Annuity Roth Conversion Calculator (2026)

What is a Roth conversion?

A Roth conversion moves money from a traditional IRA or 401(k), where it has never been taxed, into a Roth, where it grows and comes out tax free. The catch is that you pay ordinary income tax on the amount you convert in the year you convert it. You are trading a tax bill today for tax-free money later, and for freedom from required minimum distributions, since a Roth IRA has none for the original owner. Whether that trade pays off depends mostly on your tax rate now compared with the rate you would pay later. For a simple one-time comparison, try the Roth conversion calculator. This page covers the annuity version, which converts year by year.

Why convert inside an annuity?

Most people who convert move money from one account to another. Some fixed index annuities take a different approach: they let you convert part of the contract to Roth each year without moving the money anywhere. The traditional portion and the Roth portion sit side by side in the same contract.

That matters for a few reasons:

• The 0% floor comes with it. The Roth portion keeps the same protection from market losses as the rest of the contract. Money you just paid tax to convert is not exposed to a down year in the index.
• Your crediting strategies stay in place. You do not have to pick new index options or start over with a new contract.
• A bonus already credited stays credited. The Roth portion carries whatever share of the premium bonus is already in the contract value.
• The surrender schedule does not restart. The converted money stays on the original schedule, instead of starting a fresh one in a new contract.

An important limit: only some contracts allow in-contract Roth conversions. Many fixed index annuities do not offer the feature at all, and the ones that do can set their own rules for how often and how much you can convert. If this is part of your plan, confirm it in writing with the insurance company before you buy. For a broader look at how these accounts work, see our guide to the Roth annuity and the IRA annuity.

How converting a little each year works

Converting everything in one year stacks the whole balance on top of your other income, which can push part of it into the 32%, 35% or even 37% bracket. Spreading it out keeps each year's conversion in a lower bracket. People call this "filling the bracket": you convert just enough to reach the top of a bracket you are comfortable paying, then stop until next year.

The 2026 federal brackets set the size of that room. For married couples filing jointly, the 22% bracket runs to $211,400 of taxable income and the 24% bracket to $403,550. For single filers, those limits are $105,700 and $201,775. Taxable income is what is left after the standard deduction, which is $32,200 for married couples and $16,100 for single filers in 2026.

Here is how the room works in practice. A married couple with $120,000 of income has $87,800 of taxable income after the deduction. Converting $123,600 fills them exactly to the top of the 22% bracket. The federal tax on that conversion comes to about $25,892, part of it at 12% and the rest at 22%. Any dollar beyond that would be taxed at 24%.

The calculator gives you five ways to set the yearly amount: fill to the top of your current bracket, fill to the top of the 22%, 24% or 32% bracket, or pick your own yearly figure. It figures the tax as the difference between the tax on your income plus the conversion and the tax on your income alone, so you see what the conversion itself costs.

A worked example

This is an illustration, not a projection. Growth is a hypothetical 5% a year, and to keep the math easy to follow, every conversion is taxed at a flat 24%, with the tax paid out of the conversion itself.

A married couple, both 60, move $360,000 of IRA money into a fixed index annuity with a 20% premium bonus. On day one the contract is worth $432,000. They plan to convert $90,000 a year.

• Year 1 (age 60). The traditional balance grows to $453,600. They convert $90,000, $21,600 goes to tax, and $68,400 lands in Roth 1.
• Year 2 (age 61). The traditional balance has grown to $381,780. Roth 1 has grown to $71,820. Another $90,000 converts, and Roth 2 starts at $68,400.
• Years 3 to 5. The pattern repeats. Each year adds a new Roth account, and every earlier one keeps growing.
• Year 6 (age 65). Only $56,749 is left in the traditional balance. They convert all of it, pay $13,620 in tax, and the traditional balance reaches zero.

Over six years the couple pays $121,620 in total tax. The $72,000 bonus offsets $72,000 of that bill, leaving $49,620 of the tax not covered by the bonus. At 65 the whole contract is Roth, worth about $439,980 at the assumed rate, with no traditional balance left to force RMDs later. The real calculator uses actual 2026 brackets instead of a flat rate, so your tax on each year's conversion will depend on your income.

The child Roth accounts and the 5-year rules

The calculator treats each year's conversion as its own "child" Roth account inside the annuity: Roth 1, Roth 2, Roth 3 and so on. The table shows each one on its own row so you can watch it grow from the year it was created.

This mirrors how the tax rules actually work, because every conversion starts its own 5-year clock:

• Converted principal. If you are under 59 and a half and you withdraw converted money before that conversion is 5 years old, the 10% early withdrawal penalty can apply to it. The clock starts on January 1 of the year you converted. Once you are past 59 and a half, this clock no longer matters for the penalty.
• Earnings. Growth on the Roth comes out tax free only when you are at least 59 and a half and your first Roth IRA has been open for at least 5 years.

For most people converting in their 60s, the second rule is the one to watch. If you have never had a Roth IRA, your first conversion starts that clock. The 59 and a half rule guide covers the early withdrawal penalty and its exceptions in more detail.

How converting changes your RMDs

Required minimum distributions start at 73 if you were born from 1951 to 1959 and at 75 if you were born in 1960 or later. Each year's RMD is based on your traditional balance, so the bigger that balance, the bigger the forced, fully taxable withdrawal. Our RMD calculator shows what yours might look like.

Once you reach RMD age, the RMD must come out first, and that money cannot be converted. It is also taxable income, so it uses up room in your bracket that you might have wanted for converting. Converting before RMD age shrinks the balance your RMDs are figured on, and if you convert all of it, as the couple in the example does by 65, there are no RMDs left at all. The calculator shows your lifetime RMDs with and without converting, side by side.

