SECURE Act 2.0 Roth 401(k) Conversion Calculator 2026
Calculate the tax cost of converting Traditional 401(k) or IRA balances to Roth in 2026. Compare your current tax bracket against estimated retirement bracket — if retirement bracket is higher, conversion saves taxes. Includes SECURE 2.0 mandatory Roth catch-up rules for high earners.
What Is a Roth 401(k) Conversion?
A Roth conversion moves money from a pre-tax retirement account (Traditional 401(k), Traditional IRA, SEP-IRA) into a Roth account, where future growth and qualified withdrawals are tax-free. The converted amount is added to your current-year ordinary income — you pay income tax on the full conversion this year, but never again on that money or its growth. Per IRS Notice 2008-30 and subsequent guidance, conversions are reported on Form 1099-R (Code 2 or 7) and Form 8606. The 5-year rule applies separately to each conversion: each converted amount must remain in the Roth for 5 years before tax-free withdrawal, regardless of age. Last updated May 2026.
SECURE Act 2.0 Mandatory Roth Catch-Up for High Earners
Starting in 2026 (delayed from the original 2024 effective date), the SECURE Act 2.0 Section 603 mandates that catch-up contributions (ages 50+) for employees earning over $145,000 (indexed) in the prior year must be Roth contributions, not pre-tax. This effectively forces high-earning 50+ employees into Roth. The 2026 catch-up limit is $7,500 (ages 50-59 and 64+) or the SECURE 2.0 "super catch-up" of $11,250 (ages 60-63 under SECURE 2.0 Section 109). Employees under the $145k threshold or under age 50 can still choose Traditional. Per IRS Notice 2023-62 and subsequent guidance, employers must offer Roth 401(k) by 2026 to enable this — most providers have updated.
When Conversion Saves Taxes — The Bracket Comparison
The math is straightforward: conversion saves money when your current marginal bracket is lower than your expected retirement bracket. If you're in the 22% bracket today and expect to be in the 24% bracket in retirement, converting at 22% saves 2 percentage points on every dollar converted plus growth. The opposite is also true — converting at 32% to use in a 22% retirement is a tax loss. Per Kitces' Roth conversion research, optimal candidates for conversion are: early retirees (age 60-72) in the "gap years" before Required Minimum Distributions (RMDs at age 73-75) and Social Security, currently in low brackets, with large pre-tax balances heading to RMDs that will push them into higher brackets at age 73+.
Strategic Considerations Beyond the Bracket Math
Three additional factors that favor conversion: (1) Required Minimum Distribution (RMD) relief — Roth 401(k) accounts (under SECURE 2.0) and Roth IRAs have no RMDs in the original owner's lifetime, useful for legacy planning. (2) IRMAA Medicare premium tilt — converted income now is income then; planning the conversion year to avoid Medicare premium surcharges matters. (3) Tax diversification — having both pre-tax and post-tax retirement balances allows you to manage which bucket you draw from in any given retirement year, optimizing for tax efficiency. The cost: lost liquidity, the upfront tax bill, and 5-year rule on each conversion. Source: IRS Publications 590-A and 590-B, SECURE Act 2.0 (Pub L 117-328), Kitces.com Roth conversion analysis.
Frequently Asked Questions
What is a Roth conversion?
Moving pre-tax retirement money (Traditional 401k, Traditional IRA) into a Roth account. The converted amount is taxable as ordinary income in the year of conversion, but future growth and qualified withdrawals are tax-free forever.
When does conversion save taxes?
When your current marginal tax bracket is LOWER than your expected retirement bracket. If you're at 22% today and project 24% in retirement, conversion at 22% saves 2 percentage points. If today is higher than retirement, conversion is a tax loss.
What is the SECURE 2.0 mandatory Roth catch-up rule?
Starting 2026, employees age 50+ who earned over $145,000 (indexed) in the prior year MUST make catch-up contributions to Roth — not pre-tax. Effectively forces high earners into Roth for amounts above the regular $23,500 contribution.
How is the conversion taxed?
The converted amount is added to your current-year ordinary income on Form 1040. Federal tax applies at your marginal bracket. State tax also applies in most states (except FL, TX, etc.). Pre-tax basis is recovered first if you have non-deductible basis (Form 8606).
Should I pay the tax from the conversion or outside funds?
Always from outside (non-retirement) funds if possible. Paying tax from the conversion itself reduces the Roth balance permanently — losing future tax-free growth on those dollars. Outside payment keeps the full converted amount working in Roth.
What is the 5-year rule on conversions?
Each conversion must remain in the Roth for 5 calendar years before tax-free withdrawal of the converted amount (regardless of age). Earnings on conversions are subject to a separate 5-year rule on the first-ever Roth contribution.