Written by Jason Stein, CFP®, RICP®. Last reviewed July 2026.
Roth conversions come up in almost every planning relationship I have. They can offer tax-free growth, lower taxes later in retirement, and a cleaner inheritance for your children. They also come with a real cost up front, and I have seen the same strategy help one situation and hurt another.
This article covers the fundamentals: what a conversion is, what it does for you, what it costs, and how I decide whether one belongs in a plan. If you already know the basics and want to see how the 2025 tax law changed the picture, I wrote about that separately in Roth Conversions After the New Tax Law.
What is a Roth conversion?
A Roth conversion transfers money from a pre-tax retirement account, such as a traditional IRA or an old 401(k), into a Roth IRA. You pay ordinary income tax on the amount you convert, in the year of the conversion. After that, the money grows tax free and qualified withdrawals are tax free.
The difference between the two account types is when the tax gets paid:
- Traditional accounts. Contributions usually went in before tax, so every withdrawal in retirement is taxed as ordinary income.
- Roth accounts. Contributions go in after tax, and qualified withdrawals come out tax free, earnings included.
The conversion is the moment the IRS collects. Once that tax is paid, the converted money is done with income tax, and Roth IRAs have no required withdrawals during your lifetime.
What does a conversion actually get you?
Four things, mainly. Tax-free growth from the day of the conversion forward. No required minimum distributions from the Roth during your lifetime. A tax-free account for the people who inherit from you. And flexibility, because retirement spending can then be drawn from taxable, pre-tax, or Roth money depending on what each year calls for.
The required distribution point matters more than most people expect. Pre-tax accounts require withdrawals starting at age 73, or 75 if you were born in 1960 or later, according to the IRS. Roth IRAs have no such requirement while you are alive, so converted dollars can stay invested as long as you want them to.
The flexibility is the piece I find people underrate. When everything sits in pre-tax accounts, every dollar you spend is a taxable event. Having a Roth bucket alongside gives you a way to cover a large expense, a new car, a roof, a family trip, without pushing that year's income into a higher bracket.
For heirs, most children who inherit an IRA must empty it within ten years. With an inherited Roth, those withdrawals are tax free. With an inherited traditional IRA, they are taxed at your children's rates, often during their peak earning years.
What does it cost you?
The tax bill arrives now instead of later. Converted dollars are added to your ordinary income for the year, which can push you into a higher federal bracket, raise your Medicare premiums two years later, and, here in California, add state tax on the full amount. Conversions are also permanent.
A few specifics I walk through with anyone considering one. The option to undo a conversion, called recharacterization, was eliminated in 2018, so there is no reversing a conversion that turns out to be poorly timed. Withholding or estimated tax payments usually need adjusting in a conversion year, and your tax preparer should know the conversion happened. And where the tax money comes from matters: if the tax has to be paid out of the converted dollars themselves, less ends up in the Roth and the math weakens. I prefer to see the tax paid from a taxable account.
There is one more change worth knowing. For years, the case for converting included a deadline, because the 2017 tax rates were scheduled to expire at the end of 2025. Congress made those rates permanent in July 2025 in the One Big Beautiful Bill Act, often shortened to OBBBA, so converting to beat a rate increase is no longer part of the case. At the same time, the new law added income thresholds that a conversion can cross, including a deduction for people 65 and older that phases out as income rises, according to the IRS. The reasons to convert are now personal rather than legislative, and sizing matters more than it used to.
When does a conversion tend to make sense?
Usually when your tax rate today is lower than the rate you, your surviving spouse, or your heirs are likely to pay later. In practice, the strongest candidates are the lower-income years between retirement and the start of Social Security and required minimum distributions.
When I review a new plan, the conversion conversation usually starts with a projection of future income. The situations where conversions earn their keep look like this:
- A low-income window. You have retired, but Social Security and required distributions have not started. These years often support conversions at rates that will not be available later.
- A large pre-tax balance. Projected required distributions would push your income in your late 70s above anything you see today.
- A married couple planning ahead. A surviving spouse will eventually file at single rates, with brackets roughly half as wide. Converting at joint rates avoids that squeeze.
- Children in high brackets. If your heirs earn more than you, prepaying the tax at your rate is often the cheaper outcome for the family.
- Cash outside the IRA to pay the tax. This keeps the full converted amount working inside the Roth.
When do I tend to advise against it?
When the tax rate on the conversion is higher than the rate the money would likely face later. That usually means converting during peak earning years, converting dollars you plan to spend within a few years, or converting when the only way to pay the tax is from the IRA itself.
I also slow the conversation down when the motivation is a headline. Converting in response to news, whether about tax policy or markets, tends to produce oversized conversions in the wrong years. The projection, not the news cycle, should set the pace.
How do I decide?
I look at four things, in order: your projected income and brackets over the next several years, the income thresholds a conversion could cross, where the money to pay the tax would come from, and how long the converted dollars can stay invested. The longer the money stays put, the more the up-front tax bill earns back.
Most of the time, the answer that falls out is not all or nothing. It is a series of moderate conversions, sized each year to fill a low bracket without crossing the thresholds that matter, repeated for as long as the window stays open.
Frequently asked questions
Should I convert my entire IRA at once?
Usually not. A single large conversion can cross several brackets and thresholds in one year. Spreading conversions over several years typically keeps each one at a lower rate.
Is there a deadline for a Roth conversion?
Yes. A conversion must be completed by December 31 to count for that tax year. The April filing deadline does not apply.
Can a conversion be undone if markets fall or my situation changes?
No. Conversions have been irreversible since 2018, which is one of the reasons I size them carefully rather than converting a large amount at once.
What is the five-year rule on conversions?
There are two clocks. Each conversion has its own five-year clock for penalty-free access to those dollars before age 59 and a half. Separately, for earnings to come out tax free, your Roth needs to have been open five years and you need to be at least 59 and a half.
Do Roth conversions affect Medicare premiums?
They can, two years later. Medicare premium surcharges are based on your income from two years earlier, so a conversion this year can raise premiums two years from now.
A final word
Whether a conversion belongs in your plan is rarely a question of whether Roth conversions are good. It is a question of whether this year offers you a lower tax rate than the years ahead. Some years the answer is yes, some years it is no, and the plan works best when the question gets asked every year, in order: income first, then brackets, then thresholds, then amount.
This article is educational and general in nature. It is not tax, legal, or investment advice, and it does not consider your individual circumstances. Tax rules change, and how they apply depends on your situation.
