Roth Conversion Calculator: When Converting Makes Sense in 2026

What Is a Roth Conversion?

A Roth conversion is the process of moving money from a Traditional IRA, SEP IRA, SIMPLE IRA, or pre-tax 401(k) into a Roth IRA. You pay ordinary income tax on the converted amount in the current tax year. In exchange, the money grows tax-free and qualified withdrawals in retirement are completely tax-free.

According to IRS Revenue Procedure 2025-40, the 2026 Traditional IRA contribution limit is $7,000 ($8,000 if age 50+). But there is no dollar cap on Roth conversions — you can convert any amount, at any time, from any pre-tax IRA.

Traditional IRA vs. Roth IRA: Tax Treatment Comparison

5 Situations Where a Roth Conversion Makes Sense

1. You're in a Temporarily Low Tax Bracket

If you took a sabbatical, changed jobs, or retired early before claiming Social Security, your taxable income may be unusually low. Converting in a low-income year means paying tax at 12% or 22% instead of 32% or 35% later. Fidelity's 2025 Retirement Research found that retirees who converted during the “income gap” years between retirement and Social Security age saved an average of $47,000 in lifetime taxes.

2. You Expect Higher Tax Rates in Retirement

If your Traditional IRA is large, RMDs could force significant taxable income in your 70s — potentially pushing you into a higher bracket than you're in today. The Tax Foundation's 2025 analysis of long-run federal fiscal gaps projects upward pressure on tax rates over the next 30 years, making pre-paying taxes at today's rates an attractive hedge.

3. You Have a Large IRA Subject to RMDs

SECURE 2.0 raised the RMD starting age to 73 (and 75 for those born after 1960). But a $2 million Traditional IRA at age 73 requires roughly $75,000 in RMDs annually — a mandatory taxable event you can't avoid. Partial conversions in your 60s reduce the IRA balance and lower future RMDs. According to the Congressional Budget Office's 2025 tax expenditure report, traditional IRA and 401(k) tax deferrals represent the second-largest federal tax expenditure at $185 billion annually — eventually, that tax is collected through RMDs or withdrawals.

4. You Want to Leave Tax-Free Wealth to Heirs

The SECURE Act eliminated the “stretch IRA” for most non-spouse beneficiaries, requiring them to empty inherited IRAs within 10 years. If your heirs are in their peak earning years, they'll pay top marginal rates on those withdrawals. A Roth IRA passes to heirs tax-free, making it a powerful estate-planning tool.

5. You Can Pay the Tax Bill From Outside the IRA

Conversions are most efficient when you pay the resulting tax bill from non-IRA funds (a taxable brokerage account or savings). Paying from the IRA itself reduces the principal that will compound tax-free — and if you're under 59.5, using IRA funds to pay the tax effectively creates an additional 10% penalty on that portion.

Break-Even Analysis: When Does the Conversion Pay Off?

The core question is: how many years does it take to recoup the upfront tax cost through tax-free growth? Vanguard's 2025 Retirement Outlook white paper estimates break-even for most conversions at 8–15 years, depending on tax rate differential and investment returns.

Example: $100,000 Conversion at Age 60

Assumptions: 7% annual growth, tax paid from outside the IRA, 20-year horizon. The break-even shortens when growth rates are higher and lengthens when they are lower. Use our Roth Conversion Calculator to model your specific numbers.

The Partial Conversion (Ladder) Strategy

Rather than converting everything at once — and potentially jumping into a higher bracket — most advisors recommend converting just enough each year to fill a lower bracket.

How Bracket-Filling Works in 2026

The 2026 federal income tax brackets (per IRS Rev. Proc. 2025-40) for a married filing jointly couple:

• 10%: $0 – $23,850
• 12%: $23,851 – $96,950
• 22%: $96,951 – $206,700
• 24%: $206,701 – $394,600

If your other income (Social Security, dividends, part-time work) totals $60,000, you have $36,950 of remaining “room” in the 12% bracket. Converting up to $36,950 from your Traditional IRA means paying only 12% federal tax on that amount. Do this for 10 years and you can shift $370,000+ into Roth at a 12% rate.

The Pro-Rata Rule: A Critical Trap

Many people try to execute a “backdoor Roth” — contributing after-tax dollars to a Traditional IRA and immediately converting — to get around Roth income limits. This works cleanly only if you have no other pre-tax IRA balances.

The IRS pro-rata rule aggregates all your Traditional, SEP, and SIMPLE IRA balances. If you have $90,000 in pre-tax IRA funds and $10,000 in after-tax contributions, exactly 10% of any conversion is tax-free — you cannot selectively convert only the after-tax dollars.

