Short answer: a Roth conversion is a bet on tax rates — yours, later, versus yours, now. Under this tool’s assumptions, converting wins only if your retirement tax rate ends up higher than today’s. Example below: converting $40,000 in a 12% year costs $4,800 in tax now and, if your retirement rate is 22%, comes out an estimated $12,829 ahead over 20 years. At equal rates, the advantage is exactly $0 — anyone who tells you conversions are always smart is skipping that arithmetic.
| Tax due on the conversion this year | $0 |
| Converted amount could grow to (tax-free) | $0 |
| End value if you CONVERT (after charging the tax bill its lost growth) | $0 |
| End value if you DON’T (growth taxed at your retirement rate) | $0 |
| Break-even retirement tax rate | — |
| Years for the conversion’s edge to repay today’s tax bill | — |
Educational estimate only — not tax or financial advice. A Roth conversion is a taxable event and (since 2018) cannot be undone. Conversions can affect Medicare premiums, ACA subsidies, financial aid, and state taxes. Model your actual brackets before converting. Your numbers never leave this page.
How this calculator works — and its assumptions, stated loudly
The model: you convert an amount from a traditional IRA, pay the tax from cash OUTSIDE the IRA, and we charge that tax payment its lost future growth (if you’d invested the $4,800 instead, it would have grown too — honest math includes that cost). The converted money then grows tax-free. If you don’t convert, the same money grows pre-tax and is taxed at your retirement rate when withdrawn. Advantage = converted amount × (1 + return)^years × (retirement rate − current rate). Notice what that means: under flat-rate assumptions, only the rate gap decides the winner; time just scales the dollars. What this model leaves out — and real decisions must include: a large conversion is taxed in slices across brackets, not at one flat rate; converting can raise Medicare IRMAA premiums, reduce ACA subsidies, and trigger state tax; future Congresses change rates; and since 2018 a conversion cannot be undone. Use this tool to understand the shape of the decision, then model your real brackets with a tax professional.
Worked example
Convert $40,000 · 12% marginal rate this year (say, a low-income year between jobs or early retirement) · 22% expected in retirement · 6% return · 20 years: – Tax due now: $4,800 – The $40,000 grows to $128,285 tax-free – Converting ends at $112,891 after charging the tax bill its lost growth – Not converting ends at $100,063 after retirement tax – Estimated advantage: +$12,829 · Break-even retirement rate: 12% · the edge repays today’s tax bill in about 3.1 years of growth
FAQs
When does a Roth conversion usually make sense? In unusually low-income years — early retirement before Social Security and RMDs, a sabbatical, a business loss year — when your marginal rate is temporarily low, and when you can pay the tax from outside the IRA. What is the “break-even rate”? The retirement tax rate at which converting and not converting end exactly tied. Here it’s simply your current rate: convert only if you genuinely expect a higher rate later. Can I undo a conversion? No. Recharacterization of conversions was eliminated in 2018 — model first, convert second. Does converting affect Medicare? It can. Conversion income counts toward the MAGI that sets Medicare IRMAA premium surcharges two years later, and toward ACA subsidy calculations. Neither is in this model.
Disclaimer
Educational content only — not tax or financial advice. This is a simplified flat-rate model of a genuinely multi-variable decision; consult a qualified tax professional before converting.
Sources: IRS Retirement Plans FAQs regarding IRAs (no recharacterization since 2018), IRS 2026 tax inflation adjustments (12% and 22% brackets) Figures last verified Report a wrong number