1. What is IRA to Roth Conversion?

An IRA to Roth conversion is when you move money from a traditional IRA to a Roth IRA. This transaction is taxable in the year of conversion, as you're converting pre-tax dollars to after-tax dollars.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Conversion\ Amount \) — The dollar amount being converted from IRA to Roth
• \( Marginal\ Rate \) — Your highest current tax bracket (as decimal)

Explanation: The tax is calculated by multiplying the conversion amount by your marginal tax rate.

3. Importance of Conversion Tax Calculation

Details: Understanding the tax implications helps in planning whether to convert, how much to convert, and when to convert to minimize tax burden.

4. Using the Calculator

Tips: Enter the amount you plan to convert and your current marginal tax rate as a decimal (e.g., 24% = 0.24). All values must be valid (amount > 0, rate between 0-1).

5. Frequently Asked Questions (FAQ)

Q1: Why convert to a Roth IRA?
A: Roth IRAs offer tax-free growth and withdrawals in retirement, unlike traditional IRAs which are tax-deferred.

Q2: Can I convert just part of my IRA?
A: Yes, you can convert any portion of your traditional IRA to a Roth IRA.

Q3: When is the best time to convert?
A: Often best in years when your income is lower, putting you in a lower tax bracket.

Q4: Are there age limits for conversions?
A: No, the SECURE Act removed the age limit for traditional IRA contributions and conversions.

Q5: Can I undo a Roth conversion?
A: Previously possible via "recharacterization," but this option was eliminated by the Tax Cuts and Jobs Act of 2017.