Just updated for 2023: Use this Roth Conversion Calculator to understand the tax implications of doing a Roth conversion in 2023. Compare estimated taxes when you do nothing, convert up to a specific threshold, or convert a custom amount. (To assess Roth conversions on your long-term wealth, use the NewRetirement Planner.)
What is a Roth conversion?
A Roth conversion is when you take money from a traditional retirement savings account and convert it to a Roth account.
Want to learn more about Roth conversions? Check out this FAQ.
How does this 2023 Roth conversion calculator work?
This Roth conversion calculator is designed to help you determine how much of your pre-tax savings you should consider converting to a Roth account this year based on taxes.
It shows you all of the tax implications for different conversion strategies.
NOTE: If you want to assess a multi-year holistic Roth conversion strategy and assess the projected lifetime tax savings of your conversions, we recommend signing up for the NewRetirement Planner. The Planner is a comprehensive financial planning tool that puts financial wellness into your own hands, enabling you to make better decisions and achieve better outcomes.
Sign up now…
Starting Your Roth Conversion Calculation
To get started with this Roth conversion calculator, you will enter your:
Age We ask age to determine if IRMAA or Social Security will be a factor to consider in your conversions. NOTE: If you are married, this tool assumes that your spouse is the same age as you.
2023 tax filing status: Your filing status is important in a Roth conversion calculation because it impacts how much you will pay. Filing status determines the standard deduction and your correct tax.
This tool only uses the most popular filing statuses: Single (if you are filing only for yourself) or Married Filing Jointly (if you are married and filing with your spouse on one return).
2023 adjusted gross income: According to the IRS, Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income.
Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account. Your AGI will never be more than your Gross Total Income on your return and in some cases may be lower.
Next, Set Up Possible Conversions Based on Different Criteria
This Roth conversion calculator gives you a grid that enables you to compare conversion strategies.
You can compare: 1) Not doing conversions (or just what you have already converted), 2) Converting an amount based on a tax bracket, 3) If you are over 63, you can explore converting based on IRMAA thresholds and/or 4) Converting a specific dollar amount
No additional conversions this year
The first column shows your tax situation if you don’t do any Roth conversions this year or none in excess of the conversions you have already done (and have already been included in your income).
Convert up to a specified tax bracket
The middle column shows your tax situation if you convert just enough to stay within a certain tax bracket.
This calculator will show you your estimated tax bracket and enable you to see conversion strategies for your current bracket or any higher bracket.
A conversion that bumps your income into a higher bracket may or may not be a good idea for you.
Convert a specific dollar amount
You can enter any dollar amount and assess the implications of a $500 or a $500,000 conversion. Enter any dollar amount you wish to assess.
Convert up to a specific IRMAA threshold
If you are 63 or older, this Roth conversion calculator enables you to assess conversion strategies based on the IRMAA thresholds.
IRMAA stands for Medicare Income-Related Monthly Adjustment Amount. You see, people with higher incomes pay more for Medicare Part B than people with lower incomes.
So, as with tax brackets, you can also assess your conversion with regard to IRMAA brackets.
Please reference our article with Important Tables for 2023 to see the Federal Income Tax Brackets and IRMAA thresholds.
Compare and Assess Your Different Roth Conversion Strategies
Okay, now the fun part. This Roth conversion calculator enables you to assess your different possible conversion strategies based on 7 different tax criteria (10 if you are over 63 and also eligible for Medicare and Social Security).
So, there are a lot of different ways to consider a conversion. There are no right answers. It is important to use this grid to think through what is important to you.
Use this Roth conversion calculator to assess your:
Planned Roth Conversion Amount
This is a summary of the total value of the amount you will convert this year for each of the proposed strategies.
Estimated Net Taxable Income
This is the amount of income that will be taxable (your adjusted gross income minus your standard deduction).
Note that the conversion amount is considered taxable income. So, the more you convert, the higher your taxable income.
Highest Federal Tax Bracket You May Reach
Your highest federal tax bracket is also known as your marginal tax rate. As your income rises, so may your highest tax bracket. And, in some cases, it might make sense to limit your conversions to stay below certain brackets.
However, it is important to remember the difference between your marginal tax rate and your effective tax rate. (Effective is the rate you actually pay and is an average of all the different rates you pay across the different income thresholds.)
