Understanding the tax implications of converting a Traditional IRA to a Roth IRA is crucial for effective retirement planning. A Roth IRA conversion allows you to move pre-tax money from a Traditional IRA into a Roth IRA, where it can grow tax-free and be withdrawn tax-free in retirement, provided certain conditions are met. However, the conversion itself is a taxable event, meaning you'll pay income taxes on the converted amount in the year of conversion.
This calculator helps you estimate the federal and state income tax liability associated with a Roth IRA conversion. It takes into account your current Traditional IRA balance, any non-deductible (after-tax) contributions you've made, your current taxable income, and your filing status to provide a personalized estimate.
Why Consider a Roth IRA Conversion?
Tax-Free Withdrawals in Retirement: Once converted and held for at least five years (and you're over 59½, disabled, or using it for a first-time home purchase), all qualified withdrawals from a Roth IRA are completely tax-free.
Tax-Free Growth: Your investments grow tax-free within the Roth IRA.
No Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roth IRAs do not have RMDs for the original owner, allowing your money to continue growing indefinitely. This also provides greater flexibility for estate planning.
Anticipate Higher Future Tax Brackets: If you expect to be in a higher tax bracket in retirement than you are now, paying taxes on the conversion today could save you money in the long run.
Current Low-Income Year: A Roth conversion can be particularly advantageous during years when your income is lower than usual, as it may allow you to convert funds at a lower tax rate.
Key Considerations for Your Conversion
Taxable Event: The primary drawback is that you must pay income tax on the pre-tax portion of the converted amount in the year of conversion. This calculator helps you estimate that cost.
Pro-Rata Rule: If you have both pre-tax and after-tax (non-deductible) contributions across all your Traditional, SEP, and SIMPLE IRAs, the IRS's "pro-rata" rule applies. This means that any conversion is considered to be a proportional mix of your pre-tax and after-tax money, regardless of which specific IRA account you convert from. Only the pre-tax portion is taxable.
5-Year Rule: For converted amounts, a separate 5-year waiting period applies before earnings can be withdrawn tax-free and penalty-free. If you withdraw converted amounts (principal) within five years, they may be subject to a 10% early withdrawal penalty if you are under age 59½, even if the original Roth IRA was opened more than five years ago.
Impact on Current Tax Bracket: A large conversion can push you into a higher tax bracket for the year, increasing your overall tax liability.
Source of Tax Payment: It's generally recommended to pay the taxes due on the conversion from funds outside your IRA, if possible. Paying taxes from the converted amount reduces the amount that can grow tax-free in your Roth IRA.
Use the calculator below to get an estimate, but always consult with a qualified financial advisor or tax professional to discuss your specific situation and ensure a Roth conversion aligns with your overall financial strategy.
Roth IRA Conversion Tax Calculator
Estimate the federal and state income tax due on your Roth IRA conversion.
Single
Married Filing Jointly
Head of Household
function calculateRothConversionTax() {
var traditionalIraBalance = parseFloat(document.getElementById('traditionalIraBalance').value);
var nonDeductibleContributions = parseFloat(document.getElementById('nonDeductibleContributions').value);
var conversionAmount = parseFloat(document.getElementById('conversionAmount').value);
var currentTaxableIncome = parseFloat(document.getElementById('currentTaxableIncome').value);
var filingStatus = document.getElementById('filingStatus').value;
var stateTaxRate = parseFloat(document.getElementById('stateTaxRate').value);
// Input validation
if (isNaN(traditionalIraBalance) || traditionalIraBalance < 0) {
alert('Please enter a valid Total Traditional IRA Balance.');
return;
}
if (isNaN(nonDeductibleContributions) || nonDeductibleContributions traditionalIraBalance) {
alert('Non-Deductible Contributions cannot exceed the Total Traditional IRA Balance.');
return;
}
if (isNaN(conversionAmount) || conversionAmount traditionalIraBalance) {
alert('Amount to Convert cannot exceed the Total Traditional IRA Balance.');
return;
}
if (isNaN(currentTaxableIncome) || currentTaxableIncome < 0) {
alert('Please enter a valid Current Year Taxable Income.');
return;
}
if (isNaN(stateTaxRate) || stateTaxRate 100) {
alert('Please enter a valid State Income Tax Rate (0-100).');
return;
}
// Pro-Rata Rule Calculation
var taxableConversionAmount = 0;
var nonTaxableConversionAmount = 0;
if (traditionalIraBalance > 0) {
var preTaxPercentage = (traditionalIraBalance – nonDeductibleContributions) / traditionalIraBalance;
taxableConversionAmount = conversionAmount * preTaxPercentage;
nonTaxableConversionAmount = conversionAmount – taxableConversionAmount;
} else {
taxableConversionAmount = 0;
nonTaxableConversionAmount = 0;
}
// Federal Income Tax Brackets (2023 Tax Year)
var taxBrackets = {
single: [
{ rate: 0.10, min: 0, max: 11000 },
{ rate: 0.12, min: 11001, max: 44725 },
{ rate: 0.22, min: 44726, max: 95375 },
{ rate: 0.24, min: 95376, max: 182100 },
{ rate: 0.32, min: 182101, max: 231250 },
{ rate: 0.35, min: 231251, max: 578125 },
{ rate: 0.37, min: 578126, max: Infinity }
],
marriedJointly: [
{ rate: 0.10, min: 0, max: 22000 },
{ rate: 0.12, min: 22001, max: 89450 },
{ rate: 0.22, min: 89451, max: 190750 },
{ rate: 0.24, min: 190751, max: 364200 },
{ rate: 0.32, min: 364201, max: 462500 },
{ rate: 0.35, min: 462501, max: 693750 },
{ rate: 0.37, min: 693751, max: Infinity }
],
headOfHousehold: [
{ rate: 0.10, min: 0, max: 15700 },
{ rate: 0.12, min: 15701, max: 59850 },
{ rate: 0.22, min: 59851, max: 95350 },
{ rate: 0.24, min: 95351, max: 182100 },
{ rate: 0.32, min: 182101, max: 231250 },
{ rate: 0.35, min: 231251, max: 578100 },
{ rate: 0.37, min: 578101, max: Infinity }
]
};
function calculateFederalTax(income, status) {
var tax = 0;
var brackets = taxBrackets[status];
if (!brackets) return 0;
for (var i = 0; i bracket.min) {
var taxableInBracket = Math.min(income, bracket.max) – bracket.min;
tax += taxableInBracket * bracket.rate;
}
}
return tax;
}
var taxBeforeConversion = calculateFederalTax(currentTaxableIncome, filingStatus);
var incomeWithConversion = currentTaxableIncome + taxableConversionAmount;
var taxAfterConversion = calculateFederalTax(incomeWithConversion, filingStatus);
var federalTaxOnConversion = taxAfterConversion – taxBeforeConversion;
// State Income Tax Calculation
var stateTaxOnConversion = taxableConversionAmount * (stateTaxRate / 100);
// Total Tax Due
var totalTaxDue = federalTaxOnConversion + stateTaxOnConversion;
// Display Results
var resultHtml = '