Roth Conversion Analyzer

A Roth conversion moves money from a pre-tax retirement account, such as a Traditional IRA, into a Roth account. You pay income tax on the amount converted now, in exchange for tax-free growth and tax-free withdrawals later, provided the rules are met. The core bet is that paying tax today, at a rate you know, will beat paying an unknown rate on a larger balance in the future.

It tends to favour people who expect to be in a higher tax bracket later, or who have a low-income year - such as early retirement before pensions begin - when the conversion can be taxed at a lower rate. It is less attractive if converting pushes you into a much higher bracket now or if you will need the money soon. The decision hinges on comparing your tax rate today with your likely rate in the future.

Ideally you pay the resulting tax bill from money outside the retirement account, so the full converted amount stays invested and keeps compounding tax-free. Using the retirement funds themselves to pay the tax shrinks the balance and can trigger penalties if you are under the qualifying age. Having outside cash to cover the tax is often what makes a conversion worthwhile.

No. This is an educational tool that compares outcomes based on the tax rates and figures you enter; conversions interact with many rules that vary by country and change over time. A conversion can have knock-on effects on other taxes and benefits. Model it here to build intuition, then consult a qualified tax professional before acting.