Intergtm

Roth Conversion Tax Cost Calculator

See whether converting a traditional IRA to a Roth is worth it by comparing your current tax rate to your expected retirement rate.

Inputs

$

The balance you plan to move from a traditional IRA to a Roth IRA this year.

%

The federal (plus state, if you like) marginal rate that will apply to the converted amount this year.

%

Your best estimate of the marginal rate you will face on IRA withdrawals once retired.

%

Assumed average annual pre-tax return in both accounts.

Paying from outside funds is almost always better — the full converted amount then compounds tax-free inside the Roth.

Results update as you type, and the address bar keeps your numbers so the link you share reopens this exact calculation.

Break-even

Never

Roth wins immediately — your retirement rate exceeds your current rate.

Detailed results
Immediate tax cost22% of $50,000 converted$11,000
Roth balance at retirementRoth value at retirement (20 years)$193,484
Traditional after-tax at retirementTraditional after-tax value at retirement$150,918
Net Roth advantage at retirementRoth is ahead$0.00
Net Roth advantage at 30 yearsNet Roth advantage after 30 years-$0.00

What this result means

Break-even: Never.

Your current and expected retirement rates are both 22%, so the Roth and traditional paths produce the same after-tax result. The Roth offers non-tax benefits (no RMDs, tax diversification) worth considering even at identical rates.

Year-by-Year Roth vs Traditional Comparison

Annual Roth balance, traditional after-tax balance, and cumulative net advantage over 30 years.

Year-by-Year Roth vs Traditional Comparison. 30 rows, first 12 shown.
YearRoth BalanceTraditional (After Tax)Net Roth Advantage
1$53,500$41,730$0.00
2$57,245$44,651$0.00
3$61,252$47,777-$0.00
4$65,540$51,121$0.00
5$70,128$54,700$0.00
6$75,037$58,528-$0.00
7$80,289$62,625-$0.00
8$85,909$67,009-$0.00
9$91,923$71,700-$0.00
10$98,358$76,719$0.00
11$105,243$82,089-$0.00
12$112,610$87,835$0.00

How this is calculated

immediate_tax = conversion × marginal_rate / 100
roth_balance(t) = roth_principal × (1 + r)^t
  where roth_principal = conversion (outside funds) or conversion × (1 − marg/100) (from conversion)
trad_after_tax(t) = conversion × (1 + r)^t × (1 − retirement_rate / 100)
opportunity_cost(t) = immediate_tax × (1 + r)^t  [only if tax paid from outside funds]
net_advantage(t) = roth_balance(t) − trad_after_tax(t) − opportunity_cost(t)
break_even = smallest t where net_advantage(t) ≥ 0

How a Roth conversion works

A Roth conversion is the act of moving money from a pre-tax traditional IRA into a Roth IRA. The IRS treats the transferred amount as ordinary income in the year of conversion, so you pay tax now at your current marginal rate. In exchange, every dollar that sits in the Roth from that point forward grows completely tax-free and is never subject to required minimum distributions.

The rate-comparison framework

The core question is simple: is your tax rate today higher or lower than it will be when you take withdrawals?

If your current rate is lower than your expected retirement rate, a Roth conversion is almost always beneficial. You lock in the lower rate today, and every future dollar of growth escapes the higher rate you would otherwise face. In this case the Roth wins immediately — there is no waiting period.

If your current rate equals your retirement rate, the two paths produce identical after-tax wealth. The Roth still offers real non-tax advantages: no required minimum distributions beginning at age 73, tax diversification that gives you flexibility in retirement, and the ability to leave heirs a tax-free inheritance. Many advisers favor conversion even at equal rates for these reasons alone.

If your current rate is higher than your expected retirement rate, the traditional IRA is the better vehicle. Paying tax now at a higher rate just to avoid a lower rate later is the wrong trade. The traditional path wins and the Roth never catches up.

Paying the tax: outside funds versus the conversion itself

When you pay the conversion tax from savings outside the IRA, the full converted amount enters the Roth and compounds tax-free for decades. When you instead withhold the tax from the conversion proceeds, a smaller principal enters the Roth — and you also lose the opportunity for that withheld amount to grow inside a tax-advantaged account. Paying from outside funds is almost always superior unless you have no other liquidity.

