1. What is Roth Conversion Tax?

The Roth conversion tax is the amount you owe when converting funds from a traditional IRA or 401(k) to a Roth account. This tax is calculated based on your marginal tax rate and the amount converted.

2. How Does the Calculator Work?

The calculator uses the Roth conversion tax formula:

Where:

• \( converted \) — Amount converted from traditional to Roth account (in dollars)
• \( marginal\_rate \) — Your marginal tax rate (as a percentage)

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

3. Importance of Roth Conversion Tax Calculation

Details: Understanding the tax implications helps in financial planning for retirement, determining whether a Roth conversion makes financial sense, and budgeting for the tax payment.

4. Using the Calculator

Tips: Enter the amount you plan to convert in dollars and your expected marginal tax rate as a percentage (e.g., enter 24 for 24%).

5. Frequently Asked Questions (FAQ)

Q1: When do I pay the conversion tax?
A: The tax is due in the year you perform the conversion, reported on that year's tax return.

Q2: Can I undo a Roth conversion?
A: Roth conversions can be recharacterized (undone) until October 15 of the following year, but this option was eliminated after 2017 for most taxpayers.

Q3: Does the conversion count as income?
A: Yes, the converted amount is added to your taxable income for the year.

Q4: Are there age limits for Roth conversions?
A: No, there are no age limits for Roth conversions as of current tax laws.

Q5: Should I convert all at once or over several years?
A: This depends on your tax situation. Spreading conversions over multiple years may keep you in a lower tax bracket.