Should You Do a Roth Conversion?

You move money from a pre-tax account (Traditional IRA or 401k) into a Roth IRA and pay ordinary income tax on the converted amount in that year. After that, the money grows tax-free and qualified withdrawals are tax-free. There is no income limit on conversions, unlike direct Roth contributions.

Mathematically, a conversion wins when your tax rate in retirement will be higher than your rate today. It is especially attractive in lower-income years — early retirement before Social Security and RMDs begin, a sabbatical, or a year with business losses — when you can convert at a low bracket.

If you pay the conversion tax from the IRA itself, less money lands in the Roth. If you pay from a separate taxable account, the full amount keeps growing tax-free and you also remove money from a taxable account where future gains would be taxed. This 'pay from outside' advantage is often the single biggest driver of the result.

Traditional IRAs and 401ks force Required Minimum Distributions starting at age 73 or 75, which raise your taxable income whether you need the money or not. Roth IRAs have no RMDs during your lifetime, so converting can shrink future RMDs and the taxes they trigger — a benefit this simple calculator does not fully model.

Yes. A large conversion can push you into a higher bracket, increase Medicare premiums via IRMAA two years later, reduce ACA health-insurance subsidies, and raise the taxable portion of Social Security. Many people convert smaller amounts over several years ("filling up a bracket") to manage these effects.

Conversions must be done by December 31 to count for that tax year. Since 2018, conversions can no longer be reversed ("recharacterized"), so the decision is permanent — another reason to model it carefully or work with a CPA before converting.