Roth IRA Conversion Calculator

What Is a Roth IRA Conversion? A Roth conversion moves money from a pre-tax Traditional IRA into a Roth IRA. You pay income tax on the converted amount today — but all future growth and qualified withdrawals are completely tax-free.

The Core Math Conversion tax cost = Balance × (current tax rate / 100)

Roth end value after n years = Balance × (1 + r)^n (The full pre-tax balance grows — no tax on withdrawal.)

Traditional end value (after-tax) = Balance × (1 + r)^n × (1 − future tax rate / 100) (The full balance grows tax-deferred, then taxed at withdrawal.)

Net Roth advantage = Roth end value − Traditional after-tax value − what the conversion tax would have grown to

That last term is the one people get wrong. You pay the conversion tax today, out of money that would otherwise have stayed invested for the whole period. Subtracting today’s tax bill from a difference measured decades later compares a present-day dollar against a future one and flatters the Roth every time.

Worked Example Balance: $100,000 | Current rate: 22% | Future rate: 25% | Return: 7% | Years: 20

Conversion tax cost = $100,000 × 0.22 = $22,000 That $22,000, left invested, would have become $22,000 × 1.07^20 = $85,133 Roth end value = $100,000 × 1.07^20 = $386,968 (all tax-free) Traditional after-tax = $386,968 × (1 − 0.25) = $290,226 Net advantage of converting = $386,968 − $290,226 − $85,133 = $11,609

The check that proves the method

Run it again with the future rate set to 22%, the same as today. The answer is exactly zero. That is the right answer, and it is worth knowing: when the rate you pay now equals the rate you would pay later, a Roth and a Traditional IRA are mathematically identical. Every dollar of Roth advantage comes from the gap between the two rates, never from the Roth wrapper itself.

When Converting Makes Sense

• Your future tax rate is expected to be higher than today’s rate
• You have many years for tax-free growth to compound
• You want to reduce Required Minimum Distributions (RMDs)
• You can pay the conversion tax from outside funds (not from the IRA)

When Converting May Not Make Sense

• Your retirement tax rate will be lower than today
• You are close to retirement with little growth time remaining
• The conversion would push you into a much higher tax bracket this year

The 5-Year Rule Each Roth conversion has its own 5-year clock. Converted funds withdrawn before age 59½ and before 5 years may be subject to a 10% penalty. Consult a tax advisor before converting.