Smaller RMDs can have effects beyond the RMD itself:

• Taxes on Social Security. Up to 85% of your benefit can become taxable as your other income rises. RMDs count toward that income, while qualified Roth withdrawals do not. The Social Security taxable benefits calculator shows where you land.
• Medicare IRMAA. Part B and Part D premiums rise in steps above certain income levels, based on your income from two years earlier. Lower RMDs later can help keep you under those lines.

Conversions work the other way in the short run. A conversion counts as income in the year you do it, so a large one at 63 or later can raise your Medicare premiums two years later. Before 65, if you buy health coverage through the ACA marketplace, conversion income can also shrink or eliminate your premium subsidy. Many people size their yearly conversions with both of these in mind.

Pros and cons of converting inside an annuity

Pros

• Tax-free growth and tax-free qualified withdrawals on everything you convert.
• No RMDs on the Roth portion during your lifetime, which gives you more control over your taxable income.
• The converted money keeps the 0% floor, so a market drop cannot shrink it.
• You convert on your own schedule, a year at a time, without opening a new contract.
• A premium bonus adds value that can offset a meaningful share of the tax bill.
• A Roth can be a cleaner inheritance, since qualified withdrawals are generally tax free to your beneficiaries.

Cons

• You pay tax now on money you might otherwise have left untaxed for years.
• If your tax rate in retirement ends up lower than today's, converting can cost you more than it saves.
• Only some fixed index annuities allow in-contract Roth conversions, which narrows your choices.
• The money is still subject to the contract's surrender schedule. See how surrender charges work.
• Conversion income can raise Medicare premiums two years later and reduce ACA subsidies before 65.
• A conversion is permanent. It cannot be undone.

Paying the tax from the conversion or from other savings

You have two ways to pay the tax, and the calculator lets you choose either one.

From other savings. You convert the full amount and pay the tax with money from a bank or brokerage account. Everything you convert lands in the Roth and keeps growing tax free. Over time this usually leaves you with the larger Roth, because the dollars that went to taxes came from an account whose growth would have been taxed anyway.

From the conversion. The tax is withheld from the amount being converted, so less reaches the Roth. In the example, $90,000 converted became $68,400 in the Roth because $21,600 went to tax. This option keeps your cash reserves intact, which can matter a great deal if you do not have much outside the IRA.

There is one trap. If you are under 59 and a half, tax withheld from the conversion counts as a distribution, not a conversion. That withheld amount can owe the 10% early withdrawal penalty on top of the income tax. The calculator adds that penalty automatically when it applies. Also ask the insurance company how a withholding withdrawal interacts with your contract's free withdrawal allowance, since a withdrawal above that amount during the surrender period can bring a charge.

Who this tends to fit, and who should skip it

It tends to fit you if:

• You expect your tax bracket later to be the same as today's or higher, for example because RMDs, a pension and Social Security will stack up.
• You have a gap between retirement and RMD age with lower income, which leaves room in a lower bracket.
• You have savings outside the IRA to pay the tax.
• You want to leave money to heirs and would rather they inherit a Roth.
• You want the converted money protected from market losses while it grows.

You should probably skip it, or go slowly, if:

• You expect to be in a lower bracket later than you are now.
• You will need this money in the next few years. The contract's surrender charges still apply to both the traditional and Roth portions.
• Paying the tax would drain your emergency savings.
• You plan to leave the IRA to charity, which owes no income tax on traditional IRA dollars anyway.
• You are uncomfortable with a decision you cannot reverse. Since 2018, Roth conversions cannot be undone.

Tax rules around conversions have many moving parts. With annuities, the taxable value of a conversion can also include more than the account value shown on your statement, depending on the contract's features, so ask the insurance company how it values a conversion. Review your own numbers with a tax professional before you act.

How to use the calculator and read your results

Start with the basics:

• Your age and filing status. Age sets your RMD age and whether the 10% penalty can apply. Filing status sets your brackets and standard deduction. From 65 on, the calculator adds the extra standard deduction for older filers and, through 2028, the new senior deduction, which shrinks as income rises. A large conversion can reduce that senior deduction, and the calculator counts that cost.
• Your yearly income before any conversion. Wages, pension, taxable Social Security and other income. This decides how much room is left in your bracket.
• The amount going into the annuity, the premium bonus and an assumed growth rate. Use a conservative hypothetical rate. Fixed index annuity credits vary year to year and can be zero.
• A rider fee, if your contract has one. Enter the yearly charge and the calculator takes it off the whole contract every year, on both paths. A fee matters more than it looks here: the Roth money stays in the annuity and keeps paying it for decades, while RMD money that leaves the contract stops paying it. A high fee can turn a conversion plan that looks ahead into one that ends up behind.
• Your conversion plan. Fill to the top of your current bracket, fill to the 22%, 24% or 32% bracket, or enter a custom yearly amount.
• How you pay the tax, an optional state income tax rate, and the age to project to.

Then read the results in this order:

1. The yearly table. Check how many years it takes to empty the traditional balance and what each year's tax is. If one year's bill looks too big, lower the target bracket or switch to a custom amount.
2. Total tax against the bonus. The line "the bonus covers $X of the tax" shows how much of your total bill the bonus offsets.
3. RMDs with and without converting. A large gap here means converting takes a lot of future forced income off the table.
4. Any penalty line. If a 10% penalty appears, try paying the tax from other savings or starting after 59 and a half.

Keep in mind that the calculator applies the 2026 brackets to every year, while real brackets adjust for inflation. The growth rate is an assumption, not a promise. Treat the output as a way to compare plans, not a forecast of what you will have.

When you have a plan that looks right, a licensed strategist can show you which fixed index annuities allow in-contract Roth conversions and get you quotes at no cost.