a Country Bank for Savings - Calculators

What is the advantage of converting to a Roth IRA?

In 1997, the Roth IRA was introduced. Since then, many people have converted all or a portion of their existing Traditional IRAs to a Roth IRAs, where interest earned may be completely tax-free. Is this a good option for you? A conversion has both advantages and disadvantages that should be carefully considered before you make a decision. This calculator estimates the change in total net-worth, at retirement, if you convert your Traditional IRA into a Roth IRA.

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Definitions

Amount to convert: Amount to convert from a Traditional IRA account to a Roth IRA. It is important to note that some high income households do not qualify for a Roth IRA conversion. Currently, anyone with an adjusted gross income over $100,000 cannot make a Roth IRA conversion. For the purposes of this calculator, we assume that your income does not limit your ability to convert to a Roth IRA.
Non-deductible contributions: Amount contributed to the Traditional IRA you are converting that was not tax deductible.
Current tax rate: Current marginal income tax rate.
Tax rate at retirement: Expected marginal income tax rate at retirement.
Investment tax rate: Expected marginal tax rate (base this on expected capital gains rate) for investments.
Current age: Current age.
Age at retirement: Desired age at retirement.
Rate of return: The annual rate of return for your IRA. This calculator assumes that your return is compounded annually. The actual rate of return is largely dependant on the type of investments you select. For example, for the last thirty years the average annual rate of return for domestic equity stocks has been about 10%. Savings accounts at a bank pay as little as 2%