How to calculate a Roth conversion break even point comes down to comparing two after-tax paths: converting now and paying the tax, versus staying traditional and investing those tax dollars elsewhere. Break even is the first year the Roth path pulls ahead. Most people want two answers at once, how many years until it pays back, and whether it is worth doing at all. This guide covers both, with a worked 2026 example.
To calculate a Roth conversion break even point, project two after-tax paths: (1) convert now, pay the tax from outside funds, and let the Roth grow tax-free; (2) keep the traditional IRA and invest the tax in a taxable account. Break even is the first year path 1 overtakes path 2. When the future rate matches or beats today’s, break even can arrive on day one; when it is lower, illustrative math shows roughly 8 to 30-plus years.
What “break even” means for a Roth conversion
A Roth conversion break even is the point where the Roth account’s tax-free growth recovers the income tax you paid to convert, the moment the after-tax value of converting overtakes the after-tax value of leaving the money in a traditional IRA. A Roth conversion moves pre-tax dollars into a Roth IRA and makes them taxable that year, except for nondeductible basis (Source: IRS Pub 590-A, 2025).
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The cost is immediate while the benefit is deferred, so break-even analysis lines the two up. The decision is also irreversible: conversions made in 2018 or later cannot be recharacterized, and the conversion must be completed by December 31 (Source: IRS Pub 590-A, 2025, IRC section 408A); see the 2026 Roth conversion deadline for timing.
The two questions searchers blend: years and the break-even tax rate
The break-even question has two parts often answered separately: a time-based framing that asks for a break-even age in years, and a tax-rate framing that computes a break-even tax rate. They are connected, so this guide covers both. Years to break even is a function of the gap between your conversion rate and your future rate, plus your rate of return.
Here is the bridge. If you pay the tax from outside (taxable) funds and your future withdrawal rate is at or above your conversion rate, the two paths reach parity almost immediately, so years to break even can be near zero. The years stretch out when you expect a lower future rate, where the question becomes whether tax-free compounding offsets that rate difference over time.
How do you calculate the break-even point?
You calculate the Roth conversion break even point by projecting two after-tax paths and finding the first year they cross. One path converts now and grows tax-free; the other keeps the traditional IRA and invests the tax dollars in a taxable account. Break even is the year the converted path overtakes the alternative. Five steps make it concrete.
- Set the amount and rate. A $100,000 conversion in the 24% bracket creates $24,000 of tax that year.
- Choose where the tax is paid. Paying the $24,000 from a taxable account keeps the full $100,000 in the Roth.
- Build the convert path. The $100,000 grows tax-free, and qualified Roth withdrawals are never taxed (Source: IRS Pub 590-B, 2025).
- Build the stay-traditional path. The $100,000 stays traditional (taxed at your future rate) and the $24,000 goes to a taxable account (taxed on growth each year).
- Compare year by year. Break even is the first year the convert path’s after-tax value wins.
Worked example: a $100,000 conversion at a 24% rate, tax paid from outside funds, at a 6% return. If your future rate also equals 24%, the two paths track closely from the start, so you break even on day one. If your future rate is about 3 points lower (21%), illustrative math puts break even near year 16; for a conversion at age 72 that lands near age 88. Narrow the gap to 2 points, or lift the return toward 8%, and break even arrives closer to year 8. A break-even calculator or an adviser can run your own numbers; sizing is covered in how much to convert to Roth.
