The Moment
You have money in a Traditional IRA or old 401(k) and you are considering converting it to a Roth IRA. The appeal is clear: Roth money grows tax-free and comes out tax-free in retirement. But the conversion triggers a tax bill today — and the decision depends on whether that tax bill now is less than the tax bill you would pay later.
When to Convert
Convert when you are in a low-income year. Job transition, sabbatical, early retirement, gap year — any year where your taxable income is unusually low creates a conversion window. If you normally earn $120,000 (24% bracket) but earn $40,000 this year (12% bracket), you can convert enough to fill up the 12% bracket and pay roughly half the normal tax rate.
Convert when you expect higher future taxes. If you are early in your career and expect rising income, converting now at 22% beats withdrawing later at 32%. If you believe tax rates will increase generally (due to national debt, policy changes), converting locks in today's rates.
Convert if you want to leave tax-free money to heirs. Inherited Roth IRAs are distributed tax-free to beneficiaries. Inherited Traditional IRAs are taxed as ordinary income. Converting now means your heirs receive the full value.
Convert if you do not need RMDs. Traditional IRAs require minimum distributions starting at age 73. If you do not need the money, converting to Roth eliminates RMDs and allows the money to continue growing tax-free.
When NOT to Convert
Do not convert if you must pay the tax from the IRA. The conversion tax should come from non-IRA funds. If you convert $50,000 and pay $12,000 in taxes from the IRA, you only have $38,000 in the Roth. That $12,000 lost to taxes is $12,000 that will never compound. Pay the tax from your checking account.
Do not convert if you are in your peak earning years. Converting $100,000 at a 35% marginal rate costs $35,000 in taxes. If your retirement rate is 22%, you are better off waiting.
Do not convert if it pushes you into a higher bracket. Convert only enough to stay within your current bracket. You can convert partial amounts — $10,000 or $30,000 at a time — rather than the full balance.
Run Your Numbers
See how Roth conversion amounts grow tax-free over your time horizon.
Compound Growth Projector
What to explore next
- →What is the backdoor Roth IRA strategy?
- →How do I calculate the optimal conversion amount?
- →Should I do a multi-year Roth conversion ladder?
Frequently Asked Questions
How much should I convert each year?
Convert enough to fill your current tax bracket without pushing into the next one. For example, if the 22% bracket ends at $95,375 (single) and your taxable income is $70,000, you can convert up to $25,375 at the 22% rate. Your CPA can calculate the exact amount.
Can I undo a Roth conversion?
No. Since 2018 (Tax Cuts and Jobs Act), Roth conversions are irrevocable. Once converted, the tax bill is permanent. This makes the timing and amount decision important — you cannot reverse course if the market drops after conversion.