Compare traditional IRA vs Roth conversion outcomes. See tax implications, future tax-free growth, and long-term benefits of converting.
Amount you're considering converting
Your marginal tax bracket this year
Your expected tax bracket in retirement
Average market return before retirement
Your state income tax rate (if applicable)
Best to pay from outside funds to maximize Roth growth
Start your Roth conversion with a top-rated brokerage.
Compare IRA Providers →| Year | Age | Traditional IRA | Roth IRA | Difference |
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A Roth conversion is when you move money from a Traditional IRA or 401(k) to a Roth IRA. You pay income taxes on the converted amount now, but all future growth and withdrawals are completely tax-free.
You have money in a Traditional IRA (pre-tax)
You convert it to a Roth IRA and pay taxes now
Money grows tax-free for decades
Withdrawals in retirement are 100% tax-free
Convert when you're in a lower tax bracket than you expect in retirement.
Convert when account values are lower - pay less tax on the same number of shares.
Roth IRAs have no Required Minimum Distributions during your lifetime.
Leave tax-free money to heirs - they won't owe income tax on withdrawals.
Having both pre-tax and Roth accounts gives you flexibility in retirement.
If you expect future tax rates to be higher, convert now.
Age 35, $50,000 in Traditional IRA, current tax rate 24%, expects 22% in retirement
Conversion may not make sense - tax rate slightly higher now
Took a year off work, income is low (12% bracket), $100,000 IRA balance
Excellent time to convert - pay only 12% vs expected 24% later
Age 50, $500,000 IRA, current rate 35%, expects 32% in retirement
Probably not worth it - tax rate higher now, consider partial conversions
IRA dropped from $200,000 to $120,000, convert now and pay tax on lower amount
Smart move - market recovery happens inside Roth, tax-free!
You pay ordinary income tax on the amount converted, at your current marginal tax rate. For example, converting $50,000 at 24% tax bracket means $12,000 in taxes. State income tax may also apply.
Yes! You can convert any amount, any time. Many people do "partial conversions" over several years to manage their tax brackets. For example, convert just enough each year to stay within the 24% bracket.
Yes - converted funds must stay in the Roth IRA for 5 years or until age 59½, whichever is longer, to avoid penalties on withdrawals. However, the 5-year clock starts January 1 of the year you convert.
Always pay from outside funds if possible! If you pay taxes from the IRA, that money doesn't go into the Roth and loses years of tax-free growth. Paying from outside keeps your full balance working for you.
Roth conversion is moving existing pre-tax money to Roth. Backdoor Roth is a strategy for high earners to contribute to Roth IRA by making non-deductible Traditional IRA contributions then converting. Both use the same process but different source funds.
Between jobs, sabbaticals, or early retirement years are perfect opportunities
Convert up to the top of your current bracket, don't jump to the next bracket
Plan conversions at least 5 years before you need the money
Keep your IRA fully invested - use separate savings for tax payments
If you might move to a no-tax state, wait until after you move