Roth conversion break even in years: a plug-and-play table
Years to break even grows as your expected future tax rate falls below your conversion rate, and shrinks as your return rises. The table below is illustrative arithmetic on a $100,000 conversion at a 24% current rate, tax paid from a taxable account carrying a roughly 15% annual tax drag. It is a hypothetical model, not a projection.
| Future rate vs. conversion rate | 4% return | 6% return | 8% return |
|---|---|---|---|
| Same or higher | ~1 year | ~1 year | ~1 year |
| 2 points lower | 16 years | 11 years | 8 years |
| 3 points lower | 24 years | 16 years | 12 years |
| 4 points lower | 32 years | 22 years | 17 years |
| 5 points lower | 41 years | 28 years | 21 years |
Source: illustrative arithmetic by Q3 Advisors using the mechanics in IRS Pub 590-A and 590-B (2025); not a forecast. Read it by mapping your age to the result: a hypothetical 65-year-old expecting a rate 3 points lower and a 6% return reaches break even near age 81, so mid-retirement conversions often land in the early-to-mid 80s. The top row is the key point, though: when your future rate is not lower than your conversion rate, break even is near-immediate and the years question falls away.
What is the break-even tax rate (BETR), and how it refines “will my rate be higher?”
The break-even tax rate (BETR) is the future tax rate at which converting and not converting produce the same after-tax result. If your expected future rate is above the BETR, the model favors the conversion path; if it is below, the no-conversion path wins. The BETR is often lower than your current marginal rate, so a conversion can still come out even when the future rate drops slightly (as framed by Vanguard).
Why lower? Paying the tax from outside funds removes dollars that would otherwise sit in a taxable account taxed on their growth every year, and shedding that tax drag is a factor the simple “will my rate be higher or lower?” rule ignores. In Vanguard’s published illustration, an investor with an expected future rate of 24% has a break-even tax rate near 23.3% (Source: Vanguard, “A BETR approach to Roth conversions,” 2025; illustrative). The framework also captures the absence of lifetime required minimum distributions on Roth accounts, which the older rule leaves out (Source: IRS Pub 590-B, 2025).
The three drivers of the break-even
Three inputs determine every Roth conversion break even: the tax rate you pay to convert, the tax rate you expect on future traditional-IRA distributions, and your rate of return. Nothing else moves the result as much as these three, and they interact.
- Conversion tax rate. The rate you pay now, capped by which 2026 bracket the conversion income lands in. A lower conversion rate shortens break even.
- Future distribution rate. The rate you would have paid on traditional withdrawals or RMDs later. A higher future rate shortens break even; a lower one lengthens it.
- Rate of return. Faster tax-free compounding recovers the upfront tax sooner, which is why every column in the table above shrinks as returns rise.
Why paying the tax from outside funds changes the answer
Paying the conversion tax from outside (taxable) funds rather than from the IRA is one of the larger factors in the break-even math, close to a precondition in most analyses. Paying from the IRA shrinks the balance that compounds tax-free, and under 59 and a half the withheld amount is itself an early distribution subject to the 10% additional tax (Source: IRS Pub 590-B and Topic No. 558, 2025).
| Where the tax is paid | Break even if future rate is the same | Break even if future rate is lower |
|---|---|---|
| From outside (taxable) funds | Near-immediate | 8 to 30-plus years, per the table above |
| From inside the IRA | Near-immediate | May never break even; plus a possible 10% penalty under 59.5 |
A worked contrast makes it concrete. Convert $100,000 and pay the $24,000 tax from a taxable account, and the full $100,000 compounds in the Roth. Withhold that $24,000 from the IRA instead, and only $76,000 lands in the Roth; under 59 and a half, that $24,000 is also an early distribution carrying a $2,400 additional tax (10%). The Roth then compounds on $76,000 rather than $100,000, so break even starts nearly a quarter behind (Source: IRS Pub 590-B and Topic No. 558, 2025).
Is it worth it after 60? Time horizon, longevity, and where it stops making sense
After age 60, whether a Roth conversion is worth it depends on the rate gap, expected return, and time horizon, not the birthday itself. The horizon decides whether a break-even that lands later in retirement is reached within a lifetime: if break even arrives near age 85 and the person lives well beyond it, the Roth keeps compounding tax-free; if they pass before break even, the conversion did not recover its tax cost.
