Is a Roth Conversion Right For You?

The internet treats a Roth conversion like a magic trick. It isn’t. It’s a tax decision: pay the IRS now, at a rate you choose, so you (or your heirs) are not stuck with that bill later. This guide covers how conversions work, when they make sense, and when they don’t.

What Exactly Is a Roth IRA Conversion?

Think of it as pre-paying the tax on purpose. A Roth conversion means you are moving money from a traditional IRA into a Roth IRA and electing to pay the income tax now versus later.

Key Elements of Roth Conversions:

A conversion is essentially a distribution; traditional IRA distributions are taxed as ordinary income
There is noincome limit on conversions- but the higher your income, the higher your tax rate will be
There is no annual cap; convert as much as you want
The amount converted is considered taxable income during the conversion year

In plain English: Traditional IRAs carry a tax liability. Roth IRAs do not. You are pre-paying the tax now so the assets can be used in the future without any further taxation.

‍When Is the Best Time to Consider a Roth IRA Conversion?

The Retirement “Tax Window”

For many households, the best years sit between work ending and other income turning on. This window of time may prove to be the lowest tax bracket you'll ever experience.

For example:

The paycheck has stopped
Social Security has not started
You're still too young for RMDs
- RMDs begin at age 73 if born between 1951–1959
- Age 75 if born 1960 or later

The key is low taxable income. After work and before RMDs, the lower brackets often sit half empty. Once RMDs start, the IRS starts filling them for you.

‍Example: a $1,200,000 traditional IRA at age 73 equates to roughly $45,283 in RMD's; that's taxable income— whether you need the cash or not. Stack that on top of Social Security and a pension, and it can:

push you into a higher bracket,
make more of your Social Security taxable,
and, two years later, raise Medicare premiums through IRMAA.

Everyone can convert. The bracket you convert in is what matters:

The Right Time & The Wrong Time to Convert:

Good times to consider converting:

Income is temporarily low
Conversion stays in 12% or 22%
Tax paid from cash or a brokerage account
You expect your future tax rates to be the same or higher
You are converting only enough to fill this year's tax bracket

Times when it's better to pass:

High income years: Paycheck, pension, Social Security, and IRA withdrawals are already stacked
The conversion jumps you into 24%+
You would pay the tax from IRA money- a $6k tax bill on a $50k conversion at 22% shrinks the move if paid from the IRA.
You expect to be in a lower tax bracket in the future
The conversion trips IRMAA (a 2026 conversion can affect 2028 Medicare premiums if MAGI clears $109,000 single / $218,000 married)

Key observation- Roth conversions are not suitable for everyone: I see a lot of clients start a pension the day they retire. They spend the rest of retirement in an elevated bracket. For those households, the tax math on a conversion often does not work.

Lasting Benefits:

What You Keep After You Convert

A conversion raises this year’s tax bill on purpose. The point is a smaller bill later — and more control over when income shows up. Treat it as an annual decision, not a one-time cleanup.

Smaller RMDs

RMDs are taxable whether you need the cash or not. Move part of a traditional IRA to a Roth and that slice is no longer in the balance the IRS will force out. A smaller traditional IRA means a smaller RMD, and less income stacked on Social Security and everything else. Roth IRAs have no lifetime RMDs for the original owner. Important rule: if you are already of RMD age: take the RMD first. That distribution cannot be converted. Only dollars above the RMD can move to a Roth.

A Cleaner Inheritance

You pay the tax now, at a rate you choose, so heirs inherit a Roth instead of a traditional IRA with a tax bill attached. Qualified withdrawals can be tax-free for them. Most non-spouse heirs still must empty an inherited Roth within 10 years, but those withdrawals are generally tax-free if the account was qualified. That is often cleaner than pushing a large taxable IRA through a decade of their working years.

Key Takeaways for Roth IRA Conversions

✓ A conversion moves traditional IRA money into a Roth and creates a tax bill this year.

✓ You are pre-paying the tax so you — or your heirs — are not handed that bill later.

✓ The better years are often when taxable income is temporarily low: after work stops, before Social Security and RMDs.

✓ Converting can cut future RMDs, manage later-year taxes, and leave a cleaner account for a spouse or heirs.

✓ Size the conversion to this year’s bracket and the rest of the plan — not to a round number or this year’s tax bill alone.

Ready to Get Started? Click here to invest with us.

Thanks for reading, tune out the noise, and always be compounding!

‍Important Disclaimer: The information provided in this guide is for educational purposes only. Any examples used are based upon a fictitious client(s) that resembles our typical clients. Nothing here within should be considered investment or tax advice. Please consult with a financial advisor and/or CPA when considering investment and tax decisions. This is not personalized investment advice.