Roth Conversion Calculator (US)
Calculate the cost and benefit of converting Traditional IRA or 401(k) money to a Roth IRA. Find your optimal annual conversion amount.
Roth Conversion Strategy Guide
What a Roth Conversion Is
A Roth conversion moves money from a Traditional IRA / 401(k) (pre-tax) to a Roth IRA (post-tax). The amount converted is added to your taxable income for that year. You pay tax now at your marginal rate. In exchange, the money grows tax-free FOREVER and qualified withdrawals after age 59½ are tax-free. There's no income limit on conversions (unlike Roth contributions). No conversion limit either — you can convert any amount. The decision is fundamentally about tax-rate arbitrage: pay tax now vs
When Conversions Make Sense
Strong cases for conversion: (1) Low-income year — gap years between retirement and Required Minimum Distributions (RMDs at 73) are prime conversion windows. (2) Bear market — convert when account values are depressed, future recovery happens tax-free. (3) Estate planning — Roth IRAs have no RMDs during owner's lifetime; heirs inherit tax-free (10-year drawdown rule). (4) Expecting higher future tax rates — TCJA expires end of 2025; tax rates may rise. (5) Want tax diversification — splitting be
The Roth Conversion Ladder (FIRE Strategy)
Early retirees in the FIRE community use conversion ladders to access retirement money before 59½ without 10% penalty. Strategy: (1) Retire at, say, 45 with $1M in 401(k). (2) Roll 401(k) to Traditional IRA. (3) Each year, convert $40,000 from Traditional to Roth. Pay tax at low rate (no other income). (4) Wait 5 years — conversions can be withdrawn penalty-free after 5 years from Roth (the seasoning rule). (5) At age 50, start withdrawing the conversions you made at age 45. Continue rolling the
Conversion Gotchas
Watch out for: (1) Medicare IRMAA surcharges — higher income from conversions raises Medicare Part B/D premiums 2 years later for those 63+ converting. (2) Social Security taxation — conversions can push more SS into the 85%-taxed bracket. (3) ACA subsidies — pre-Medicare retirees on ACA marketplace plans lose subsidies as conversion income rises. (4) Pro-rata rule — if you have any deductible Traditional IRA money, you can't selectively convert non-deductible portion. (5) No recharacterization
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