Roth IRA Conversion

In 1997, the Roth IRA was introduced. This new IRA allowed for contributions to be made on an after-tax basis and all gains (or growth) to be distributed completely tax-free. Since then, people with incomes under $100,000 have had the option to convert all or a portion of their existing traditional IRAs to Roth IRAs. Beginning in 2008, participants with funds in eligible employer-sponsored plans could also roll those funds directly over to a Roth IRA in a qualified rollover if their income did not exceed the $100,000 threshold. Starting in 2010, all IRA owners and participants in eligible employer-sponsored plans, regardless of their income level, are eligible to convert their traditional IRA and pretax funds in an employer-sponsored plan [401(k), 401(a), 403(b) and government 457(b)] to a Roth IRA.

Is this a good option for you? A conversion has both advantages and disadvantages that should be carefully considered before you make a decision. This calculator compares two alternatives with equal out-of-pocket costs to estimate the change in total net worth at retirement if you convert your traditional IRA into a Roth IRA.

See Definitions below for more information.

To use this calculator, change entries and select "Calculate" to view new results.