Roth conversion calculator: tax now vs tax later
Short answer: A Roth conversion moves money from a traditional IRA to a Roth IRA. You pay income tax on the converted amount now, and qualified withdrawals later are tax-free. Converting tends to come out ahead when your tax rate later is expected to be higher than today, and when you can pay the tax from money outside the IRA. Enter your own assumptions below.
Roth conversion comparison i
What drives the result
- Tax rate now vs later. If the two are equal and you pay the tax from the IRA, the outcomes are about the same.
- Paying the tax from outside savings. This effectively moves more money into the tax-free account.
- Time. Longer horizons give tax-free growth more room, under whatever growth rate you assume.
- Other effects. A conversion raises income for the year, which can affect Medicare premiums, credits, and the tax on Social Security benefits.
Things the calculator does not model
- State income tax, unless you include it in your rates
- Required minimum distributions on the traditional IRA
- The 5-year rules for Roth conversions, and the 10% penalty if tax is withheld from an IRA conversion before age 59½
- Heirs’ tax rates if the account is inherited
Planning conversions alongside your return
Conversions are usually planned in partial amounts across low-income years, such as early retirement before Social Security or required distributions begin. Because the decision depends on your actual bracket, it works well when your tax projection and your plan are built together. Bull Oak’s profile says it handles tax planning, tax prep, and filing as part of its financial planning.
Related: 6 things to understand before a Roth conversion, using a low-income year, financial advisors who also do taxes.
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Frequently asked questions
Do I pay tax on a Roth conversion?
Yes. The pre-tax amount converted is added to your taxable income for the year.
Is there an income limit for Roth conversions?
No. Anyone with a traditional IRA can convert, regardless of income.
Can I undo a Roth conversion?
No. Recharacterizing a conversion has not been allowed since 2018.
Should I pay the conversion tax from the IRA?
Paying from outside savings usually leaves more in the Roth. Withholding from the IRA before age 59½ can also trigger a penalty on the withheld amount.
Is this investment or tax advice?
No. Results depend entirely on the assumptions you enter. Talk to a professional about your situation.
Bull Oak is a fee-only fiduciary advisor, helping high-net-worth individuals and families navigate the transition into retirement through financial planning, investing, and tax planning and filing.
See Bull Oak’s profileRelated reading: what is a backdoor Roth IRA.
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Bull Oak is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. Nothing on this page is a recommendation to buy or sell any security, and calculator results depend entirely on the assumptions you enter.