According to the Tax Foundation, the tax brackets for 2023 are:
- 10% for:
- Single filers earning $0-$11,000
- Married filing jointly earning $0-$22,000
- Heads of Households earning $0-$15,700
- 12% for:
- Single filers earning $11,000-$44,725
- Married filing jointly earning $22,000-$89,450
- Heads of Households earning $15,700-$59,850
- 22% for:
- Single filers earning $44,725-$95,375
- Married filing jointly earning $89,450-$190,750
- Heads of Households earning $59,850-$95,350
- 24% for:
- Single filers earning $95,375-$182,100
- Married filing jointly earning $190,750-$364,200
- Heads of Households earning $95,350-$182,100
- 32% for:
- Single filers earning $182,100-$231,250
- Married filing jointly earning $364,200–$462,500
- Heads of Household earning $182,100-$231,250
- 35% for:
- Single filers earning $231,250-$578,125
- Married filing jointly earning $462,500-$693,750
- Heads of Households earning $231,250-$578,100
- 37% for:
- Single filers earning $578,125 or more
- Married filing jointly earning $693,750 or more
- Heads of Households earning $578,100 or more
Estimated Federal Effective Tax Rate
The U.S. tax system is progressive. Not all of your income is taxed at the same rate. Your effective tax rate is an average of the various tax rates at which your income is taxed.
It is a common misconception that your marginal tax rate (the highest bracket your income puts you in) is what you pay in taxes. You actually pay an average and this average is called your “effective tax rate.”
Effective tax rate is the percent you actually pay.
Example: So, if your filing status is single and your taxable income is $150,000, you are paying 10% on the first $10,275, 12% on the next $31,500 ($41,775 – $10,275 = $31,500), 22% on $47,300 ($89,075 – $41,775 = $47,300) and 24% on $60,025 ($150,000 – $89,075 = $60,925).
Your effective tax rate is the total amount you pay in taxes divided by your taxable income:
Effective tax rate = Total tax ÷ Taxable income
Estimated Federal Tax Owed
This is the amount the Roth conversion calculator estimates you will owe for each of your different Roth conversion scenarios.
Estimated federal Tax Owed for Conversion Portion
This row represents the additional taxes you will pay (in excess of taxes paid on other income) as a result of the proposed Roth conversions.
Estimated Long-Term Capital Gains Rate
This row shows an estimate of your capital gains rate based on your taxable income.
NOTE: The tax rate you pay on capital gains is not based on the gains or growth in your account. The rate you pay on your capital gains is based on your income.
The 2023 capital gains tax rates are:
- 0% for:
- Single filers earning $0-$44,625
- Married filing separately earning $0-$44,625
- Married filing jointly earning $0-$89,250
- Heads of Households earning $0-$59,750
- 15% for:
- Single filers earning $44,626-$492,300
- Married filing separately earning $44,626-$276,900
- Married filing jointly earning $89,251-$553,850
- Heads of Households earning $59,751-$523,050
- 20% for:
- Single filers earning above $492,300
- Married filing separately earning above $276,900
- Married filing jointly earning above $553,850
- Heads of Households earning above $523,050
Estimated Percent of Social Security that may be taxed
If you are earning Social Security, that income may be taxed.
This Roth conversion calculator estimates the percentage of your Social Security income that may be taxed based on your total income.
If you are not currently earning Social Security income, you may want to ignore this row or use the information to help you assess your claiming strategy.
Highest tier of IRMAA reached
It is not commonly known, but the more you earn, the more you pay for Medicare Part B. And, these higher rates are referred to as Income-Related Monthly Adjustment Amount (IRMAA).
This row shows the highest IRMAA tier or bracket you reach with each conversion strategy or scenario.
So, If you are 63 years of age or older, this Roth conversion calculator enables you to assess conversion strategies based on your IRMAA threshold or brackets.
Please reference our article with Important Tables for 2023 to see the Federal Income Tax Brackets and IRMAA thresholds.
2025 IRMAA Per Person
If you are over 63 and have a high income, this Roth conversion calculator shows the projected Medicare Income-Related Monthly Adjustment Amount (IRMAA) you may pay per month starting in 2025.
Your IRMAA is determined by your Adjusted Gross Income (AG)) from the previous 2 years. So, your 2023 AGI (with a few adjustments) determines your 2025 IRMAA.
And again, IRMAA is a surcharge paid on Medicare Part B. The more income you have, the more you may pay for Medicare Part B.
