Roth Conversion Calculator

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Roth Conversion Calculator

The Roth IRA has provided individuals with an enticing incentive to save for retirement. Contributions are made after tax, and all gains can be distributed tax-free! Moreover, people can transfer any part of their Traditional IRAs into this new type of IRA. The advantages of a Roth IRA make it clear why so many choose to convert.

IRA owners and members in qualified employer-sponsored programs can now convert their Traditional IRA funds and pre-tax contributions to a 401a, 401k, 403b, or governmental 457b plan into a Roth IRA. This incredible opportunity provides more flexibility when it comes to retirement planning!

With this calculator, you can swiftly measure the difference in total net worth by converting your Traditional IRA to a Roth IRA without worrying about the out-of-pocket costs. So utilize it now, and get ready for a secure retirement!

Roth Ira Conversion Tax Calculator

Who Is A Good Candidate For A Roth Conversion?

A Roth conversion may be a good option for individuals who meet the following criteria:

  • Expect to be in a higher tax bracket in retirement than in the current year.
  • Have enough money outside retirement accounts to pay the tax bill from the conversion.
  • Seek tax-free withdrawals in retirement.
  • Desire greater flexibility with their retirement funds.
  • Have a long-term investment horizon.
Roth Ira Conversion Calculator

When Should You Do A Roth Conversion?

A Roth conversion may be a good option when:

  • Your tax bracket is lower in the year of conversion.
  • You have adequate funds outside retirement accounts to pay the tax liability from the conversion.
  • You anticipate that your tax bracket will be higher in the future.
  • You want tax-free withdrawals in retirement.
  • You want greater flexibility with your retirement funds.
401K To Roth Ira Conversion Calculator

How Do I Avoid Taxes On A Roth IRA Conversion?

It is impossible to avoid taxes on a Roth IRA conversion as the amount converted is considered taxable income in the year of the conversion. The taxes are due when the conversion is made and must be paid through estimated tax payments or with your income tax return for that year. The only way to avoid paying taxes on the converted amount is to wait until the funds have met the 5-year holding period and you are 59 1/2 years old to make tax-free withdrawals.

With that said, utilizing a fixed indexed annuity with a premium bonus (up to 20%) could help offset the money going to taxes.

Roth Conversion Tax Calculator

Next Steps

When deciding whether to convert your traditional IRA into a Roth IRA, there are pros and cons to consider. Our free online Roth IRA conversion calculator can help you estimate the taxes you’ll owe if you decide to go ahead with the conversion. On the other hand, converting your retirement plan into a Roth IRA annuity could offer protection from market losses and guaranteed income for the rest of your life. Still, it’s essential to weigh all your options before making a decision.

If you have any questions about converting your traditional IRA into a Roth IRA, our experts would be happy to help. Contact us today for a quote.

Roth Conversion Calculator

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Roth Conversion Calculator FAQ

How much tax do you pay on a Roth IRA conversion?

You pay income tax on the converted amount in a Roth IRA conversion.

How much are the taxes on a $50,000 Roth conversion?

The taxes on a $50,000 Roth conversion depend on your tax bracket.

Do you pay taxes twice on a Roth conversion?

No, you pay taxes only once on a Roth conversion.

Do you pay capital gains on a Roth conversion?

No, capital gains are not taxed in a Roth conversion.

Do you have to pay taxes immediately on Roth conversion?

Yes, taxes are due on the amount converted in the year the Roth conversion is made. The taxes are reported on your individual income tax return for that year and must be paid with the return or through estimated tax payments. Failure to pay the taxes owed from a Roth conversion can result in penalties and interest.

What is the 5-year rule for Roth conversions?

The 5-year rule for Roth conversions states that Roth conversion contributions must stay in the account for at least five years to be eligible for tax-free withdrawals.

How many years can you spread out a Roth conversion?

One year.

Does a Roth conversion affect my Social Security?

A Roth conversion may affect your Social Security benefits if your modified adjusted gross income (MAGI) exceeds certain thresholds.

How much can I convert to a Roth IRA in 2023?

In 2023, you can convert an unlimited amount from your traditional IRA or other qualified retirement plans to a Roth IRA.

How many times can you do a Roth conversion in a year?

You can do multiple Roth conversions in a year. There is no limit.

Can Roth conversion increase the tax bracket?

Absolutely. Converting a substantial amount to a Roth IRA can spike up your taxable income and result in you being pushed into the higher tax bracket for that particular year, which could mean significantly more taxes due at the end of it all.

What is a Backdoor Roth Ira calculator?

A backdoor Roth IRA calculator is a tool that helps individuals determine their eligibility and contributions for a backdoor Roth IRA conversion. It takes into account factors like income, IRA contributions, and tax deductions to provide accurate calculations. By using a backdoor Roth IRA calculator, individuals can make informed decisions regarding their retirement savings strategies.

Is backdoor Roth still allowed in 2024?

Annually, you can make a Backdoor Roth IRA Contribution and perform a Backdoor Roth Conversion. In 2024, the contribution limit is $7,000 ($8,000 if 50+ years old).

What is a 401k to Roth IRA conversion calculator?

A 401k to Roth IRA conversion calculator is a helpful tool to estimate the tax implications of converting your retirement funds. It calculates the taxable amount, and potential penalties, and compares the long-term benefits of a conversion. Use this calculator before making any decisions to ensure you make an informed choice.

What are the Roth conversion rules?

Roth conversion rules refer to the specific regulations governing the conversion of a traditional Individual Retirement Account (IRA) into a Roth IRA. These rules dictate factors such as tax implications, eligibility criteria, and contribution limits. It is essential to understand and comply with the Roth conversion rules to make informed decisions regarding retirement savings.

How can a Roth conversion calculator with RMD help?

A Roth conversion calculator with RMD, or Required Minimum Distribution, is a tool that helps individuals determine the tax consequences of converting a traditional IRA or 401(k) into a Roth IRA. This calculator takes into account factors such as age, income, and expected future tax rates to estimate the potential benefits of a Roth conversion.

What is a traditional IRA to Roth conversion calculator?

A traditional IRA to Roth conversion calculator is a useful tool that helps individuals determine the tax implications of transferring funds from a traditional IRA to a Roth IRA. By inputting key financial information, such as current and expected future tax rates, the calculator provides an estimate of the potential tax liability or savings that may result from the conversion.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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