Roth Conversion Strategy

State Tax Rates

Many individual states levy state income taxes. Some states offer a flat tax, and others offer progressive tax rates, while others have no income tax at all. This tool calculates state income taxes based on the state you select using the following tax rates and standard deductions:

Effective Tax Rate

Before analyzing this Roth conversion strategy, a discussion of effective tax rate is in order. You can calculate your effective tax rate by dividing your total tax by your total income:

While the difference between marginal Federal tax brackets can be 2% to 10%, when we plot the effective tax rate for all filing statuses, including the standard deduction, over a wide range of incomes you will notice a smooth line of rates between 0% and 37% (the highest marginal rate) with inflections (change in slope) where marginal rates change. Note that effective tax rates map to fixed dollar amounts for your filing status and your personal effective tax rate falls on one of the lines below:

A common recommendation for Roth IRA conversions is to convert IRA money until you reach the next higher tax bracket (or inflection point). This seems like a reasonable approach if you want to make progress on your Roth conversions while minimizing the impact to your income tax for this year, however if you want to minimize your income tax over a lifetime you need to take a longer term approach and utilize a portion of the next higher tax bracket.

Required Minimum Distributions

As of 2026, the IRS mandates that individuals begin taking Required Minimum Distributions (RMDs) from your IRA(s) to your taxable account starting the year you turn age 73 if born before 1960, and at age 75 if born in 1960 or later. This Roth conversion tool calculates your RMD by dividing your projected IRA account balance at the end of the previous year by the distribution period (listed in the IRS Uniform Lifetime Table). RMD's are required to be taken by the end of the calendar year. If you miss your required distribution, an excise tax of 25% of the amount of your RMD that wasn't withdrawn is assessed at tax time.

This tool calculates your RMD and if it exceeds your minimum effective tax rate (fixed dollar amount), then the RMD supersedes your minimum effective tax rate. Click on the summary button at the bottom of the page to see the annual numbers behind this analysis. This tool performs RMD distributions at the end of the calendar year.

Note that Roth conversions cannot be used to satisfy your required minimum distribution, and Roth IRAs do not have RMDs.

Social Security & Medicare

This tool models Social Security and Medicare taxes as well as monthly SS benefits. If you add a job as a source of income, a 6.2% Social Security tax and a 1.45% Medicare tax are withheld from your earned income. If you are self employed, these rates are doubled as you are also responsible for matching employer contributions, and self employment taxes are also assessed at tax time. As of 2026, Social Security taxes are assessed on individual income up to $184,500, and a Medicare surcharge of 0.9% is assessed on individual income exceeding $200,000.

Social Security benefits are paid starting in the month you reach the starting age you specify. This tool models an annual cost of living adjustment (COLA) in January. SS benefits are paid on the second, third or fourth Wednesday of the month based on your date of birth. For married couples filing jointly, after death of the first spouse the surviving spouse receives the higher benefit amount of their own SS benefit or between 71.5% and 99% of their spouse's benefit if between age 60 and full retirement age.

While this tool models different starting ages for married couples claiming Social Security, it does not attempt to optimize your SS benefits. A popular strategy for claiming Social Security is the spouse with a lower SS benefit starts at age 62, while the spouse with a higher SS benefit starts at age 70. You can experiment with different starting ages to see how it impacts the outcome.

IRMAA

The Social Security Administration adjusts your Medicare Parts B & D premiums if your MAGI is above certain levels. This Medicare Income-Related Monthly Adjustment Amount is commonly referred to as IRMAA. IRMAA looks at your MAGI from your previous tax return to determine your premium adjustment. If you distribute your tax liability over your lifetime you can minimize the impact of IRMAA.

NIIT

Getting Started

To start using this tool, simply fill in the information requested below to build your Roth conversion projection:

Accounts

Transfers

Jobs

Roth Conversion Projection

The projected value of your IRA, Roth IRA and taxable accounts based on the information you provided is shown below:

Roth conversions are performed to increase your taxable income to meet your minimum effective tax rate (fixed dollar amount) threshold. If your minimum effective tax rate is zero, then this tool only performs Roth IRA conversions to take advantage of your standard deduction. All taxes / premiums are paid from either your taxable account (first) or your Roth IRA (last). The tool seeks to to convert as much money as possible to your Roth account so it can provide tax-free income in retirement.

Optimal Tax Rate Analysis

Future tax rates are uncertain and may vary depending on legislative changes, and your personal financial situation affects your effective tax rate. Since you control the size of your Roth conversions, you can target your effective tax rate to a certain percentage each year regardless of tax law changes. The question then becomes:

Is there an optimal minimum effective tax rate to maximize your retirement portfolio?

The chart below displays the outcome of this Roth conversion strategy over a wide range of minimum effective tax rates using the information you provided. The projected after-tax portfolio and lifetime tax values are based on your joint life expectancy.

You can view a summary of this Roth conversion strategy at a particular minimum effective tax rate by clicking on a data point in the chart above. You can also click on one of the buttons below to view a summary of either your highest projected after-tax portfolio or lowest lifetime tax paid.

The Roth Conversion column in the summary table displays the dollar amount of Roth conversions needed each tax year to satisfy your minimum effective tax rate. The optimal tax rate for you may be influenced by other factors such as income limits regarding ACA subsidies, IRMAA premiums and additional NIIT taxes for your filing status. IRMAA and NIIT calculations are included in this tool. While this tool models many factors related to your financial situation, you should consult with a financial / tax professional for a second opinion before you take action.

Roth Conversion Analysis

• Life expectancy
• Traditional IRA & Taxable balances
• Expected market returns
• Anticipated future taxable income (job, Social Security, dividends & capital gains, lottery)
• Projected future tax rates and filing status

In order to satisfy a minimum tax rate, this tool performs taxable Roth IRA conversions as necessary. While your optimal minimum effective tax rate will change based on the factors above, your recommended minimum effective tax rate seeks to put you on a course to maximize your retirement portfolio by distributing your income tax burden over multiple years. Unfortunately, no one can predict future tax rates beyond a few years and the remaining items on the list above are unknowable with any certainty. The current value of your Roth IRA does not impact this analysis because that money already meets your end goal of tax-free income in retirement.

The shape of the Optimal Tax Rate Analysis chart above varies widely by individual. You may choose to maximize your after-tax portfolio, or minimize your lifetime tax paid, or choose a number somewhere in between. The more information you provide regarding your cash flows, the better you can estimate Roth conversions to meet your goals. As you enter hypothetical cash flows, note that the shape of this chart changes as you vary the inputs on the page so you can determine the target range for your future Roth IRA conversions.