Converted amounts are taxed as ordinary income
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Roth Conversion Tax Calculator
Estimate the federal tax cost of converting a traditional IRA or 401(k) to a Roth IRA.
How a Roth IRA Conversion Is Taxed
When you convert pre-tax money from a traditional IRA or 401(k) to a Roth IRA, the converted amount is added to your taxable income for that year and taxed at your ordinary income rates using the standard progressive tax brackets.
Single filer, $60,000 salary, converts $20,000 traditional IRA to Roth in 2025
The conversion is taxed at your top brackets first. Because this filer already has $44,250 of taxable income before converting, the $20,000 conversion stacks on top — about $4,225 of it fills the rest of the 12% bracket and the remaining ~$15,775 is taxed at 22%. That works out to roughly $3,977 of extra tax, an effective rate near 20% on the converted amount. Conversions are cheapest in years when your other income is low.
When a Roth Conversion Makes Sense
| Good Time to Convert | Why |
|---|---|
| Low income year | Temporary pay cut, sabbatical, career transition, or early retirement before Social Security. Lower income means lower marginal rate on the conversion. |
| Before RMDs begin | Once you reach age 73, required minimum distributions from traditional IRAs force taxable withdrawals. Converting before RMDs begin reduces future forced income. |
| Market downturn | Converting after a market decline means you convert fewer dollars of value, pay less tax, and get more shares into the Roth that grow tax-free when markets recover. |
| Expect higher rates in retirement | If you believe your tax rate in retirement will be higher than today, paying tax now at a lower rate makes sense. |
| Leaving to heirs | Roth IRAs have no RMDs and heirs inherit tax-free growth. Converting for estate planning purposes can be powerful for high-value accounts. |
| You can pay tax from outside the IRA | Paying conversion tax from non-IRA funds preserves the full converted amount inside the Roth for tax-free growth |
Partial conversions are fine. You do not have to convert your entire traditional IRA at once. Many people do partial conversions each year to fill up a lower tax bracket without pushing income into a higher one. For example, converting just enough to fill the 12% bracket each year before retirement can be highly efficient.
Roth Conversion: Advantages and Disadvantages
Advantages
- Tax-free growth and withdrawals in retirement
- No required minimum distributions at age 73
- Tax diversification in retirement
- Heirs inherit tax-free
- No income limit to convert
- Flexible -- convert any amount any year
Disadvantages
- Tax due in the year of conversion
- Can push you into a higher bracket
- May affect Medicare premiums (IRMAA)
- May reduce ACA subsidy eligibility
- 5-year rule on converted amounts
- Requires cash outside IRA to pay tax ideally
Watch for IRMAA. A large Roth conversion can increase your Medicare Part B and Part D premiums two years later through the Income-Related Monthly Adjustment Amount. In 2025, IRMAA surcharges begin at $106,000 MAGI for single filers and $212,000 for married jointly. Plan large conversions carefully if you are near Medicare age.
How Much to Convert Each Year: The Bracket-Filling Approach
One of the most tax-efficient Roth conversion strategies is to convert just enough each year to fill up your current tax bracket without crossing into the next one. This is especially powerful during low-income years -- early retirement before Social Security, a sabbatical year, or a year with large deductions.
| Filing Status | Fill to Top of 12% Bracket | Fill to Top of 22% Bracket | Fill to Top of 24% Bracket |
|---|---|---|---|
| Single filer (2025 taxable income room) | Up to $48,475 | Up to $103,350 | Up to $197,300 |
| Married filing jointly | Up to $96,950 | Up to $206,700 | Up to $394,600 |
| Tax rate paid on conversion | 12% | 22% | 24% |
| Best for | Early retirees, low-income years | Most pre-retirement converters | High savers with large traditional balances |
Example: Married couple, retired at 62, no Social Security yet, $40,000 other income
The window closes when Social Security starts. Once you begin Social Security benefits, up to 85% of those benefits become taxable income, which raises your effective marginal rate and shrinks the conversion room in each bracket. The years between retirement and Social Security are often the best Roth conversion opportunity of a person's financial life.
The Roth Conversion 5-Year Rule Explained
Roth conversions have a separate 5-year holding period from regular Roth contributions. Each conversion creates its own 5-year clock. If you withdraw converted amounts within five years of the conversion and you are under age 59.5, you will owe a 10% early withdrawal penalty on the converted amount.
| Roth Money Type | 5-Year Rule | Penalty If Withdrawn Early |
|---|---|---|
| Regular Roth contributions | Always available to withdraw penalty and tax-free (contributions only) | No penalty on contributions |
| Roth conversion amounts | Each conversion has its own 5-year clock from Jan 1 of conversion year | 10% penalty if under 59.5 and within 5 years |
| Roth earnings | Account must be at least 5 years old AND you must be 59.5+ | Tax + 10% penalty if rules not met |
| After age 59.5 | 5-year clock still matters for earnings, not for conversions | No penalty after 59.5 regardless of holding period |
The Pro-Rata Rule: Why Non-Deductible IRAs Complicate Conversions
If you have a mix of pre-tax (deductible) and after-tax (non-deductible) money in any traditional IRA, the IRS requires you to treat every withdrawal and conversion as coming proportionally from both pools. You cannot choose to convert only your non-deductible contributions tax-free. This is the pro-rata rule, and ignoring it is one of the most expensive mistakes in Roth conversion planning.
Example: $90,000 pre-tax IRA + $10,000 non-deductible IRA, convert $10,000 to Roth
The backdoor Roth only works cleanly with no pre-existing IRA balance. High earners who do a backdoor Roth conversion get hit with the pro-rata rule if they have any pre-tax IRA money elsewhere. The cleanest solution is to roll your traditional IRA balance into a current employer 401(k) before doing the backdoor conversion -- 401(k) balances are excluded from the pro-rata calculation.
| Situation | Pro-Rata Impact |
|---|---|
| Only pre-tax IRA money | No issue -- 100% of any conversion is taxable, as expected |
| Only non-deductible IRA contributions, no growth | No issue -- 100% tax-free conversion (classic backdoor Roth) |
| Mix of pre-tax and after-tax IRA money | Pro-rata rule applies -- partial tax on every conversion |
| Pre-tax 401(k) rolled to IRA before backdoor Roth | Creates pro-rata problem -- consider rolling into employer plan instead |
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Disclaimer: This page provides general Roth IRA conversion tax information for educational purposes. Individual situations vary significantly based on income, account types, existing IRA balances, state taxes, Medicare premiums, and other factors. It is not tax, legal, or financial advice. Consult a qualified tax professional or financial advisor before making Roth conversion decisions.