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Use this calculator to help you consider converting assets to a Roth IRA.

Roth IRA Conversion calculator

Retirement: For Individuals: Roth IRA Conversion

Consider the benefits of a Roth IRA conversion.

All investors can convert their retirement assets to a Roth IRA* regardless of their modified adjusted gross income or tax filing status. Before you consider converting any of your assets, you’ll want to make sure that a Roth IRA Conversion makes sense for your financial situation.

Roth IRAs have several benefits, including:

  • Potential for federally tax-free growth and distributions.**
  • Power of compounded earning potential.
  • Opportunity for federally tax-free distribution to heirs.**
  • Variety of investment options.
  • No required minimum distributions.

Three Simple Steps

Use these simple steps when working with your financial professional and tax advisor to determine if a Roth IRA Conversion makes sense for your situation: 

  • Inventory your retirement assets – Determine how much you want to convert and from which retirement account(s).
  • Determine your tax payment strategy – Make a plan for your tax payments before you complete a Roth IRA Conversion.  Keep in mind that:
    • Paying income taxes with assets from other than your retirement accounts may be beneficial.
    • A 10% IRS early withdrawal penalty may apply if you are under 59½.
    • The pro-rata rule determines your tax liability if you maintain IRA(s) containing both pre- and post-tax contributions.
  • Review your retirement portfolio regularly – Review your retirement accounts at least annually.  Changes in risk tolerance, investment performance, or life events may warrant changes in your retirement strategy.

Is a Roth IRA Conversion Right for You?

Eligibility for a Roth Conversion doesn’t automatically mean you should convert your assets.  Roth Conversions may not be appropriate for all investors.  Consult your financial professional and tax advisor to determine if it is appropriate for your individual circumstances.
*Conversions are subject to federal income taxes.  State taxes also may apply: check with your local tax advisor.  Refer to IRS Publication 590, Individual Retirement Arrangements (IRAs) for a complete discussion of making contributions and taking withdrawals from IRAs.
**Roth IRA contributions are not tax-deductible, but earnings can be withdrawn income-tax-free if you’re at least 59½ and have had the Roth at least five years.  Withdrawals made prior to age 59½ may be subject to a 10% IRS early distribution penalty.



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While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Sales Support at 1.800.787.1621.

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