One workaround: if your employer plan (401k, 403b) accepts incoming rollovers, you can roll your pre-tax IRA into the employer plan, leaving only after-tax IRA dollars behind — allowing a clean backdoor Roth conversion.

The 5-Year Rule for Roth Conversions

There are actually two separate 5-year rules for Roth IRAs. The first governs tax-free earnings (your Roth must be at least 5 years old). The second governs converted principal without penalty.

Each Roth conversion carries its own 5-year holding period for the converted principal. If you are under age 59.5 and withdraw converted principal within 5 years of that specific conversion, you owe a 10% early withdrawal penalty.

This matters most for the Roth conversion ladder — a strategy where early retirees convert each year and then tap those funds 5 years later, penalty-free. You need to plan 5 years ahead. Our guide on Roth IRA rules and strategy covers this in more detail.

SECURE 2.0 Changes That Affect Conversion Decisions

The SECURE 2.0 Act (signed December 2022) made several changes that alter the Roth conversion calculus:

• RMD age raised to 73 (further rising to 75 for those born after 1960). This extends the “conversion window” before RMDs begin.
• Roth 401(k) accounts no longer subject to RMDs (starting 2024). If you have a Roth 401(k), you no longer need to roll it to a Roth IRA to avoid RMDs.
• 529-to-Roth rollovers now allowed (subject to limits) starting 2024 — unused 529 education funds can roll into a Roth IRA for the beneficiary.

For a deeper look at contribution limits and IRA mechanics, see our IRA Contribution Calculator Guide and our guide to 401(k) contribution limits for 2026.

Key Statistics: The Case for Roth Accounts

• $12.5 trillion held in traditional IRAs nationwide as of Q4 2025 (Investment Company Institute, 2025 IRA database) — most of it pre-tax and subject to future taxation.
• Only 20% of IRA assets are held in Roth IRAs, despite Roth accounts having been available since 1997 (ICI, 2025).
• 47% of retirees end up in a higher tax bracket in their 70s than they expected, largely due to RMDs combined with Social Security income (Fidelity Retirement Research, 2025).
• $185 billion in annual federal tax expenditures on defined contribution and IRA tax deferrals (CBO Tax Expenditure Report, 2025) — political pressure to reduce this figure could lead to higher future rates on Traditional IRA withdrawals.
• 73 is the current RMD starting age under SECURE 2.0 (IRS Rev. Proc. 2025-40), giving most pre-retirees more conversion runway than the previous age-72 rule.

When a Roth Conversion Does NOT Make Sense

Conversions are not always the right move. Avoid converting if:

• Your current marginal rate is higher than your expected retirement rate.
• You need the IRA funds soon (within 5 years) and would face penalties or a depleted account.
• The conversion would push you into a Medicare IRMAA surcharge bracket, significantly increasing your Part B and Part D premiums.
• You live in a high-income-tax state that taxes IRA conversions and plan to move to a no-income-tax state before retirement.
• You are in your 80s with limited life expectancy — the break-even horizon may never arrive.

Frequently Asked Questions

What is a Roth IRA conversion?

A Roth conversion moves money from a Traditional IRA (or 401k) into a Roth IRA. You pay ordinary income tax on the converted amount in the year of conversion. After that, the money grows tax-free and qualified withdrawals in retirement are entirely tax-free.

When does a Roth conversion make financial sense?

A Roth conversion makes sense when your current marginal tax rate is lower than your expected rate in retirement. It is also smart when you have a large Traditional IRA subject to future Required Minimum Distributions, or when tax law changes may raise rates broadly.

What is the 5-year rule for Roth conversions?

Each Roth conversion starts its own 5-year clock. If you withdraw converted principal before 5 years have elapsed (and before age 59.5), you owe a 10% penalty on that amount. The clock resets with every new conversion, so a Roth conversion ladder requires careful timing.

What is the pro-rata rule for Roth conversions?

The pro-rata rule prevents you from cherry-picking only after-tax IRA dollars when converting. The IRS treats all your Traditional IRA balances as one pool. If 90% is pre-tax and 10% is after-tax, then 90% of any conversion is taxable regardless of which account the funds come from.

How do Required Minimum Distributions affect Roth conversion decisions?

SECURE 2.0 raised the RMD starting age to 73. A large Traditional IRA can force large taxable RMDs that push you into a higher bracket and increase Medicare IRMAA surcharges. Converting before RMDs begin reduces the IRA balance, lowering future mandatory distributions.

Can I undo a Roth conversion?

No. The Tax Cuts and Jobs Act of 2017 eliminated recharacterization of Roth conversions. Once you convert, the tax bill is permanent. This makes it critical to calculate the tax impact carefully before converting, especially in high-income years.