Analyze Roth IRA conversion scenarios with tax impact, break-even year, and projected after-tax wealth comparison charts.
Converting a traditional IRA to a Roth IRA means paying income tax on the converted amount this year, in exchange for tax-free growth and tax-free withdrawals later. This calculator applies your marginal tax rate to the amount you convert, shows the cash due in the conversion year, then projects after-tax wealth for the convert-now and keep-it paths year by year until the Roth overtakes - if it does. The figure most people misread is the tax bill: it is due now, in cash, and if it is withheld from the converted amount, less money compounds, and the break-even slides out or never arrives. The calculation runs entirely in your browser; nothing you enter leaves the page.
A concrete input and expected output from the current implementation.
Input
Convert $100,000 from a traditional IRA to a Roth IRA. Marginal tax rate: 22%. Annual growth: 7%. Horizon: 20 years. Assumed future withdrawal rate: 22%. Tax paid from savings outside the IRA.
Expected output
Tax due this year: $22,000 (100,000 x 22%). Year-20 after-tax wealth: converted path $386,968 (100,000 x 1.07^20, tax-free) versus $301,835 if it stays in the traditional IRA (386,968 x 78%). The converted path is ahead by $85,133. Break-even year: 1.
With the tax paid from outside the IRA and the same 22% assumed on conversion and withdrawal, the converted path is worth 1 / 0.78 = 1.28 times the traditional path's after-tax value in every year, so it leads from year one. The break-even lands later only when tax is withheld from the conversion or the assumed future rate is lower.
The converted balance is added to your ordinary income for the conversion year, so the tool applies the marginal rate you enter - or computes bracket by bracket if the conversion straddles brackets. You also choose whether the tax is paid from outside savings or withheld from the conversion; withholding shrinks the Roth's starting balance, and the difference compounds across the whole projection.
Both paths grow at the growth rate you enter; the traditional side is reduced by the future withdrawal rate you assume when money is withdrawn, while the Roth side is not. The tool walks year by year to the horizon you set and marks the first year the converted path's after-tax wealth passes the traditional path's. Depending on the rates you enter, that year can be early, far out, or never.
Because the future rate you enter may not match reality: required distributions, taxable Social Security, and a surviving spouse filing singly can push effective rates above working years, and the conversion year may be a one-off low-income year. The calculator applies the numbers you give it, so enter your best estimate, then test a higher future rate and watch the break-even move.
From outside cash, if you can. Amounts withheld from the conversion never reach the Roth and never compound; the calculator makes the difference visible when you pick the funding source, and the break-even stretches out or disappears under withholding. Just make sure the cash is not your emergency fund.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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