Estimate the tax impact of moving your Traditional IRA or 401(k) funds to a Roth account.
Conversion Summary
Estimated Tax Due (Current Year):$0.00
Projected Roth Value in 15 Years:$0.00
Total Tax Saved (vs Traditional IRA):*$0.00
*Assuming the same tax rate at withdrawal as current rate. Individual results may vary based on future tax laws.
Understanding the Roth IRA Conversion
A Roth IRA conversion involves moving assets from a tax-deferred retirement account, like a Traditional IRA or 401(k), into a Roth IRA. While this move triggers an immediate income tax bill, it allows the money to grow tax-free for the rest of your life, provided you follow the IRS rules.
Is a Roth Conversion Right for You?
The primary math behind a Roth conversion centers on your tax bracket arbitrage. If you believe your tax rate in retirement will be higher than your current tax rate, a conversion is usually a winning strategy. By "pre-paying" your taxes now, you lock in the lower rate and shield all future growth from the IRS.
How to Use This Calculator
Amount to Convert: This is the total dollar value you are moving from your Traditional account.
Current Tax Rate: This should include your Federal income tax bracket plus any applicable state taxes.
Years Until Withdrawal: The longer the money stays in the Roth IRA, the more tax-free compounding you benefit from.
Annual Return: Your estimated average stock market or bond market return.
The "Tax Trap" to Avoid
For the best results, you should pay the conversion tax using cash from a brokerage or savings account rather than taking the tax out of the IRA itself. If you use IRA funds to pay the tax and you are under age 59½, that portion could be subject to an additional 10% early withdrawal penalty.
Strategic Timing
Pro-tip: Many savvy investors perform Roth conversions during "down years" in the stock market. If your account value drops by 20%, you can convert the same number of shares for a 20% smaller tax bill. When the market recovers, all that growth happens inside the tax-free Roth wrapper.
function calculateRothConversion() {
var amount = parseFloat(document.getElementById('conversionAmount').value);
var taxRate = parseFloat(document.getElementById('currentTaxRate').value) / 100;
var years = parseFloat(document.getElementById('yearsToRetire').value);
var growth = parseFloat(document.getElementById('annualGrowth').value) / 100;
if (isNaN(amount) || isNaN(taxRate) || isNaN(years) || isNaN(growth)) {
alert("Please enter valid numeric values in all fields.");
return;
}
// 1. Immediate Tax Bill
var taxDue = amount * taxRate;
// 2. Future Value of Roth (Assuming tax paid from outside funds to maximize benefit)
// FV = P * (1 + r)^n
var futureValueRoth = amount * Math.pow((1 + growth), years);
// 3. Comparison: Traditional IRA (No tax now, tax at end)
// If left in Trad, it grows to the same amount, but then we subtract the tax at withdrawal
var futureValueTradPreTax = amount * Math.pow((1 + growth), years);
var futureValueTradPostTax = futureValueTradPreTax * (1 – taxRate);
// 4. Tax Savings
// This is the difference between total tax-free growth and growth that will be taxed
var taxSavings = futureValueRoth – futureValueTradPostTax – taxDue;
// Display results
document.getElementById('rothResult').style.display = 'block';
document.getElementById('taxDueDisplay').innerText = '$' + taxDue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('rothFvDisplay').innerText = '$' + futureValueRoth.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('taxSavingsDisplay').innerText = '$' + (taxSavings > 0 ? taxSavings : 0).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('yearSpan').innerText = years;
}