Net Benefit: The total dollar advantage (or disadvantage) of converting, based on the difference between the tax you would owe in retirement and the tax you pay today. A positive number generally favors conversion.
Tax Paid Now: The ordinary income tax triggered by moving pre-tax dollars into a Roth, calculated at your current marginal rate.
Roth Value at Retirement: What the converted amount grows to, tax-free, by your retirement year at the assumed return rate.
Tax If Not Converted: The tax that would apply to the same balance if withdrawn from a Traditional IRA in retirement at your expected future rate.
Break-Even: How many years of tax-free growth it takes for the Roth's advantage to offset the upfront tax cost. A shorter break-even generally makes conversion more attractive.
How This Calculator Works
You enter the Traditional IRA balance, the amount to convert, your current and expected retirement tax brackets, years to retirement, and an assumed annual return. The tool multiplies the conversion amount by your current bracket to find today's tax, then compounds the same amount to retirement and applies your future bracket. The difference is the net benefit. It assumes flat tax rates and a single lump conversion, so real-world results will vary.
Quick Questions
Does converting always save money if my future bracket is lower?
Not necessarily. Even with a lower future bracket, the upfront tax bill reduces the amount you have invested today. Whether conversion pays off depends on how long the money grows tax-free and the actual bracket difference. The break-even figure helps you gauge that.
Can I convert only part of my Traditional IRA?
Yes. Partial conversions are common and can help you stay within a lower tax bracket each year. This calculator models a single lump-sum conversion; run it multiple times with different amounts to compare partial strategies.
Are there income limits for Roth conversions?
No. Unlike Roth IRA contributions, there is no income cap on conversions. Anyone with a Traditional IRA can convert regardless of how much they earn, though the converted amount counts as taxable income for the year.
What about the five-year rule?
Each conversion has its own five-year clock before earnings can be withdrawn tax- and penalty-free. If you're under 59½, early withdrawals of converted amounts within five years may face a 10% penalty. This calculator does not model early-withdrawal penalties.