Davidson Securities
Jon Davidson
4721 Ridge Road
Cazenovia, NY 13035

Advanced Roth IRA Conversion Calculator
Advanced Roth IRA Conversion Calculator

With a Roth conversion, the taxable portion of your traditional IRA (deductible contributions and earnings) is subject to tax in the year of conversion. This calculator compares two scenarios: (1) The full or partial conversion of a traditional IRA to a Roth IRA, and (2) No traditional-to-Roth conversion. The calculator assumes that you'll pay any conversion taxes from other assets, and determines (for scenario 2) the amount you could have earned on that "side fund" had you not converted. For both scenarios, all required minimum distributions (RMDs) are also assumed to be invested in the side fund. The calculator estimates the IRA accumulation, and RMD distributions, for the IRA owner and up to three beneficiaries, (you can specify one spouse beneficiary and up to two non-spouse beneficiaries). Total after-tax dollars are compared.

The current year and the conversion year are assumed to be 2020.

Part One: General Information
Current Age
End projection for IRA owner at age
Current traditional IRA balance $
Nontaxable amount allocated to IRA* $
Percent of IRA to be converted %
Part Two (Optional): Show distributions to beneficiaries?

Select "Yes" if you want to project amounts for beneficiaries

Spouse beneficiary -- % of IRA proceeds at death** % Current Age
Nonspouse beneficiary(ies)
Beneficiary 1-- % of IRA proceeds at death % Current Age
Beneficiary 2-- % of IRA proceeds at death % Current Age

* If you have multiple traditional IRAs, you must pro-rate your nontaxable balance among them. The IRS provides a worksheet in Publication 590-B.

** Assumes rollover to own IRA.

Conversion taxes are paid from other assets.

IRA owner turns 70½ in the same year he or she reaches age 70.

First lifetime RMD paid in the year traditional IRA owner reaches age 70½; Lifetime RMD calculation does not account for special rule that applies when spouse is more than 10 years younger than IRA owner. Lifetime RMDs are not required for Roth IRA owners.

Death occurs on last day of the year; conversion occurs at beginning of year; and all taxes are paid at end of year incurred.

Federal estate tax and possible credit for estate taxes paid are not accounted for; state income and death taxes and credits are also not taken into account. If these taxes had been taken into account, the results shown may have been lower.

RMDs are deposited into a side fund and grow at the specified annual rate of return. Amount(s) equivalent to any conversion tax that would be owed as a result of the Roth conversion are also deposited into the side fund and grow at the specified annual rate of return.

Assumes spouse beneficiary rolls over inherited IRA to own IRA, RMDs from traditional IRA start in year spouse reaches age 70½. No lifetime RMDs are required for spouse beneficiary from Roth IRA because spouse becomes Roth IRA owner. RMDs are required for non-spouse beneficiaries of both traditional and Roth IRAs, and these commence in the year after the IRA owner's death.

Does not take into account special rule that says RMDs can be taken over owner's remaining life expectancy if longer than the beneficiary's. Assumes separate accounts established for beneficiaries - each beneficiary's own life expectancy is used for RMDs.

This is a hypothetical example intended for illustration purposes only, and does not represent the performance of any specific investment or portfolio, nor is it an estimate or guarantee of future value. The calculations above assume that earnings are compounded annually, and that distributions from the Roth IRA will be tax free. Investment fees and expenses have not been deducted. If they had been, the results would have been lower. When making an investment decision, investors should consider their personal investment horizons and income tax brackets, both current and anticipated, as these may further impact the results of this comparison.

Jon Davidson is a  Registered Representative offering securities through Cadaret, Grant & Co Inc., member FINRA/SIPC. Davidson Securities and Cadaret Grant are separate entities.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021.