Question 1

What is a Roth conversion?

Accepted Answer

A Roth conversion is the act of moving money from a pre-tax retirement account — a traditional IRA, SEP-IRA, SIMPLE IRA, or eligible 401(k) — into a Roth IRA. The amount you convert is included in your gross income for the year of the conversion and taxed at your ordinary-income rate. The upside is that the money inside the Roth IRA then grows tax-free: qualified distributions (age 59½ or older, and the account is at least five years old) come out without any federal income tax. Per Ed Slott (IRA Help), *Slott Report* (irahelp.com): 'Converted dollars are always available tax-free, regardless of age, because as you said, you already paid the taxes due on those dollars when you did the conversion.' The strategic logic is straightforward: you pay tax now, at a rate you can see and plan around, rather than paying an unknown future rate on a much larger balance. Conversions can be done in any amount — there is no annual limit — which gives you full control over how much ordinary income you recognize in a given tax year. You do not have to convert an entire account at once. This calculator lets you model partial conversions to test whether a specific dollar amount keeps you inside a target bracket. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 2

How is the conversion tax calculated?

Accepted Answer

Under IRC §408A(d)(3)(A)(i), the converted amount is includible in gross income in the year of conversion, subject to a limited exception for after-tax (basis) amounts in the account. If your traditional IRA is funded entirely with pre-tax dollars — which is true for most deductible contributions — then 100% of the converted amount is taxable. If you made non-deductible contributions (tracked on IRS Form 8606), the taxable fraction is reduced proportionally under the pro-rata rule (IRC §408(d)(2)), which is what the Backdoor Roth Pro-Rata Calculator handles. Once the taxable amount is determined, it stacks on top of all your other ordinary income for the year. The 2026 federal tax brackets (as adjusted by OBBBA provisions under IRC §1) apply to the combined amount. This means the first dollars of the conversion may land in your existing marginal bracket while later dollars 'spill over' into the next bracket — a situation the full calculator will visualize with a bracket-fill chart. The marginal rate on the last dollar of the conversion is the critical number for decision-making, not the average rate across the full conversion. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 3

What are the 2026 federal tax brackets under OBBBA?

Accepted Answer

The One Big Beautiful Bill Act (OBBBA) locked in the TCJA bracket structure through 2033 rather than allowing the 2017 rates to sunset in 2026. As a result, the 2026 brackets for ordinary income remain at the TCJA rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The specific dollar thresholds adjust annually for inflation via the Chained CPI mechanism under IRC §1(f)(3). For 2026, the Joint Committee on Taxation published updated breakpoints: for single filers, the 22% bracket begins at approximately $47,150; the 24% bracket at approximately $100,525; the 32% bracket at approximately $191,950; the 35% bracket at approximately $243,725; and the 37% bracket at approximately $609,350. Married-filing-jointly thresholds are roughly double through the 35% range. These figures are the ones this calculator uses internally and will update annually as IRS Rev. Proc. cost-of-living adjustments are published. Without OBBBA, the top rate would have reverted to 39.6% in 2026 and the 28% bracket would have re-appeared — the legislation eliminates that risk for planning purposes through 2033. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 4

Can a Roth conversion push me into a higher tax bracket?

Accepted Answer

Yes, and this is one of the central questions this calculator is designed to answer. Because the converted amount is treated as ordinary income, it is literally added to your existing taxable income before applying the bracket schedule. If your wages, self-employment income, Social Security benefits, and investment income already fill most of a bracket, even a modest conversion can push some dollars into the next bracket. The full calculator will show a 'bracket-fill' visualization: your existing income fills the bracket from the left, and the conversion fills from there rightward. The dollars that spill into the next bracket face the higher rate — only those dollars, not the entire conversion amount. A common planning approach is to identify the remaining 'room' in your current bracket and convert only up to that threshold each year. This multi-year ladder strategy was widely discussed by Michael Kitces on kitces.com in the context of IRMAA-aware Roth conversions: filling brackets in lower-income years (early retirement, before Social Security and RMDs begin) can dramatically reduce lifetime tax cost. The calculator will also flag when a conversion is large enough to trigger the 3.8% Net Investment Income Tax (NIIT) on investment income that coincides with the conversion year. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 5

What about state income tax on a Roth conversion?

