Roth Conversion Calculator

What is a Roth Conversion?

A Roth conversion moves money from a Traditional IRA (or 401k) to a Roth IRA. You pay income tax on the converted amount now, but future growth and withdrawals are tax-free.

When Conversions Make Sense

• Low income year: Job transition, sabbatical, early retirement
• Market downturn: Convert depreciated assets at lower tax cost
• Tax rate arbitrage: Current rate lower than expected retirement rate
• Estate planning: Pass tax-free assets to heirs
• Avoid RMDs: Roth IRAs have no Required Minimum Distributions

Key Considerations

• Conversion amount is added to your taxable income
• May push you into a higher tax bracket
• Could affect Medicare premiums (IRMAA) 2 years later
• 5-year rule applies to converted amounts before age 59½
• Pay taxes from external funds when possible

Backdoor Roth IRA

High earners who exceed Roth IRA income limits can use the backdoor strategy:

1. Contribute to a non-deductible Traditional IRA
2. Convert to Roth IRA (minimal tax if no other Traditional IRA funds)
3. Pro-rata rule applies if you have other Traditional IRA balances

Partial Conversions

You dont have to convert everything at once. Many people do partial conversions over several years to fill up lower tax brackets without jumping to higher ones. This is especially useful in early retirement before Social Security begins.