There is no fixed age at which a conversion stops making sense, because the answer tracks the rate gap and return, not the calendar. Roth accounts also strengthen the horizon math because the original owner never has to take required minimum distributions, so the balance can compound tax-free for life (Source: IRS Pub 590-B, 2025).
The 2026 tax brackets and why timing matters
The 2026 bracket schedule sets the ceiling on your conversion rate, so it defines how much you can convert within a given rate before spilling into the next one. The figures below come from Rev. Proc. 2025-32, which reflects the 2026 inflation adjustments including One Big Beautiful Bill (P.L. 119-21) amendments.
| 2026 marginal rate | Single taxable income | Married filing jointly |
|---|---|---|
| 12% | $12,400 to $50,400 | $24,800 to $100,800 |
| 22% | $50,400 to $105,700 | $100,800 to $211,400 |
| 24% | $105,700 to $201,775 | $211,400 to $403,550 |
| 32% | $201,775 to $256,225 | $403,550 to $512,450 |
| 35% | $256,225 to $640,600 | $512,450 to $768,700 |
Source: Rev. Proc. 2025-32 (2026). The 2026 standard deduction is $16,100 single and $32,200 married filing jointly, plus an age-65 amount of $2,050 single and $1,650 per spouse (Source: Rev. Proc. 2025-32). A common approach is to size a conversion so it fills the rest of a target bracket without tipping into the next, since each boundary is a rate cliff that raises the conversion cost.
Hidden costs that push the break-even later
Conversion income stacks on your other income and can trigger surcharges the simple break-even math omits: Social Security taxation, the Medicare IRMAA surcharge, the net investment income tax, and the two 5-year rules. The added MAGI can push more of your Social Security benefits into taxation, up to 85% of benefits, at combined-income thresholds that are not inflation-indexed (Source: SSA and IRS Pub 915, 2025).
Medicare’s IRMAA surcharge uses your MAGI from two years earlier, so a 2026 premium is set by your 2024 tax return, and a large conversion can lift premiums for a full year two years out (Source: SSA POMS HI 01101.020, 2025). The 2026 tiers below show the jump.
| 2026 MAGI (single) | 2026 MAGI (married filing jointly) | Total monthly Part B |
|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 (no surcharge) |
| Over $109,000 to $137,000 | Over $218,000 to $274,000 | $284.10 |
| Over $137,000 to $171,000 | Over $274,000 to $342,000 | $405.80 |
| Over $171,000 to $205,000 | Over $342,000 to $410,000 | $527.50 |
| Over $205,000 to $500,000 | Over $410,000 to $750,000 | $649.20 |
Source: SSA POMS HI 01101.020 (effective 2026, based on 2024 MAGI); standard 2026 Part B premium $202.90 per CMS (2025). A single filer whose conversion lifts 2024 MAGI from $108,000 to $138,000 could move from the $202.90 tier to the $405.80 tier, roughly $2,435 more in Part B premiums across 2026.
A conversion is not itself net investment income, but the added MAGI can pull other investment income above the 3.8% net investment income tax thresholds ($200,000 single, $250,000 MFJ); see the 2026 net investment income tax detail. Two 5-year rules also bear on break even: a converted amount withdrawn within five years, before age 59 and a half, can trigger the 10% additional tax on the previously taxed amount, and Roth distributions follow ordering rules (contributions, then conversions, then earnings) (Source: IRS Pub 590-B, 2025).
The low-income conversion window and RMDs
The years between retiring and the start of Social Security and required minimum distributions are often the lowest-income years of a retirement, a common window to convert at a lower rate (as noted in third-party analyses). Once RMDs begin they add taxable income you cannot avoid, raising the very future rate the break-even math is trying to beat, and you cannot convert an RMD itself.
RMDs from traditional IRAs currently begin at age 73, rising to 75 for those born in 1960 or later beginning in 2035, and a conversion done before RMDs begin reduces the traditional balance those RMDs are calculated on (Source: SECURE 2.0 Act of 2022, sec. 107; IRS). Because Roth IRAs carry no lifetime RMDs for the original owner, converting can lower future forced income; see the detail on required minimum distributions for 2026.