Accepted Answer

Most states that have an income tax conform to the federal treatment of Roth conversions — the converted amount is taxable state income in the year of conversion. However, there are significant exceptions that can change the math materially. California conforms to federal treatment but applies its own rate schedule (up to 13.3%), so a large conversion in a high-income year can be costly in CA even if the federal rate is manageable. Pennsylvania and New Jersey are notable non-conformity states: PA does not tax retirement income from qualified plans, and NJ excludes certain IRA distributions from income for taxpayers above a certain age — these states may treat the conversion very differently from the federal rule. Illinois, on the other hand, exempts retirement income including IRA distributions from its flat 4.95% income tax, which can make Illinois a favorable state for retirees doing large conversions. Tennessee and Florida have no income tax, which eliminates state-level conversion cost entirely. The full calculator will include a state-selector field so you can model the combined federal + state marginal rate on any conversion. Always confirm current-year state rules with a licensed CPA or EA in your state, as conformity rules change. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 6

How does IRMAA Medicare interact with a Roth conversion?

Accepted Answer

IRMAA — the Income-Related Monthly Adjustment Amount — adds a surcharge to Medicare Part B and Part D premiums for beneficiaries whose modified adjusted gross income (MAGI) exceeds certain thresholds. The critical detail for Roth conversion planning is that IRMAA uses a two-year lookback: your 2026 premiums are based on your 2024 MAGI, your 2027 premiums are based on your 2025 MAGI, and so on. A large Roth conversion in 2025 will not affect your 2025 Medicare premiums — it will affect your 2027 premiums. For 2026, the Tier 1 IRMAA threshold is $106,000 for single filers ($212,000 MFJ), rising through five tiers to the top surcharge at $500,000+ single ($750,000+ MFJ). The annual Part B surcharge at Tier 1 is approximately $838 for single filers on top of the standard premium; at the highest tier it is approximately $4,884 annually per person. Michael Kitces has written extensively on kitces.com about sizing Roth conversions to stay just below IRMAA thresholds — or deliberately crossing a threshold only when the long-term Roth benefit is large enough to justify the surcharge cost in the lookback year. The IRMAA Lookback Planner on this site is purpose-built to model this exact calculation. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 7

What is the 5-year rule for Roth conversions — and how is it different from the 5-year rule for Roth contributions?

Accepted Answer

There are actually two distinct 5-year clocks in the Roth IRA rules, and conflating them is one of the most common planning errors. The first clock governs earnings: the entire Roth IRA account must be at least 5 years old (measured from January 1 of the first tax year for which any Roth IRA contribution was made) before any earnings come out tax-free as a qualified distribution, even after age 59½. This is a single account-level clock — once any Roth IRA you own satisfies it, all your Roth IRAs benefit. The second clock governs converted principal: each Roth conversion creates its own 5-year holding period for the converted amount. If you withdraw converted principal within 5 years of that conversion and you are under age 59½, you owe a 10% early withdrawal penalty on the converted amount (but not ordinary income tax, since the conversion itself was already taxed). After age 59½, the 5-year conversion clock does not matter for penalty purposes — you can take converted principal out immediately without penalty. Per Ed Slott (IRA Help), *5 Steps for Tax-Free Roth IRA Distributions* (irahelp.com): the two-gate rule requires both qualifying age/disability/death and the 5-year account clock to be satisfied for earnings to come out tax-free. The conversion clock is a separate, penalty-only safeguard. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

Question 8

When should I convert versus defer?

Accepted Answer

The conversion-versus-defer decision comes down to one core comparison: your current marginal tax rate on the converted amount versus your expected future marginal rate when you would otherwise take distributions. If you expect to be in a higher bracket in retirement — because of large RMDs, Social Security income, or continued investment income — converting now at today's lower rate makes sense. If you expect to be in a lower bracket in retirement, deferring is mathematically superior. Several situational factors tip the analysis toward converting: (1) you are in a lower-income year than usual (early retirement, a gap year, a business loss year); (2) the OBBBA-locked bracket structure gives you high visibility through 2033; (3) your Roth account has long enough to compound before you need distributions; (4) you can pay the conversion tax from taxable funds outside the IRA, so the full converted amount stays invested. Per Ed Slott (IRA Help), *Slott Report* (irahelp.com): 'Converted dollars are always available tax-free, regardless of age, because as you said, you already paid the taxes due on those dollars when you did the conversion.' Michael Kitces, writing on kitces.com about IRMAA-aware Roth conversion strategies, frames the optimal window as the years between retirement and age 73 (when RMDs must begin under SECURE 2.0) — filling lower brackets before Social Security + RMD income stacks on top. This calculator lets you run that comparison directly. Consult a licensed CPA, Enrolled Agent, or financial planner before executing any IRA conversion. This is an estimator, not tax advice.

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