How this calculator works
Converting a traditional IRA to a Roth IRA means paying income tax on the converted amount now, in exchange for tax-free growth and tax-free withdrawals later. This calculator compares the projected value of converting against staying traditional (where withdrawals are taxed at retirement), using tax rates you enter yourself — it never assumes or looks up a specific bracket, since tax law and bracket thresholds change over time.
The comparison depends entirely on whether your current tax rate is higher or lower than your expected rate at retirement. If the two rates are equal, and taxes are paid from money outside the IRA, converting and staying traditional produce mathematically identical after-tax results once you also account for what that outside tax payment could have earned elsewhere — this calculator shows both the simple comparison and that more rigorous, opportunity-cost-adjusted version.
The formulas
Tax cost now = convert amount × current marginal rateRoth principal = convert amount (if paying tax from outside funds) or convert amount − tax cost (if paying from the IRA itself)Projected value at either path: balance × (1 + expected return)^years to retirementTraditional value after tax = convert amount × growth factor × (1 − retirement tax rate)The primary net benefit figure compares the two projected balances directly. When paying the tax from outside funds, an additional figure also subtracts what that tax payment could have grown to if left invested at the same rate instead — a fairer comparison that reduces to zero exactly when your current and retirement tax rates are equal.
Worked example: $50,000 converted, 24% now, 22% at retirement, 7% return, 20 years
- Tax cost now = 50,000 × 0.24 = $12,000.
- Paying that tax from outside funds, the full $50,000 grows tax-free: 50,000 × 1.07^20 ≈ $193,484.
- Staying traditional, the same $50,000 grows the same way but is taxed at withdrawal: 50,000 × 1.07^20 × (1 − 0.22) ≈ $150,918.
- Simple net benefit ≈ 193,484 − 150,918 = $42,567. Accounting for what the $12,000 paid in tax today could have earned over 20 years (≈$46,436) narrows the true benefit to about −$3,870 — because the current rate (24%) is actually higher than the expected retirement rate (22%) here.
Frequently asked questions
Why does the calculator show two different "net benefit" numbers?
The first is a simple side-by-side comparison of the two projected balances. The second, shown only when paying the conversion tax from outside funds, also subtracts what that tax money could have earned had it stayed invested instead of paying today's tax bill. That second figure is the more complete comparison — it is the one that turns negative when your current tax rate is higher than your expected retirement rate, even though the simple comparison always favors converting.
Why doesn't the calculator tell me my tax bracket?
Tax brackets, rates and rules change from year to year and depend on your full financial situation, filing status and jurisdiction. Enter your own current and expected marginal rates so the result reflects your actual numbers rather than a bracket table that may be outdated by the time you read this.
Is paying the conversion tax from the IRA itself ever a good idea?
It converts less money into the tax-free Roth account, since part of the balance is withheld to cover the tax bill, and for anyone under the standard early-withdrawal age it can also trigger a penalty on the withheld amount, which this calculator does not model. Paying from outside funds, when available, keeps the full converted amount growing tax-free.
Does this account for required minimum distributions?
No — it compares projected balances only. Traditional IRAs are typically subject to required minimum distributions starting at an age set by current law, while Roth IRAs generally are not for the original owner; that structural difference is a separate consideration this calculator does not model.
Should I actually do a Roth conversion based on this calculator?
Use it to understand the mechanics and rough magnitude, not as financial or tax advice. Tax rules change, state taxes and other income can affect your actual marginal rate, and a conversion can also push you into a higher bracket in the conversion year itself. Consult a qualified tax professional before converting.