Roth IRA Conversion Calculator: Is Converting Worth It?

Is a Roth conversion worth it? The rate comparison decides

On the defaults — converting $50,000.00 at a 22% tax rate, expecting a 25% rate at withdrawal, 20 years to go, and 7% annual growth — the Roth value in 20 years is $193,484.22 (tax-free), the traditional value after 25% tax is $145,113.17, the tax owed now is $11,000.00, what that tax money would have become is $42,566.53, and the net advantage is $5,804.52 — converting wins. The whole decision is the rate comparison: if your future rate is higher than today’s rate, converting wins, and the dollar gap grows with time and growth; if your future rate is lower, staying traditional wins; if the rates are equal it is a tie.

Five things about the model are worth stating plainly. First, the growth factor is (1 + growth ÷ 100)^years — 1.07^20 = 3.8697. Second, the Roth value is the amount times the growth factor, tax-free — $50,000.00 × 3.8697 = $193,484.22. Third, the traditional value after tax is the same growth times (1 − future rate) — $193,484.22 × 75% = $145,113.17. Fourth, the tax money is not free — $11,000.00 paid today would have become $42,566.53 in 20 years, and that opportunity cost comes off the advantage. And fifth, the advantage is computed from the ROUNDED components, so the numbers on the page add up exactly — the unrounded formula gives $5,804.53, the page shows $5,804.52; all listed in Accuracy & limitations.

The worked example, line by line

Setup: convert $50,000.00, current rate 22%, future rate 25%, 20 years, 7% growth.

Line 1 — the growth factor. The growth factor is 1.07^20 = 3.8697.

Line 2 — the Roth value. The Roth value is $50,000.00 × 3.8697 = $193,484.22, tax-free.

Line 3 — the traditional value. The traditional value after 25% tax is $193,484.22 × 75% = $145,113.17.

Line 4 — the tax now. The tax owed now is $50,000.00 × 22% = $11,000.00.

Line 5 — what the tax money would have become. The tax money would have become $11,000.00 × 3.8697 = $42,566.53.

Line 6 — the net advantage. The net advantage is $193,484.22 − $145,113.17 − $42,566.53 = $5,804.52 — converting wins.

Every branch, checked

Convert $100,000.00: Convert $100,000.00 at 22% now and 25% later, 20 years at 7% growth: Roth $386,968.45, traditional after tax $290,226.33, tax now $22,000.00, tax money’s future value $85,133.06, net advantage $11,609.06 (converting wins) — Doubling the conversion doubles the advantage to $11,609.06 (the unrounded formula gives $11,609.05) — the gap scales with the amount.

Current rate 12% (a low-income year): Convert $50,000.00 at 12% now and 25% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $145,113.17, tax now $6,000.00, tax money’s future value $23,218.11, net advantage $25,152.94 (converting wins) — At a 12% current rate the tax is only $6,000.00, so the advantage jumps to $25,152.94 (the unrounded formula gives $25,152.95) — a low-income year is the time to convert.

Future rate 12% (lower than today): Convert $50,000.00 at 22% now and 12% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $170,266.12, tax now $11,000.00, tax money’s future value $42,566.53, net advantage -$19,348.43 (staying traditional wins by $19,348.43) — At a 12% future rate the traditional value rises to $170,266.12 and the advantage turns negative — staying traditional wins by $19,348.43.

10 years to withdrawal: Convert $50,000.00 at 22% now and 25% later, 10 years at 7% growth: Roth $98,357.57, traditional after tax $73,768.18, tax now $11,000.00, tax money’s future value $21,638.66, net advantage $2,950.73 (converting wins) — With only 10 years to go the advantage is $2,950.73 — time grows the gap, so a shorter horizon shrinks it.

Growth 5%: Convert $50,000.00 at 22% now and 25% later, 20 years at 5% growth: Roth $132,664.89, traditional after tax $99,498.66, tax now $11,000.00, tax money’s future value $29,186.27, net advantage $3,979.96 (converting wins) — At 5% growth the advantage is $3,979.96 (the unrounded formula gives $3,979.95) — slower growth means a smaller rate gap in dollars.

Future rate 32%: Convert $50,000.00 at 22% now and 32% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $131,569.27, tax now $11,000.00, tax money’s future value $42,566.53, net advantage $19,348.42 (converting wins) — At a 32% future rate the traditional value falls to $131,569.27 and the advantage is $19,348.42 — a higher future rate is the strongest case for converting.

Convert $25,000.00: Convert $25,000.00 at 22% now and 25% later, 20 years at 7% growth: Roth $96,742.11, traditional after tax $72,556.58, tax now $5,500.00, tax money’s future value $21,283.26, net advantage $2,902.27 (converting wins) — Halving the conversion to $25,000.00 halves the advantage to $2,902.27 (the unrounded formula gives $2,902.26) — the gap scales with the amount.

