Let’s face it—taxes don’t disappear when you retire. In fact, for many people, retirement can trigger new, unexpected tax burdens. That’s where Roth conversions come in.
A Roth conversion isn’t just some accountant’s trick. It’s a real, powerful financial planning move that could save you thousands—or even hundreds of thousands—over the course of your retirement.
If you’ve ever wondered if you should convert your traditional IRA or 401(k) to a Roth, this article is for you.
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What Is a Roth Conversion?
Let’s start with the basics. A Roth conversion means you’re moving money from a pre-tax retirement account—like a Traditional IRA or 401(k)—into a Roth IRA.
Here’s the catch: when you convert, you’ll owe income tax on the money you move. But once it’s in the Roth IRA, it grows tax-free—and withdrawals in retirement are also tax-free.
Sound simple? It is. But deciding when and how much to convert is where strategy matters.
Why Do a Roth Conversion?
You might be thinking, “Why would I pay taxes now if I don’t have to?”
Great question. The short answer is: you’re betting that your tax rate today is lower than it will be in the future.
That future could be:
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When you retire and Social Security plus Required Minimum Distributions (RMDs) kick in.
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If tax laws change and rates rise (yes, it happens).
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Or if you pass money to your kids, and they inherit your IRA in a higher bracket than you ever were.
So you pay taxes now, potentially at a lower rate, and your money grows tax-free forever after.
How Roth Conversions Save You Money Long Term
Let’s walk through a quick example.
Say you convert $50,000 from a Traditional IRA at a 22% tax rate. You pay $11,000 in taxes now. That $50,000 then grows for the next 20 years, untouched by the IRS.
If it doubles or triples, you just legally avoided tens of thousands in future taxes.
It’s like buying out your “silent partner” (Uncle Sam) while he’s still giving you a discount.
When a Roth Conversion Makes Sense
Here are some situations when a Roth conversion could be a smart move:
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You’re in a low tax bracket this year (maybe you retired early or had less income).
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You expect higher income later (like Social Security, pensions, or large RMDs).
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You want to reduce future RMDs (Roth IRAs don’t have them).
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You’re leaving an inheritance and want to reduce tax burden for your heirs.
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You moved to a low- or no-income-tax state and want to take advantage now.
On the flip side, if you’re already in a high bracket, a conversion might not be worth it unless you’re confident taxes will go even higher.
The “Tax Bracket Filling” Strategy
One popular Roth conversion tactic is “filling the bracket.”
Let’s say you’re in the 12% federal tax bracket, and it tops out at $94,300 (for married couples filing jointly in 2025). If you’ve only earned $70,000 this year, you could convert up to $24,300 and stay within that 12% bracket.
That’s what we mean by “filling the bracket.” You’re using up unused room in your current tax bracket to convert more at low rates.
It’s a smart way to chip away at your pre-tax balance without pushing yourself into a higher bracket.
Timing Is Everything
Roth conversions don’t have to be all or nothing. In fact, doing smaller annual conversions over time can be much smarter than one giant lump sum.
For example:
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Convert more in early retirement, before Social Security starts.
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Convert in years where your income dips.
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Avoid converting so much that you trigger Medicare IRMAA surcharges or bump into the next bracket.
Pro tip: Conversions must be completed by December 31 of the calendar year—there’s no “grace period” like with IRA contributions.
What About State Taxes?
Yep—state income tax matters too. Some states don’t tax IRA withdrawals at all. Others do.
If you’re planning a move from a high-tax state (like California or New York) to a no-tax state (like Florida or Texas), wait to convert until after the move.
This could save you thousands right off the bat.
Watch Out for These Common Mistakes
Let’s be real—Roth conversions are simple in concept, but they’re easy to mess up. Avoid these common pitfalls:
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Converting too much at once, which can push you into a higher tax bracket.
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Not having cash on hand to pay the taxes (never use IRA funds to pay taxes).
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Triggering Medicare IRMAA surcharges by increasing your MAGI (modified adjusted gross income).
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Assuming conversions can be undone—they can’t anymore (the IRS removed recharacterizations in 2018).
Pros and Cons of Roth Conversions
Let’s break it down with a quick list:
Pros:
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Tax-free withdrawals in retirement
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No required minimum distributions (RMDs)
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Helps control future tax brackets
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Can reduce taxes on Social Security or capital gains
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Creates tax-free legacy for heirs
Cons:
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Pay taxes upfront
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Can affect Medicare premiums and ACA subsidies
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Might push you into a higher bracket
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Complex timing and strategy required
How to Know If It’s Right for You
Here’s my honest take: Roth conversions aren’t one-size-fits-all.
But for many people, they’re a golden opportunity to lower lifetime taxes. Especially if:
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You’re flexible about when you take income
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You’re in control of your tax picture
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You care about leaving money to loved ones tax-free
The best part? You don’t have to go it alone. A qualified financial advisor can help you model out scenarios, run tax projections, and create a smart conversion schedule.
That’s exactly what I do with my clients every fall. We sit down, look at income, bracket thresholds, and map out the sweet spot.
In Conclusion: Turn Today’s Taxes into Tomorrow’s Tax-free Riches
Roth conversions might sound intimidating, but they’re one of the most powerful tools in retirement planning.
Think of it like this: would you rather pay taxes on the seed or the harvest?
With a little planning, you can take control of your tax future—and keep more of your money working for you, not Uncle Sam.
If you haven’t looked into a Roth conversion strategy yet, now’s a great time to start.
