Roth Conversion Calculator

A Roth conversion takes money already sitting in a Traditional IRA or 401(k) and moves it into a Roth account. Unlike a new contribution, the entire converted amount becomes taxable income for that year, all at once, at your current marginal rate. In exchange, that money then grows and can be withdrawn completely tax-free in retirement, instead of being taxed as ordinary income on the way out like a Traditional account. This calculator does not model annual new contributions; the Roth IRA Calculator and IRA Calculator handle that side of the decision instead.

Worked Example: $100,000 Conversion, 24% Now, 22% Later, 7% Return, 20 Years

Convert $100,000 at a 24% current marginal rate, paying the tax bill from outside savings. The tax owed is $100,000 x 24% = $24,000, paid separately, so the full $100,000 moves into the Roth and grows at 7% for 20 years: $100,000 x 1.07^20 = $386,968, entirely tax-free at withdrawal.

Now compare staying Traditional. The same $100,000 grows untaxed to the identical $386,968 pre-tax figure (1.07^20 is the same growth factor either way), but it gets taxed as ordinary income on the way out at the expected future rate of 22%: $386,968 x (1 - 0.22) = $301,835.

Converting wins here by $386,968 - $301,835 = $85,133. Notice that the expected future rate (22%) is actually lower than the current rate (24%) in this example — the kind of gap that might sound like a point in favor of just staying Traditional and waiting for the lower rate. Converting still wins decisively anyway. That's the power of paying the tax from outside funds: it doesn't just capture the rate spread, it shelters the entire $100,000 principal from ever being taxed again, which is worth far more than the 2-percentage-point rate difference alone would suggest.

Why Paying From Outside Funds Beats Paying From the Converted Amount

Using the same $100,000 example, if you'd instead paid the $24,000 tax bill out of the conversion itself, only $76,000 would have actually moved into the Roth. Grown at 7% for 20 years: $76,000 x 1.07^20 = $294,096 — about $92,872 less than paying from outside funds, and notably even less than the $301,835 you'd have ended up with by not converting at all. Paying the conversion tax from the converted amount itself doesn't just underperform the outside-funds approach; in this example it actually makes conversion the losing move entirely. The money used to pay the tax never gets a chance to compound, whichever pot it comes from, so the question is really just which pot can best afford to lose it, and it's almost never the money you're trying to grow tax-free for decades.

The Equal-Tax-Rate Insight

Set both tax rate fields to the same number and switch to "pay from the converted amount": the Roth conversion result and the stay-Traditional result will come out mathematically identical, to the penny. That's not a coincidence — Mode B (paying tax from the converted amount) just moves the exact same-sized tax bite earlier in time without changing anything else about it, so at equal rates it changes nothing about the outcome.

Paying from outside funds is different, and the numbers on this page will still show the Roth side ahead even at equal tax rates. That's because this calculator, like most conversion tools, only tracks what happens inside the two retirement accounts, not the fate of the outside cash you spent on the tax bill. If you also credit the "don't convert" scenario with investing that same cash elsewhere, the two strategies come back into balance at equal tax rates: converting isn't secretly free money, it is a wash once you account for where the tax-payment cash would otherwise have gone. What conversion actually buys you is a bet on rates — specifically, that your future rate will be lower than, or at worst equal to, your current rate. If you expect the opposite, the math tips toward staying Traditional.

Two Rules That Matter More Than the Math

Conversions are irreversible. Before 2018, you could "recharacterize" a conversion back to Traditional if it turned out to be a mistake. The Tax Cuts and Jobs Act of 2017 eliminated that option entirely. Once you convert, that tax bill is locked in for the year, regardless of what markets or tax law do afterward.

The 5-year rule applies separately to each conversion. Every Roth conversion starts its own 5-tax-year clock. If you're under 59 1/2 and withdraw a specific converted amount before its own 5-year period is up, that withdrawal can trigger a 10% penalty, even though you already paid income tax on it at conversion. Multiple conversions in different years each carry their own separate clock. This calculator projects long-term growth only and does not simulate early-withdrawal penalties.

For the drawdown side of retirement planning once your accounts are in place, see the Retirement Withdrawal Calculator. For the Traditional-vs-Roth decision on new contributions, use the IRA Calculator or the Roth IRA Calculator.

Frequently Asked Questions

Q: How is this different from the Roth IRA Calculator on this site?

The Roth IRA Calculator projects growth of new contributions. This tool evaluates converting an existing Traditional balance in a single taxable event.

Q: Is it better to pay the conversion tax from outside funds or from the converted amount itself?

Paying from outside funds is almost always better, because it leaves the full converted balance compounding tax-free. See the worked example above for the exact numbers.

Q: Can I undo a Roth conversion if I change my mind?

No. The 2017 tax law eliminated recharacterization of conversions. The decision is permanent once made.

Q: When can I withdraw converted funds without a penalty?

Each conversion has its own 5-year clock. Withdrawing converted funds before that clock is up, while under 59 1/2, can trigger a 10% penalty even though the tax was already paid at conversion.