Is this a good option for you? A conversion has both advantages and disadvantages that should be carefully considered before you make a decision. This calculator estimates the change in total net-worth, at retirement, if you convert your traditional IRA into a Roth IRA. This calculator has been updated for the SECURE 2.0 of 2022, the SECURE Act of 2019 and CARES Act of 2020.
Owner's plan information: |
Investment return information: |
Beneficiary information: |
Withdrawal information: |
Income taxes: |
Value of Roth Conversion |
Roth Conversion Results KJE1 |
Roth vs. Traditional IRA Balances (Before Taxes) |
This calculator has been updated for 2023 to include 'SECURE 2.0', a follow-up to 'The SECURE Act of 2019'. SECURE 2.0 increases the age of Required Minimum Distribution (RMD) for account owners. Secure 2.0 did not change how the RMD is calculated; it only changed the age that they start. These rules took effect January 1st, 2023.
| Birthdate | Age* |
|---|---|
| Account owners born on or before 6/30/1949 | 70 1/2* |
| 7/1/1949 through 12/31/1950 | 72* |
| 1/1/1951 through 12/31/1959 | 73* |
| Account owners born on or after 1/1/1960 | 75* |
| *Age of account owner as of 12/31 of the distribution year. This RMD chart only applies to the original account owner or a spouse who chooses to treat their inherited account as their own. | |
The CARES Act of 2020 provided a temporary waiver of RMDs. The RMD waiver is for retirement plans and accounts for 2020. This includes direct contribution plans such as 401k, 403b, 457b plans and IRAs. RMDs were also waived for IRA owners who turned 70 1/2 in 2019 and were required to take an RMD by April 1, 2020.
If you have RMD questions, please consult with your own tax advisor regarding your specific situation. If you are under 75 and this RMD is from a 403(b) plan, you may not be required to take distributions on the balance in your account before 1987 until you reach age 75. You may need to contact a financial planner or CPA to determine if this exception applies to your RMD.
IMPORTANT! This calculator has been updated for the Secure 2.0 (2022), SECURE Act of 2019 and the CARES Act of 2020. Future IRS published procedures may have an impact on enforcement and interpretation of these Acts.
Check this box if your only beneficiary is your spouse. The IRS distribution rules use a uniform lifetime table to calculate all life expectancies for determining a minimum distribution. The only exception to this rule is if the only beneficiary is a spouse and he or she is more than 10 years younger than the account owner. In this situation, the joint life expectancy table is used. The joint life expectancy table normally produces lower required minimum distributions.
This is only required if your beneficiary is your spouse.
Beneficiary's name to appear on the printable report.
Annual after-tax amount to withdraw from IRA. For Roth IRA the after-tax amount is the same as the actual withdrawal. For the traditional IRA the after-tax amount will be calculated using the entered retirement tax rate. If the gross traditional IRA withdrawal (before tax) amount is less than any RMD for the year, the RMD will be used.
The planned annual withdrawals last through the owner's and the spouse's lifetime. We assume no planned withdrawals, other than the RMD, for any non-spouse beneficiary.
Age to begin the withdrawals. Default age will be the age of retirement, but any age greater than retirement age is acceptable. This allows for time to pass before any funds are withdrawn if other resources are available that can be drawn down first. If an age entered is less than 59 1/2, we assume a 10% penalty on the withdrawal.
Allows you to automatically increase the amount taken out each year, once withdrawals begin. This can help plan for potential cost of living increases.
This is the total amount of the Roth Conversion that will be taxed. This is the entire amount you are converting, unless you have made contributions to an IRA that did not qualify for a tax deduction. If you are not converting all of your IRA balances, the portion is not subject to tax is prorated for the amount that is being converted.
Check this box to use your IRA to pay your conversion tax bill. This assumes that when you convert your traditional IRA you keep enough of the proceeds, and pay any taxes or penalty on the amount, to pay any additional income taxes due to the Roth conversion. For the purposes of this analysis, we assume that you do not receive any interest on the withheld amount.
Check this box to calculate a possible penalty if you are paying your conversion tax bill from your IRA. There is a 10% penalty on distributions from a traditional IRA before you are 59 1/2. The penalty would apply to any amount you use to pay for income taxes on the conversion. There would also be a 10% penalty on any amounts that you use to pay the penalty. There is no penalty if you are over 59 1/2.
Choose your filing status. The ‘Filing Status’ table summarizes the five possible filing status choices. Your filing status determines the income levels for your Federal tax bracket. It is also important for calculating your standard deduction, personal exemptions, and deduction phase-out incomes. Your marital status as of the last day of the year determines your filing status.Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $22,000 | $0 - $11,000 | $0 - $15,700 | $0 - $11,000 |
| 12% | $22,000 - $89,450 | $11,000 - $44,725 | $15,700 - $59,850 | $11,000 - $44,725 |
| 22% | $89,450 - $190,750 | $44,725 - $95,375 | $59,850 - $95,350 | $44,725 - $95,375 |
| 24% | $190,750 - $364,200 | $95,375 - $182,100 | $95,350 - $182,100 | $95,375 - $182,100 |
| 32% | $364,200 - $462,500 | $182,100 - $231,250 | $182,100 - $231,250 | $182,100 - $231,250 |
| 35% | $462,500 - $693,750 | $231,250 - $578,125 | $231,250 - $578,125 | $231,250 - $346,875 |
| 37% | Over $693,750 | Over $578,125 | Over $578,125 | Over $346,875 |
| *Caution: Do not use these tax rate schedules to figure 2022 taxes. Use only to figure 2023 estimates. Source: Rev. Proc. 2022-45 | ||||
Expected marginal income tax rate at retirement.
Expected marginal tax rate for investments. This calculator assumes that you invest the amount that you would have had to pay in taxes in a taxable investment account. The investment tax rate is used for calculating the annual return on these taxable investments.