Is a Roth conversion worth it?
Converting traditional IRA or 401(k) dollars to Roth means paying tax on the conversion now in exchange for tax-free growth and tax-free withdrawals later. Enter your numbers to compare the after-tax outcome of converting vs. leaving the money alone. Everything runs in your browser.
A simplified approximation for planning intuition, not tax advice. It ignores IRMAA, state taxes, bracket-filling strategies, and the fact that tax rates themselves can change — talk to a tax professional before converting.
How this calculator works
A Roth conversion moves money from a traditional (pre-tax) account to a Roth account. You pay ordinary income tax on the converted amount this year, at your current marginal rate. In exchange, that money — and everything it earns — is never taxed again.
The alternative is to leave the money in the traditional account, where it keeps growing tax-deferred and gets taxed at your (assumed) marginal rate when you withdraw it. We grow both paths at the same expected return and compare the after-tax dollars you end up with:
- Tax paid now = conversion amount × current rate
- Converted (Roth) future value = (conversion amount − tax paid now) × (1 + growth)years, tax-free
- Not converted future value = conversion amount × (1 + growth)years × (1 − retirement rate)
The math boils down to a simple rule of thumb: converting wins when your retirement tax rate is higher than your current rate, and loses when it's lower. If the two rates are equal, it's roughly a wash before other factors (like avoiding future RMDs, estate planning, or bracket management) are considered.
Keep the plan honest
Planomy models Roth conversions inside your full withdrawal plan — filling tax brackets year by year against your real accounts, RMDs, and Social Security — instead of a single one-year estimate.
Frequently asked questions
When can a Roth conversion make sense?
A Roth conversion can make sense when your tax rate today is lower than the rate you expect later. Common windows include early retirement before RMDs, lower-income years, or years before large pension or Social Security income begins.
Why does paying the tax from cash matter?
Paying conversion tax from outside cash keeps the full converted amount invested in the Roth account. If you withhold tax from the conversion itself, less money moves into Roth and the long-term benefit is usually smaller.
Does this include Medicare IRMAA or state taxes?
No. The calculator focuses on federal income-tax tradeoffs. A real conversion plan should also consider state taxes, Medicare IRMAA thresholds, ACA credits, and how the conversion affects other income-based benefits.
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