What Is a Roth IRA Conversion?
A Roth IRA conversion involves moving money from a traditional IRA (or other pre-tax retirement account) into a Roth IRA. You pay income tax on the converted amount now, but all future growth and qualified withdrawals are tax-free. This can be a powerful tax planning strategy if you expect to be in a higher tax bracket in retirement, want to eliminate required minimum distributions (RMDs), or wish to leave tax-free assets to heirs.
There is no income limit or cap on how much you can convert from a traditional IRA to a Roth IRA. However, the entire converted amount is added to your taxable income for the year, which could push you into a higher tax bracket. You can do partial conversions over multiple years to manage the tax impact.
How the Roth Conversion Calculator Works
When Does a Roth Conversion Make Sense?
- You expect your tax rate in retirement to be higher than your current rate
- You have a long time horizon (10+ years) for the Roth to grow tax-free
- You want to eliminate required minimum distributions (RMDs) at age 73+
- You can pay the conversion taxes from non-retirement funds
- You want to leave tax-free assets to heirs
- You had a low-income year (job loss, sabbatical, early retirement)
Roth Conversion Strategies
Multi-Year Conversion Strategy
Tax Bracket Impact Example
- 1Base income: $85,000 (in the 22% bracket, which ends at $96,950)
- 2First $11,950 of conversion taxed at 22% = $2,629
- 3Remaining $38,050 of conversion taxed at 24% = $9,132
- 4Total federal tax on conversion: $11,761
- 5Effective conversion tax rate: 23.5%
Roth Conversion vs. Traditional IRA: Key Differences
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax on Contributions | Tax-deductible | After-tax (no deduction) |
| Tax on Growth | Tax-deferred | Tax-free |
| Tax on Withdrawals | Taxed as ordinary income | Tax-free (if qualified) |
| Required Minimum Distributions | Required at age 73 | None during owner's lifetime |
| Income Limits for Contributions | None (deductibility may be limited) | $161,000 single / $240,000 married (2026) |
| Early Withdrawal Penalty | 10% before age 59.5 | Contributions anytime; earnings after 5 years + age 59.5 |
| Estate Planning | Heirs pay income tax on distributions | Heirs receive tax-free distributions |
If you have both deductible and non-deductible contributions in your traditional IRAs, the IRS uses the pro-rata rule to determine the taxable portion of any conversion. You cannot cherry-pick only the non-deductible (already-taxed) portion to convert. This rule applies across ALL your traditional IRAs combined.
Sources and Methodology
This calculator uses 2026 federal income tax brackets from the IRS and standard financial projection formulas. It assumes a constant rate of return and does not account for annual contribution limits, RMD requirements, or the 5-year Roth seasoning rule for conversions. Consult a qualified tax advisor before making conversion decisions.
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