Planning for retirement involves making smart decisions about taxes and investment growth. One of the most important choices you might face is whether to keep your savings in a traditional IRA or convert them into a Roth IRA. To simplify this decision, the Fidelity Roth Conversion Calculator helps you estimate taxes, growth potential, and whether a conversion works in your favor.

In this article, we’ll explain how the tool works, show you step-by-step instructions, provide an example calculation, and answer common questions about Roth conversions.

What is the Roth Conversion Calculator?

The Fidelity Roth Conversion Calculator is a financial planning tool designed to help investors analyze the impact of converting pre-tax retirement savings (like a traditional IRA) into a Roth IRA.

A Roth conversion means paying taxes on your pre-tax contributions today so your money can grow tax-free and be withdrawn tax-free in retirement. The decision depends on multiple factors like your current tax rate, expected retirement tax rate, annual returns, and time horizon.

This calculator helps you compare both scenarios so you can make an informed choice.

How to Use the Fidelity Roth Conversion Calculator

Using the calculator is straightforward. Here’s a step-by-step guide:

1. Enter the Amount to Convert
   • Input the dollar amount from your traditional IRA or other pre-tax account that you are considering converting.
2. Enter Your Current Age
   • This helps estimate the growth period before retirement.
3. Enter Your Retirement Age
   • The calculator uses this to project growth until you begin withdrawals.
4. Current Marginal Tax Rate (%)
   • Provide your present federal tax rate. This determines the taxes you’ll owe on the converted amount today.
5. Expected Tax Rate in Retirement (%)
   • Estimate what your tax rate will be when you retire. If it’s higher than today, a Roth conversion often makes sense.
6. Expected Annual Return (%)
   • Add your estimated yearly investment growth rate (e.g., 6–8%).
7. Years Until Withdrawal
   • Enter the number of years before you’ll need the money. This affects how much growth your investment could achieve.
8. Click “Calculate”
   • The tool runs projections, showing:
     • Taxes owed on conversion
     • Projected Roth IRA balance (tax-free)
     • Projected traditional IRA balance (after-tax)
     • Roth advantage or disadvantage
9. Review the Results
   • A clear comparison highlights whether converting benefits your situation.
10. Use Reset, Copy, or Share Options

• Reset to try different scenarios, copy results for records, or share with a financial advisor.

Practical Example: Roth Conversion Calculation

Let’s walk through a sample calculation.

• Amount to Convert: $50,000
• Current Age: 40
• Retirement Age: 65
• Current Tax Rate: 22%
• Future Tax Rate: 28%
• Annual Return: 7%
• Years Until Withdrawal: 25

Results:

• Taxes Paid on Conversion: $11,000
• Value if Left in Traditional IRA: $271,475
• Net After-Tax Traditional IRA Value: $195,462
• Value in Roth IRA (Tax-Free): $260,475
• Roth Advantage: +$65,013

👉 In this case, converting to a Roth IRA provides over $65,000 more in retirement because the expected future tax rate is higher than the current rate.

Benefits of Using the Roth Conversion Calculator

• Clarity on Taxes – Know exactly how much tax you’d pay today.
• Future Growth Insight – Compare tax-free Roth growth vs. traditional after-tax growth.
• Personalized Scenarios – Adjust assumptions to match your financial plan.
• Retirement Planning Confidence – Make informed decisions instead of guessing.
• Advisor-Friendly – Share results easily when consulting a tax or financial advisor.

Best Use Cases for Roth Conversion

• You expect higher tax rates in retirement.
• You want tax-free withdrawals during retirement.
• You prefer leaving tax-free assets to heirs.
• You have funds outside your IRA to cover the tax bill.
• You’re younger and have decades for growth before retirement.

Tips for Using the Calculator Effectively

• Run multiple scenarios with different tax rates and returns.
• Be conservative with growth rate assumptions.
• Consider state taxes in addition to federal rates.
• Remember: the calculator is a guide—not tax advice. Always consult a professional.

FAQs About the Fidelity Roth Conversion Calculator

1. What does the Roth Conversion Calculator do?
It estimates the tax costs and long-term benefits of converting pre-tax retirement savings into a Roth IRA.

2. Is the calculator free to use?
Yes, it’s completely free and available online.

3. Who should use this calculator?
Anyone with a traditional IRA, 401(k), or similar account considering a Roth conversion.

4. Does the calculator account for inflation?
No, it focuses on growth and tax impact. You may need separate inflation adjustments.

5. Do I need exact tax rates?
Not necessarily. Even rough estimates can help highlight whether a conversion is advantageous.

6. Can I change inputs multiple times?
Yes. You can reset and test different scenarios.

7. What happens if my retirement tax rate is lower than today?
The calculator will often show that staying with a traditional IRA may be better.

8. How accurate are the results?
They are projections based on your inputs. Real outcomes depend on future tax laws, market returns, and personal circumstances.

9. Does it calculate required minimum distributions (RMDs)?
No. But Roth IRAs have no RMDs, which is another advantage.

10. Can I share results with my advisor?
Yes. The tool includes a copy and share function for easy collaboration.

11. What tax rate should I use?
Use your federal marginal tax bracket today and your expected bracket in retirement.

12. Does the calculator consider state taxes?
It does not. If you live in a state with income tax, include that in your planning.

13. Should I always pay taxes from outside the IRA?
Yes, ideally. Paying taxes from IRA funds reduces the benefit of a Roth conversion.

14. Is there an age limit for using the calculator?
No, but it’s most useful for individuals with several years before retirement.

15. What if my investments earn less than expected?
You can rerun the calculator with lower annual return assumptions to see the impact.

16. Can this help with estate planning?
Yes. Roth IRAs are valuable for heirs since withdrawals are tax-free.

17. Is a Roth conversion permanent?
Yes. Once you convert, you cannot reverse it under current tax law.

18. Should I convert all my IRA funds at once?
Not necessarily. Some investors spread conversions over several years to manage tax brackets.

19. How long does the calculation take?
Just a few seconds. The tool provides results almost instantly.

20. Is professional advice still necessary?
Yes. The calculator is an educational tool, not a substitute for personalized tax advice.

Final Thoughts

The Fidelity Roth Conversion Calculator is a powerful tool for anyone planning retirement. By comparing the tax costs today with potential tax-free growth in the future, it empowers you to make informed decisions about your financial future.

If you expect higher taxes in retirement, or if you want to maximize tax-free wealth, this calculator can highlight the potential advantages of a Roth conversion. Use it as a guide, run multiple scenarios, and consult a financial advisor before making your decision.