RMD vs. Roth Conversion Calculator: Break-Even Analysis

Break-even age, cumulative after-tax value for each path, IRMAA flag for the conversion year, year-by-year projection table, and the legacy value comparison for heirs under the 10-year rule.

Doesn't model state income taxes, investment volatility, or Social Security taxation interactions in detail; uses flat tax-rate assumptions for the conversion year and for future RMD years. Models the donor's decision, not the inherited-IRA distribution decisions a beneficiary would face after the original owner's death.

Tax dollars paid today could have stayed invested in a taxable brokerage account. The calculator compounds the upfront tax at the expected return rate and treats it as a drag on the Roth side. A $22,000 tax bill compounded at 6% over 20 years is about $70,500 of foregone growth, which is what the Roth's tax-free compounding has to overcome before break-even.

On a $100,000 conversion at 22%, the $22,000 tax can come from cash or from the IRA. Cash payment leaves the full $100,000 in the Roth; IRA payment effectively converts $78,000 (the rest is withheld and never reaches the Roth). Over 20 years at 6%, that's about $321,000 vs $250,000 of tax-free growth, a $71,000 gap that closes earlier when you have outside cash to cover the tax.

Age 65, $200,000 traditional IRA, $50,000 conversion at 22% ($11,000 tax paid from cash), 6% return, 22% future RMD rate. The Roth path overtakes the traditional path in cumulative after-tax value at roughly age 79. On the donor's side, lifetime tax savings come out to about $18,000 if the donor lives to a typical 88-90. The legacy advantage adds to that: at age 90, the converted Roth has compounded tax-free for 25 years to roughly $214,600 ($50,000 × 1.06²⁵), all of which the heir keeps. The unconverted $50,000 left in the traditional IRA has been depleted by RMDs along the way; whatever remains comes out at the heir's marginal rate (often 22-24%). The exact heir-side gap depends on RMD timing, but at a 24% heir bracket the legacy column typically lands $30,000-$50,000 ahead of the traditional path on this one $50,000 conversion.

Higher future RMD rate (24% instead of 22%) pulls break-even in by ~5 years. Lower future rate pushes it out or eliminates it. Paying tax from cash vs. from the IRA pulls it in by 3-5 years. Conversions that push MAGI across an IRMAA tier add about $1,148 per person per year for each Medicare-eligible spouse and push break-even out accordingly. A pre-RMD lifespan substantially below break-even age makes the legacy advantage the entire reason to convert.

The current marginal rate applies to the conversion; the projected future rate applies to RMD withdrawals on the traditional path. If you expect RMDs to stack with Social Security and pension into a higher bracket, or if you're modeling the widow's-tax scenario, set the future rate higher than the current rate.

Specify cash or IRA. Cash is materially better for break-even (3-5 years earlier, on average) because the full conversion amount enters the Roth. The calculator shows both numbers if you want to compare.

The expected return rate drives both projections. Conservative planning assumptions (4-5%) make break-even later; aggressive assumptions (7%+) make it earlier. The break-even result is more sensitive to this assumption than to the future tax rate, so try a couple of values.

Break-even age and cumulative after-tax value are the headline numbers. The IRMAA flag tells you whether the conversion would cross a Medicare premium tier in the conversion year. The legacy column shows what each path leaves to heirs at end-of-life under the 10-year rule.

OBBBA created an additional standard deduction of $6,000 per qualifying senior aged 65 or older, in effect for tax years 2025-2028 and phasing out at higher MAGI (6 cents per dollar over $75,000 single / $150,000 joint). For a married couple where both spouses are 65+ and below the phase-out, that's $12,000 of extra deduction. Concrete example: $112,000 of joint taxable income before the deduction, both spouses 65+, no phase-out. Subtract $12,000 to land at $100,000 of taxable income, just inside the 12% bracket. Without the deduction, the last $11,200 would have been at 22%; with it, those dollars are at 12%, saving $1,120 in tax and creating an extra $11,200 of room for a 12%-rate Roth conversion.

Under OBBBA the State and Local Tax cap rises from $10,000 to $40,000 for 2025-2029 (with a phase-down at very high incomes). For high-tax-state residents who itemize, the larger SALT deduction can pull taxable income down a bracket and create additional cheap-conversion room in the same year.

Tier 0 (no surcharge): under $109,000 single / $218,000 joint. Tier 1 ($109,001-$137,000 / $218,001-$274,000): adds about $1,148 per person per year on Part B and Part D combined. Tier 2 ($137,001-$171,000 / $274,001-$342,000): about $2,886 per person per year. Tier 3 ($171,001-$205,000 / $342,001-$410,000): about $4,620 per person per year. The top two tiers add roughly $6,355 and $6,936 per person per year.

