Roth Conversion Calculator
A Roth conversion moves money from a Traditional IRA into a Roth: you pay income tax on it now so it grows and comes out tax-free later. Whether that trade pays off depends on a few numbers, and on one detail most calculators skip: where the tax bill comes from.
Is converting to a Roth worth the tax hit?
Convert a Traditional IRA to Roth and you pay tax now for tax-free growth later. Here's what it's worth for your numbers.
Pay the conversion tax from
After 20 years, converting leaves you ahead by
$6,849
If you convert
$160,357
If you stay traditional
$153,508
Converting triggers a $11,000 tax bill this year. Paying the tax from outside savings is what tips it: your whole balance keeps compounding tax-free, while the tax money would have been dragged down by taxes in a brokerage account.
How this works
It compares the after-tax value at retirement of two paths for the same money: converting to a Roth now, or leaving it in the Traditional account. On the convert side, the balance grows and comes out tax-free. On the stay side, it grows and is taxed at your retirement rate when you withdraw.
The detail that changes the answer is where you pay the conversion tax. If you pay it out of the account, a smaller balance compounds tax-free, and the whole thing becomes a straight bet on tax rates: convert if your rate in retirement will be higher than it is today. If you pay it from outside savings, your full balance keeps compounding tax-free, which is the stronger move. To keep that comparison fair, the tool assumes the money you would have spent on tax instead grows in a taxable account with gains taxed at 15%.
What it doesn't model: a big conversion can push you into a higher bracket for the year, and it can affect things like IRMAA (Medicare) surcharges and ACA subsidies. Treat the result as a clear directional answer, not a filing.
// Illustrative only. Not tax or financial advice. Conversions are permanent; talk to a tax pro before doing a large one.