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
Frequently asked questions
How do you calculate the break-even point on a Roth conversion?
Compare two after-tax paths over time: converting now versus leaving the money traditional and investing the tax dollars in a taxable account. Break even is the first year the Roth path’s after-tax value overtakes the other. The inputs are conversion rate, future rate, return, and where the tax is paid (Source: IRS Pub 590-A/B, 2025).
How long does it take to break even on a Roth conversion?
It depends on the gap between your conversion rate and future rate, your return, and where the tax is paid. When the tax comes from outside funds and your future rate is at or above today’s, break even can be near-immediate; when the future rate is lower, illustrative math shows roughly 8 to 30-plus years, longer at lower returns (Source: IRS Pub 590-A/B, 2025).
Is a Roth conversion worth it after age 60?
Age alone does not determine it. What matters is the rate gap, expected return, time horizon, and whether the tax is paid from outside funds. Someone expecting a higher or equal future rate and paying from a taxable account can break even quickly, while someone expecting a much lower future rate at a low return may take decades (as framed by Vanguard; not advice).
At what age does a Roth conversion no longer make sense?
There is no fixed cutoff age, because the outcome tracks the time horizon and the rate gap, not the calendar. In illustrative tables, break-even ages often land in the early-to-mid 80s, so a shorter life expectancy narrows the window in which the conversion is recovered (Source: IRS Pub 590-B, 2025).
What is the break-even tax rate for a Roth conversion?
The break-even tax rate (BETR) is the future rate at which converting and not converting give the same after-tax result. Above it the model favors converting; below it, staying put. Because paying tax from outside funds sheds future tax drag, the BETR is often below your current rate, near 23.3% for a 24% expected future rate in Vanguard’s illustration (Source: Vanguard, 2025; illustrative).
Should I pay Roth conversion taxes from my IRA or from outside funds?
The rules allow either, but paying from outside (taxable) funds keeps more dollars compounding tax-free and shortens break even. Paying from the IRA shrinks the growing balance, and if you are under 59 and a half the withheld amount is an early distribution subject to a 10% additional tax (Source: IRS Pub 590-B and Topic No. 558, 2025).
How many years should you leave money in a Roth after converting?
Under the conversion 5-year rule, a converted amount withdrawn before five years have passed and before age 59 and a half can trigger the 10% additional tax on the converted amount (Source: IRS Pub 590-B, 2025). Separately, a longer time horizon gives tax-free compounding more time to work in the break-even math.
Sources
IRS Publication 590-A (2025), Contributions to Individual Retirement Arrangements, irs.gov/publications/p590a. IRS Publication 590-B (2025), Distributions from IRAs, irs.gov/publications/p590b. IRS Topic No. 558 (2025), Additional Tax on Early Distributions, irs.gov/taxtopics/tc558. IRS Publication 915 (2025), Social Security and Equivalent Railroad Retirement Benefits, irs.gov/publications/p915. Rev. Proc. 2025-32 (2026 inflation adjustments), irs.gov. SSA, Income Taxes and Your Social Security Benefit, ssa.gov. SSA POMS HI 01101.020 (2026 IRMAA), secure.ssa.gov. CMS, 2026 Medicare Parts A and B Premiums and Deductibles (2025), cms.gov. Vanguard, A BETR approach to Roth conversions (2025), corporate.vanguard.com. SECURE 2.0 Act of 2022, sec. 107 (RMD age), congress.gov. Break-even year figures are illustrative arithmetic by Q3 Advisors and are not projections.
About the author
Craig Wear, CFP®, is the founder of Q3 Advisors, a registered investment adviser focused on retirement tax planning and Roth conversion strategy. He writes on the tax mechanics that shape retirement withdrawal decisions.
