Calculator
Example Data Table
| Scenario | Transfer | Basis | Taxable Sale | Ordinary Rate | Gain Rate |
|---|---|---|---|---|---|
| Moderate transfer | $50,000 | $20,000 of $150,000 | $20,000 proceeds, $15,000 basis | 29% | 20% |
| Large transfer | $100,000 | $25,000 of $250,000 | $40,000 proceeds, $28,000 basis | 32% | 23.8% |
| Cash funded | $30,000 | Manual 100% taxable | $0 | 24% | 0% |
Formula Used
Basis ratio = nondeductible basis ÷ total traditional IRA balance.
Basis used = transfer amount × basis ratio.
Taxable conversion = transfer amount − basis used.
Ordinary tax = taxable conversion × combined ordinary tax rate.
Capital gain = taxable asset sale proceeds − cost basis.
Capital gains tax = capital gain × combined gain rate.
Total estimated tax cost = ordinary tax + capital gains tax + penalty.
Future Roth value = amount reaching Roth × (1 + growth rate)years.
How to Use This Calculator
Enter the planned Roth transfer amount first.
Choose the basis method that matches your records.
Add traditional IRA balance and nondeductible basis details.
Enter ordinary income tax rates for conversion income.
Add taxable sale proceeds if assets fund the tax.
Enter cost basis and capital gain tax rates.
Choose whether tax is paid using cash, sale proceeds, or withholding.
Press calculate to view results above the form.
Understanding Roth Transfer Tax Planning
A Roth transfer can move retirement money into a Roth account. The future appeal is simple. Qualified Roth withdrawals may be tax free. The difficult part is the tax cost today. This calculator separates that cost into clear pieces.
Taxable Conversion Amount
Many transfers begin with traditional retirement money. Pre tax contributions and earnings usually create taxable income when converted. After tax basis can reduce that taxable part. The pro rata method compares total basis with the total traditional IRA value. Then it applies that ratio to the amount moved.
Capital Gains From Funding Taxes
Capital gains do not usually come from trades inside an IRA. They may appear when taxable investments are sold to pay the conversion tax. The calculator asks for sale proceeds and cost basis. It then estimates the gain and applies your chosen gain rates. This helps show the real cash cost.
Withholding And Penalty Review
Some users pay tax from outside cash. Others withhold part of the transfer. Withholding can reduce the amount reaching the Roth account. It may also create penalty exposure for younger users. The penalty input lets you test that risk without forcing one rule.
Future Value Comparison
A conversion decision is not only about current tax. It also depends on future growth, later tax brackets, and the time horizon. This page estimates a future Roth value. It also compares a delayed taxable retirement balance. The result is only a planning estimate, not tax advice.
Scenario Testing Matters
Try several transfer sizes before choosing one. A smaller transfer can keep income inside a lower bracket. A larger transfer may suit a low income year. The calculator also shows how taxable asset sales change the answer. That matters when appreciated shares are sold only to raise tax cash. Review each scenario slowly. Keep notes for your return preparer and future planning.
Better Inputs Create Better Results
Use current statements when entering balances. Use your marginal rates, not average rates. Add state rates when they apply. Change growth and year assumptions to see sensitivity. Save results as CSV for spreadsheets. Export a PDF for client files, notes, or later review. Discuss large transfers with a qualified adviser before acting.
FAQs
Does a Roth transfer create capital gains tax?
The transfer itself is usually modeled as ordinary income on untaxed amounts. Capital gains may arise when taxable investments are sold to pay the conversion tax.
Why does this calculator include cost basis?
Cost basis helps estimate gain from taxable assets sold for tax funding. Sale proceeds above basis are treated as estimated gain for this planning model.
What is nondeductible basis?
Nondeductible basis is after tax money already included in the traditional IRA. It may reduce the taxable part of a Roth conversion.
What is the pro rata method?
The pro rata method compares nondeductible basis with total traditional IRA value. The same ratio is applied to the converted amount.
Should I pay taxes from the Roth transfer?
Withholding from the transfer can reduce Roth funding. It may also create penalty concerns. Compare it with outside cash before deciding.
Why is future tax rate included?
The future rate estimates the tax cost of waiting. It helps compare converting now with keeping the money tax deferred.
Can this replace tax advice?
No. This is an estimate tool. Real conversions can affect brackets, credits, Medicare costs, and state rules. Ask a qualified adviser.
Why export CSV or PDF?
CSV works well for spreadsheets. PDF is useful for saving a snapshot, sharing assumptions, or reviewing transfer scenarios later.