The reverses, worked backwards

Amount to convert so the tax now is exactly $10,000.00 (22% rate): $45,454.55 — the exact amount is 45454.5455. At the displayed $45,454.55 the Roth value is $175,894.77, the traditional value is $131,921.07, the tax is $10,000.00, the tax money would have become $38,696.85, and the net advantage is $5,276.85. $45,454.55 is the smallest cent amount whose unrounded tax reaches $10,000.00 (unrounded tax $10,000.001); $45,454.54 gives an unrounded $9,999.9988, which still rounds to $10,000.00. The star is DOLLARS.

Future rate where converting exactly ties staying traditional: 22.00% — the exact rate is 22.0000. At the displayed 22.00% the Roth value is $193,484.22, the traditional value is $150,917.69, the tax is $11,000.00, the tax money would have become $42,566.53, and the net advantage is $0.00 — a Tie. The tie is any future rate equal to today’s 22%. The star is PERCENT.

Years until the net advantage reaches $10,000.00: 29 years — at 29 years the Roth value is $355,712.85, the traditional value is $266,784.64, the tax money would have become $78,256.83, and the net advantage is $10,671.38; at 28 years the advantage is $9,973.26 — 28 years is not enough. The star is YEARS.

Growth rate for a Roth value of exactly $250,000.00 in 20 years: 8.38% — the exact growth rate is 8.3798%. At the displayed 8.38% the Roth value is $250,007.44 — $7.44 over the $250,000.00 target; at 8.37% the Roth value is $249,546.49 — $453.51 short. 8.38% is the first 0.01pp step that reaches the target. The star is PERCENT.

Amount to convert so the Roth value at 20 years is exactly $200,000.00 (7% growth): $51,683.80 — the exact amount is 51683.8006. At the displayed $51,683.80 the Roth value is $200,000.00, the traditional value is $150,000.00, the tax is $11,370.44, the tax money would have become $44,000.00, and the net advantage is $6,000.00. $51,683.81 is the smallest cent amount whose unrounded Roth value reaches $200,000.00 (unrounded at displayed $199,999.9978); $51,683.79 gives an unrounded $199,999.9591, which still rounds to $200,000.00. The star is DOLLARS.

Years until the traditional after-tax value reaches $150,000.00: 21 years — at 21 years the Roth value is $207,028.12, the traditional value is $155,271.09, the tax money would have become $45,546.19, and the net advantage is $6,210.84; at 20 years the traditional value is $145,113.17 — not enough. The star is YEARS.