The opportunity cost adjustment

Because paying conversion tax from outside funds depletes other savings, a rigorous comparison must account for what those tax dollars would have earned if left invested. This calculator factors in that opportunity cost: the break-even and net advantage figures represent your true wealth position in each scenario, not just a comparison of account balances.

What this calculator does not model

Federal and state tax brackets are not applied automatically — you enter your own marginal rates. The calculator assumes constant annual returns and constant tax rates over time. It does not model Roth conversion ladders across multiple years, the pro-rata rule for IRAs with non-deductible basis, Medicare premium surcharges (IRMAA), or state-specific rules. Use the output as a directional guide and verify with a tax adviser before executing a large conversion.

Assumptions

  • Tax rates are entered directly by the user; no bracket tables are applied automatically.
  • Both the Roth and traditional accounts earn the same constant annual return.
  • The traditional IRA balance is fully subject to income tax at the stated retirement rate upon withdrawal.
  • When tax is paid from outside funds, those funds are assumed to have otherwise earned the same return rate.
  • No state tax differences between current and retirement state of residence are modelled.
  • Required minimum distributions are not modelled; the traditional balance is compared on an after-tax basis only.
  • Roth five-year seasoning rules and early withdrawal penalties are not applied.

Frequently asked questions

›What is the ideal year to do a Roth conversion?

Years when your taxable income is temporarily low are the best opportunities — a sabbatical year, a year with large deductions, early retirement before Social Security begins, or any year where your marginal rate drops below what you expect in the future. Conversions in those low-income windows lock in a rate you may never see again.

›Can I undo a Roth conversion if I change my mind?

No. The Tax Cuts and Jobs Act of 2017 eliminated recharacterization of Roth conversions. Once the money is in the Roth it stays there. Plan carefully before converting, especially in years when your income might push you into a higher bracket than expected.

›Does a Roth conversion affect my Medicare premiums?

Yes. Medicare Part B and Part D premiums are means-tested through the Income-Related Monthly Adjustment Amount (IRMAA). A large conversion in a single year can push your modified adjusted gross income above a threshold and raise your premiums two years later. Spreading conversions across several years often avoids or minimizes this surcharge.

›What is the pro-rata rule and how does it affect conversions?

If you hold both deductible (pre-tax) and non-deductible (after-tax) dollars across all your traditional IRAs, every conversion is treated as coming proportionally from each pool. You cannot choose to convert only the after-tax basis tax-free. This rule matters most for people attempting a backdoor Roth contribution who also hold a large pre-tax IRA.

›Should I convert a large amount all at once or spread it out?

Spreading conversions over several years lets you fill up lower brackets each year without spiking into a higher one. Converting $200,000 in a single year might push a large portion into the 35% bracket, whereas four $50,000 conversions could all fall in the 22% bracket. The optimal pace depends on your projected income each year and when you need the money.

›Are Roth conversions subject to the 10% early withdrawal penalty?

The conversion itself is not subject to the 10% penalty — you are transferring the money, not withdrawing it for spending. However, if you are under 59½ and then take a distribution from the Roth within five years of the conversion, those converted dollars may be subject to the penalty. Consult a tax adviser if you are under 59½.

›How does this calculator handle the case where rates are equal?

When your current and retirement rates are equal, the net financial advantage of conversion is zero — both paths produce the same after-tax balance. The calculator shows break-even at year 0 to reflect that you are indifferent on a purely mathematical basis, but the Roth's non-financial benefits (no RMDs, estate planning simplicity) may still tip the decision.

›Does Roth account growth affect the break-even calculation?

No — and the math shows why. When the tax is paid from outside funds, the net advantage at any year t equals conversion × (1+r)^t × (retirement_rate − current_rate) / 100. The growth factor (1+r)^t appears in every term and cancels out. The investment return affects the size of the advantage but not the break-even condition, which depends entirely on the difference between your two tax rates.

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