This calculator shows what converting a chosen amount to a Roth would cost you this year: federal and New Jersey tax on the conversion, the federal bracket room before it, what it does to the New Jersey retirement income exclusion, and what it does to your Medicare premium two years later.
What would a Roth conversion cost me this year?
The years between retiring and the first required distribution are the low-income years of a lifetime, and they are when a conversion is cheapest. This works out the federal and New Jersey tax on a conversion you choose, what it does to the New Jersey retirement income exclusion, and what it does to your Medicare premium two years later. It does not tell you whether to convert.
Federal taxable income is line 15 of Form 1040. Modified adjusted gross income is line 11 plus any tax-exempt interest; it is the figure Medicare uses. New Jersey total income is line 27 of Form NJ-1040, which is a different and usually larger figure, because New Jersey starts from a different base and allows different deductions. The last of the three is the taxable pension, annuity and IRA income already inside that total, from line 20a.
Federal brackets from IRS Revenue Procedure 2025-32. New Jersey rate schedules from the New Jersey Division of Taxation. The retirement income exclusion and its $150,000 limit from the instructions to Form NJ-1040, line 28a. New Jersey treatment of a conversion from publication GIT-2, IRA Withdrawals. Medicare amounts from the Centers for Medicare and Medicaid Services.
How it works
New Jersey has a cliff the federal system does not
A conversion counts in New Jersey total income. If that carries a household over $150,000 of total income, the retirement income exclusion is lost entirely, not reduced. Between $100,001 and $150,000 the exclusion is already tapering in bands, and those bands are a percentage of your own pension and retirement income rather than a percentage of the dollar cap, a distinction an earlier version of this calculator got wrong.
That makes the New Jersey question different in kind from the New York one. A conversion sized without checking the exclusion can cost more in lost exclusion than it saves in future tax.
One point that is genuinely unsettled
New York has a memorandum stating that conversion income qualifies for its pension and annuity exclusion. New Jersey has nothing equivalent. The card says so on the page rather than assuming an answer, because the treatment changes the arithmetic and we could not find it settled in a primary source.
The Medicare edge, two years out
Medicare premiums are set from income reported two years earlier and move in steps. A conversion a dollar over a threshold moves you a whole bracket, for both spouses. The calculator gives the exact amount that would stay under the next edge.
Questions
Common questions
Can I undo a conversion?
No. Recharacterisation was repealed for conversions made after 2017.
Should I check this against the exclusion calculator?
Yes, and the two are built to agree. If they ever disagree, treat the exclusion calculator as the authority on the exclusion and tell us.
Several of these choices cannot be undone.
A conversion is permanent, and in New Jersey it can cost more in lost exclusion than it saves in tax. We can cover it in a short conversation, at no charge and with no obligation.
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