How Much Do You Pay in Roth Conversion Taxes?

Calculating Roth conversion tax involves determining the income tax owed on the amount converted from a traditional IRA or 401(k) to a Roth IRA. Since conversions are taxed as ordinary income, the tax liability depends on the individual’s federal and state tax brackets. For example, if a person converts $50,000 and falls into the 24% federal tax bracket, they may owe $12,000 in federal taxes, plus any applicable state taxes. Additional factors like the Net Investment Income Tax (NIIT) or Medicare surtax may apply if the conversion increases taxable income beyond specific thresholds.

A financial advisor can help you assess whether a Roth conversion is right for you and how much to convert. Connect with your advisor matches today.

What Is a Roth IRA?

A Roth IRA is a retirement account that is funded with after-tax money, meaning that you have already paid taxes on it. So when you make a withdrawal, you don’t have to pay taxes on that money as long as certain conditions are met.

Roth IRAs have two separate five-year rules that affect tax-free withdrawals. The first applies to earnings in a Roth IRA, requiring you to wait five years after making your initial Roth conversion before earnings can be withdrawn tax-free, regardless of age.

Your contributions are assumed to have occurred on January 1 of the tax year in which you start to make contributions, so if you make your first contribution to a Roth IRA on Dec. 1, 2025, your five-year period will be over on Jan. 1, 2030. The second rule, meanwhile, applies specifically to Roth conversions (see below).

If you open a traditional IRA instead, you fund it with pre-tax dollars, and it serves as a tax write-off in the year you make contributions. When you retire and start to make withdrawals, you pay income taxes on the withdrawals. Traditional IRAs and 401(k)s are also subject to required minimum distributions (RMDs), mandatory annual withdrawals that start at age 73 (or 75 for those born in 1960 or later).

What Is a Roth IRA Conversion?

A Roth IRA conversion happens when you convert your traditional IRA or 401(k) to a Roth IRA. You are taxed on whatever amount of money you convert each tax year at your marginal income tax rate, not at the lower and preferred capital gains rate.

The tax bill you will face could be significant and should be paid with non-retirement account funds to receive the full benefit of making the conversion.

Roth conversions are subject to their own five-year rule. Under this rule, each converted amount must remain in the Roth IRA for at least five years before withdrawals avoid the 10% early withdrawal penalty. This rule resets for each conversion, meaning multiple conversions create multiple five-year clocks. However, the five-year clock is retroactive to January 1 of the year of the conversion. Converted funds can also be withdrawn penalty-free at any time if the account holder is at least 59 ½.

How to Calculate Roth Conversion Tax

If you convert a traditional IRA to a Roth IRA, or perform an in-plan Roth conversion, you have to pay taxes on the amount of deductible, pre-tax income that you convert since that money wasn’t taxed when it went into your account.

If you execute an in-plan Roth conversion, you may also be converting some pre-tax funds: A good rule to follow is that you must pay income taxes on any pre-tax funds that you convert to a Roth IRA. Your tax rate is the marginal tax rate on the amount of your income including the amount of the conversion.

If there are any non-deductible funds in your traditional IRA or 401(k), they may have a nontaxable portion. You will calculate the nontaxable portion on IRS Form 8606.

Let’s say you decide to convert $50,000 from your traditional IRA into a Roth IRA and the entire amount was deductible. If you are in the 24% tax bracket, that means you will pay $12,000 (0.24 x $50,000) in taxes when you convert the $50,000 to a Roth IRA. And if the $50,000 pushes you into a higher tax bracket, then your tax liability is calculated using the marginal rate for that bracket.

If you are scheduled to take an RMD from the retirement account from which you are making the conversion, you have to take that RMD before the conversion or you will face penalties.

And SmartAsset’s RMD Calculator can help you estimate your mandatory withdrawals once you reach RMD age.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

Roth Conversions Can Lead to Surprise Tax Bills

A Roth conversion increases taxable income, which can push a taxpayer above income thresholds that trigger the net investment income tax (NIIT) and Medicare surcharges.

NIIT applies a 3.8% tax on investment income when modified adjusted gross income (MAGI) exceeds $200,000 for single filers or $250,000 for married couples filing jointly. A Roth conversion raises MAGI, potentially subjecting previously untaxed investment gains to NIIT.

Similarly, higher MAGI can push retirees into higher Medicare premium brackets. Medicare IRMAA (income-related monthly adjustment amount) surcharges apply to Part B and Part D premiums when MAGI surpasses $106,000 for individuals or $212,000 for joint filers (2025 thresholds). Converting too much in one year could result in higher Medicare costs two years later, as IRMAA surcharges are based on prior tax returns. For example, IRMAA can increase a single person’s monthly Part B premium from $185 to as much as $628.90 in 2025, depending on their income.

To avoid these unintended costs, taxpayers may opt for partial conversions to keep MAGI below key thresholds.

How to Pay Taxes on a Roth Conversion

You will have an opportunity to pay taxes on the proceeds of your Roth conversion at the time of your conversion. It’s best to have a tax accountant or financial advisor provide advice and assistance if you are going to make a Roth conversion.

You may need to pay taxes on the conversion upfront or through estimated tax payments during the tax year. It is not wise to wait until the tax deadline for the year to pay the taxes because you may incur penalties. A tax accountant or financial advisor can best direct you.

Using taxable assets rather than withdrawing from the converted funds helps maximize the long-term benefits of the Roth IRA. However, if taxes are paid from the converted amount, it reduces the account’s growth potential and could trigger an early withdrawal penalty if the account owner is under 59 ½.

Ways to Lower Your Roth Conversion Tax Bill

Several strategies can help reduce or eliminate the taxes owed on a Roth conversion. These approaches focus on managing taxable income, leveraging deductions, and timing the conversion strategically.

Convert in a low-income year: Completing a Roth conversion during a year with reduced income, such as early retirement or a job transition, can keep the tax rate lower.
Spread conversions over multiple years: Converting smaller amounts over several years prevents a large income spike that could push you into a higher tax bracket.
Use tax deductions and credits: Charitable contributions, business expenses or medical deductions can offset the taxable income from the conversion.
Harvest investment losses: Selling investments at a loss in a taxable account can help offset some of the additional tax burden.
Pay taxes with non-retirement funds: Using cash or taxable savings rather than IRA withdrawals ensures the full converted amount stays invested and growing tax-free.

Bottom Line

A couple sit down with their advisor to discuss Roth conversion taxes.

A Roth conversion can provide more after-tax income in retirement. To take full advantage of the increase in your after-tax retirement income, you’ll need to be cognizant of the unique rules that apply to Roth conversions. A tax accountant or financial advisor can provide additional guidance.

Tools for Planning Retirement

A financial advisor could help you optimize your retirement investments to minimize your tax liability. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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