A married couple converting $30,000 that pushes 2026 MAGI from $217,000 (just under Tier 1) to $247,000 crosses Tier 1 by exactly one dollar. Both spouses on Medicare pay Tier 1 for the full year, adding about $2,296 to 2028 premiums. Convert $1,000 less and the surcharge disappears entirely. The calculator flags conversions that cross any tier so you can see how much you'd save by trimming the conversion to land just below the cliff.

Two practical workarounds: convert before age 63, when the lookback hasn't started affecting Medicare premiums yet (you may still need to consider IRMAA when you reach 65), or stage the conversion across multiple tax years so MAGI lands just below each tier rather than crossing one.

Ten years of taxable distributions averaging $50,000 per year (more if the balance keeps growing during the decade). For an heir in their peak earning years already filling the 22% bracket, those distributions stack on wages and often spill into 22-24% territory. Total federal tax across the 10 years lands around $110,000-$120,000, leaving the heir with roughly $380,000-$390,000 net.

Same 10-year withdrawal window, but distributions are tax-free. The heir keeps the full $500,000 plus any growth that accrues across the 10-year decumulation. There's also no need to bunch distributions to the 10th year for tax timing; the heir can take it as needed within the window.

If the donor's own break-even age is past their realistic life expectancy, the legacy column is the entire reason to convert. Conversely, if the heir is already retired and would inherit at a lower bracket than the donor's current rate, the legacy advantage shrinks, and the conversion needs to win on the donor's break-even alone.

The 12% joint bracket goes to $100,800; the 12% single bracket only goes to $50,400. So $80,000 of taxable income sits in 12% marginal as a couple but in 22% marginal as a survivor. Federal tax on $80,000: about $9,100 joint, about $12,300 single. Same income, about $3,200 more tax per year, every year going forward.

Roth distributions don't add to AGI, so they don't push the surviving spouse's other ordinary income up brackets. A $200,000 traditional IRA producing an age-75 RMD of about $8,140 (4.07% under the Uniform Lifetime Table) is taxed at the survivor's marginal rate; if that rate is 22% post-death and 12% pre-death, the $8,140 RMD costs about $1,791 single vs. $977 joint, an $814 annual difference. The same $200,000 in a Roth produces tax-free distributions and zero contribution to the bracket where the survivor's pension and Social Security are landing.

Widow's-tax impact compounds, both because RMD percentages rise with age and because the survivor faces this tax structure for the rest of their life. On a $200,000 traditional balance, the cumulative widow's tax difference often exceeds $20,000-$25,000 across 15-20 years; on larger balances it scales linearly. The calculator approximates this when you set the future tax rate higher than the current rate.

Take the RMD early in the year so you have a clear remaining-balance picture for conversion math. The conversion's tax bracket is set by total taxable income for the year, RMD included; if the RMD is $20,000 and pushes you into the 22% bracket, the conversion lands at 22% from the first dollar.

Before RMD age (72-75 depending on birth year), there's no sequencing restriction and there's no mandatory income on the traditional IRA pulling you up brackets. The same conversion costs less in tax and has more years to compound tax-free. Most break-even calculations land earlier when the conversion happens at 65-70 instead of 75-80.

From retirement (often 60-65) to the first RMD year (73 or 75) is typically 8-15 years of lower-income tax planning room. Spreading a $200,000 total conversion across that window in $20,000-$30,000 annual tranches keeps each year's tax bill in 12% or 22% territory and avoids both single-year IRMAA cliffs and the higher bracket spillover from one large conversion.

If 2026 joint taxable income is $80,000, the top of the 12% bracket sits $20,800 higher at $100,800. Converting $20,800 puts the entire conversion at 12% (about $2,496 in tax). Converting $30,000 puts $20,800 at 12% and the remaining $9,200 at 22%, adding about $920 of extra tax for the spillover. The calculator shows current bracket room so you can size conversions to the cheap rate.

From retirement to the start of Social Security (typically ages 62-70) is the lowest-income window for most retirees. Earnings have stopped, RMDs haven't started, and Social Security may be deferred to 70 for the credit. That combination produces the cheapest tax brackets you'll see in retirement and is where multi-year conversion strategies pay the most.

A $150,000 total conversion done in one year often spills into 24% or higher and crosses an IRMAA tier. The same $150,000 spread as $30,000 per year across five years usually stays inside 12% or 22% and avoids the IRMAA cliff entirely. The downside is sequence risk: future tax law could change, but historical bracket changes have been gradual enough that a 5-year stage is generally safer than a single-year conversion.

If your current marginal rate is at or near the top bracket (35-37%) and you expect a meaningfully lower rate in retirement, the conversion math runs the wrong direction. The calculator will show a negative cumulative result. That's the signal to defer or to wait for a low-income year (e.g., a sabbatical, a part-time year, or post-retirement gap years) before converting.