Why convert only part of the balance?

To stay inside your current bracket. Amounts above the bracket top are taxed at the higher rate, and spreading conversions across years keeps more of it at the lower one.

Should I pay the tax from the converted money?

Preferably not. Paying from outside leaves the whole converted balance compounding untaxed, which is most of the benefit.

InvestmentretirementUnited States only

Roth IRA Conversion Calculator

Roth conversion tax and whether it pays. Converting only up to the top of your current bracket is the standard technique, because the spill into the next bracket is taxed at a higher rate for no extra benefit.

Also called: roth ira conversion, convert 401k to roth.

Tax on the conversion

$23,633.00

$23,633.00 in tax to convert 100,000, at a blended rate of 23.63%. 81650 spills into the higher bracket. Converting only 18350 this year would keep it all at the lower rate. Converting is worth $12,048.69 against leaving it, assuming a 28% rate later.

Blended rate on the conversion

23.63%

Room left in the current bracket

$18,350.00

Pushed into the next bracket

$81,650.00

Roth value at withdrawal

$210,698.96

Traditional value after tax

$198,650.27

Benefit of converting

$12,048.69

On bracket filling

81650 spills into the higher bracket. Converting only 18350 this year would keep it all at the lower rate.

How this is calculated

Computed from the published rates for the tax year you selected, which is not necessarily the current year. A calculation, not tax advice, and it does not know anything about your circumstances beyond the figures entered.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The converted amount is added to ordinary income, filling the remainder of your current bracket and then spilling into the next. Converting exactly to the top of a bracket is why this is usually done over several years rather than at once. The conversion pays if your rate in retirement would exceed the blended rate you pay now, and paying the tax from outside the account rather than from the converted amount improves the result further.

the conversion fills the current bracket first and spills into the next

A: Amount converted
R: Room in the bracket

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a conversion that spills into the next bracket

Amount to convert: $100,000.00
Other taxable income this year: $85,000.00
Top of your current bracket: $103,350.00
Current bracket rate: 22%
Next bracket rate: 24%
Expected rate in retirement: 28%
Years until withdrawal: 15
Annual return: 7%

Tax on the conversion$23,633.00

18,350 at 22% plus 81,650 at 24%

Open this example

converting only the bracket room stays at the lower rate

Amount to convert: $18,350.00
Other taxable income this year: $85,000.00
Top of your current bracket: $103,350.00
Current bracket rate: 22%
Next bracket rate: 24%
Expected rate in retirement: 28%
Years until withdrawal: 15
Annual return: 7%

Tax on the conversion$4,037.00

boundary: exactly filling the bracket

Open this example

Method and limits

What it assumes

Two brackets. A large conversion can cross several.

What it deliberately does not model

Conversions can raise Medicare premiums and the taxability of Social Security, neither modelled here.
A five year clock applies to converted amounts before penalty-free withdrawal.
This is an estimate, not tax advice.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why convert only part of the balance?: To stay inside your current bracket. Amounts above the bracket top are taxed at the higher rate, and spreading conversions across years keeps more of it at the lower one.
Should I pay the tax from the converted money?: Preferably not. Paying from outside leaves the whole converted balance compounding untaxed, which is most of the benefit.