Should you convert your Traditional IRA to Roth? The answer could save — or cost — you six figures.
A Roth IRA conversion lets you move money from a tax-deferred Traditional IRA or old 401(k) into a Roth IRA. You pay income tax on the converted amount today — but every dollar of growth and every future withdrawal is completely tax-free.
The key question is timing: if your current tax rate is lower than your expected rate in retirement, converting now locks in a bargain. With the 2025 federal brackets (22% up to $103,350 for single filers), many mid-career professionals are in a sweet spot for conversion — especially during career breaks, sabbaticals, or early retirement before Social Security kicks in.
Our calculator compares both paths — keeping funds in a Traditional account vs. converting to Roth — and shows you the break-even year, total tax cost, and net advantage at retirement. Enter your numbers below for a personalised verdict.
A Roth conversion moves money from a Traditional IRA or 401(k) to a Roth IRA. You pay income tax on the converted amount today, but all future growth and withdrawals are tax-free. It's especially valuable when you expect higher tax rates in retirement or want to eliminate Required Minimum Distributions (RMDs).
A Roth conversion typically makes sense when: (1) your current tax rate is lower than your expected retirement rate, (2) you have many years until retirement for tax-free growth, (3) you want to avoid RMDs, or (4) you expect tax rates to increase. People in career transitions, early retirees before Social Security starts, or anyone in a temporarily low-income year are ideal candidates.
The converted amount is added to your ordinary income for the year. For example, converting $50,000 while earning $80,000 means you'd be taxed on $130,000 total income. The additional tax depends on your marginal bracket. In 2025, the 22% bracket covers income from $48,476 to $103,350 (single filers).
Yes, but only if you've left the employer or their plan allows in-service distributions. Most people roll their 401(k) to a Traditional IRA first, then convert to Roth. Some plans offer a Roth 401(k) in-plan conversion option. Check with your plan administrator.
No — unlike Roth IRA contributions, there is no income limit or dollar limit on Roth conversions. You can convert any amount. However, large conversions may push you into higher tax brackets, so many people use a "staged conversion" strategy over multiple years.
Each Roth conversion has its own 5-year clock. If you withdraw the converted amount before 5 years (and before age 59½), you'll owe a 10% early withdrawal penalty on that amount (though not the earnings). After 5 years or age 59½, the converted amount is fully accessible penalty-free.