What the defaults assume

The defaults are converting $50,000.00 at a 22% current rate and a 25% future rate, 20 years at 7% growth — Roth value $193,484.22, traditional value $145,113.17, tax now $11,000.00, tax money’s future value $42,566.53, net advantage $5,804.52. With a $100,000.00 conversion, Convert $100,000.00 at 22% now and 25% later, 20 years at 7% growth: Roth $386,968.45, traditional after tax $290,226.33, tax now $22,000.00, tax money’s future value $85,133.06, net advantage $11,609.06 (converting wins) — Doubling the conversion doubles the advantage to $11,609.06 (the unrounded formula gives $11,609.05) — the gap scales with the amount. With a 12% current rate, Convert $50,000.00 at 12% now and 25% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $145,113.17, tax now $6,000.00, tax money’s future value $23,218.11, net advantage $25,152.94 (converting wins) — At a 12% current rate the tax is only $6,000.00, so the advantage jumps to $25,152.94 (the unrounded formula gives $25,152.95) — a low-income year is the time to convert. With a 12% future rate, Convert $50,000.00 at 22% now and 12% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $170,266.12, tax now $11,000.00, tax money’s future value $42,566.53, net advantage -$19,348.43 (staying traditional wins by $19,348.43) — At a 12% future rate the traditional value rises to $170,266.12 and the advantage turns negative — staying traditional wins by $19,348.43. With 10 years to withdrawal, Convert $50,000.00 at 22% now and 25% later, 10 years at 7% growth: Roth $98,357.57, traditional after tax $73,768.18, tax now $11,000.00, tax money’s future value $21,638.66, net advantage $2,950.73 (converting wins) — With only 10 years to go the advantage is $2,950.73 — time grows the gap, so a shorter horizon shrinks it. With 5% growth, Convert $50,000.00 at 22% now and 25% later, 20 years at 5% growth: Roth $132,664.89, traditional after tax $99,498.66, tax now $11,000.00, tax money’s future value $29,186.27, net advantage $3,979.96 (converting wins) — At 5% growth the advantage is $3,979.96 (the unrounded formula gives $3,979.95) — slower growth means a smaller rate gap in dollars. With a 32% future rate, Convert $50,000.00 at 22% now and 32% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $131,569.27, tax now $11,000.00, tax money’s future value $42,566.53, net advantage $19,348.42 (converting wins) — At a 32% future rate the traditional value falls to $131,569.27 and the advantage is $19,348.42 — a higher future rate is the strongest case for converting. With a $25,000.00 conversion, Convert $25,000.00 at 22% now and 25% later, 20 years at 7% growth: Roth $96,742.11, traditional after tax $72,556.58, tax now $5,500.00, tax money’s future value $21,283.26, net advantage $2,902.27 (converting wins) — Halving the conversion to $25,000.00 halves the advantage to $2,902.27 (the unrounded formula gives $2,902.26) — the gap scales with the amount. With $0.00 converted, Convert $0.00 at 22% now and 25% later, 20 years at 7% growth: Roth $0.00, traditional after tax $0.00, tax now $0.00, tax money’s future value $0.00, net advantage $0.00 (Tie) — nothing converted, nothing gained. With equal rates of 22%, Convert $50,000.00 at 22% now and 22% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $150,917.69, tax now $11,000.00, tax money’s future value $42,566.53, net advantage $0.00 (Tie) — the rate gap is zero, so the advantage is zero. With 0 years to withdrawal, Convert $50,000.00 at 22% now and 25% later, 0 years at 7% growth: Roth $50,000.00, traditional after tax $37,500.00, tax now $11,000.00, tax money’s future value $11,000.00, net advantage $1,500.00 (converting wins) — the 3pp rate gap is worth $1,500.00 even today. With 0% growth, Convert $50,000.00 at 22% now and 25% later, 20 years at 0% growth: Roth $50,000.00, traditional after tax $37,500.00, tax now $11,000.00, tax money’s future value $11,000.00, net advantage $1,500.00 (converting wins) — the same $1,500.00, because the rate gap alone is worth 3% of $50,000.00. With a 37% current rate, Convert $50,000.00 at 37% now and 25% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $145,113.17, tax now $18,500.00, tax money’s future value $71,589.16, net advantage -$23,218.11 (staying traditional wins by $23,218.11) — paying the top rate today to dodge a 25% rate later loses $23,218.11. With a 37% future rate, Convert $50,000.00 at 22% now and 37% later, 20 years at 7% growth: Roth $193,484.22, traditional after tax $121,895.06, tax now $11,000.00, tax money’s future value $42,566.53, net advantage $29,022.63 (converting wins) — dodging a 37% rate later is worth $29,022.63. With a $1,000,000.00 conversion, Convert $1,000,000.00 at 22% now and 25% later, 20 years at 7% growth: Roth $3,869,684.46, traditional after tax $2,902,263.35, tax now $220,000.00, tax money’s future value $851,330.58, net advantage $116,090.53 (converting wins) — the advantage scales to $116,090.53.

Output · formula · meaning

Who uses this

• The worker in a low-income year: they learn a 12% current rate makes the advantage $25,152.94 — and they check the $45,454.55 reverse to see the conversion that costs exactly $10,000.00 in tax.
• The worker expecting a higher rate in retirement: they learn a 32% future rate makes the advantage $19,348.42 — and they check the 22.00% reverse to see the future rate where the two exactly tie.
• The worker with decades to go: they learn 29 years takes the advantage to $10,671.38 — and they check the 8.38% reverse to see the growth rate that makes the Roth worth exactly $250,000.00 in 20 years.
• The worker sizing the conversion: they learn $51,683.80 makes the Roth worth exactly $200,000.00 in 20 years — and they check the 21-year reverse to see when the traditional value reaches $150,000.00.

Accuracy & limitations

The math is first-principles: the growth factor is (1 + growth ÷ 100)^years, the Roth value is the amount times the growth factor, the traditional value after tax is the amount times the growth factor times (1 − future rate), the tax now is the amount times the current rate, what the tax money would have become is the tax now times the growth factor, and the net advantage is the Roth value minus the traditional value minus what the tax money would have become — each component rounded to cents half-up first, and the advantage computed from the ROUNDED components, so the numbers add up exactly (the unrounded formula can differ by $0.01). What the model cannot do is give tax advice: the tax is assumed paid from OUTSIDE savings — if you pay it from the conversion itself, the Roth starts smaller; the 5-year rule means converted money cannot be withdrawn penalty-free for five years if you are under 59½ conversions are IRREVERSIBLE since 2018 (no recharacterization); the tax is due in the year of the conversion, so a December conversion is a same-year tax bill; Roth IRAs have no required minimum distributions for the owner, which the traditional side ignores here; the model uses one flat rate today and one flat rate later, while real tax is bracketed and the conversion itself can push you into a higher bracket; and state tax, the 3.8% net investment income tax, and IRMAA surcharges are ignored. Use it to find the rate, amount, or horizon where the advantage flips — then check with a tax professional before converting. This is not tax advice.

Frequently asked questions