Roth Conversion Strategies for Retirement

A Roth conversion is one of the most powerful tools in retirement tax planning, and one of the most misunderstood. The concept is simple: you move money from a traditional IRA (where withdrawals are taxed as income) to a Roth IRA (where withdrawals are tax-free). You pay taxes on the amount you convert today, but you never pay taxes on that money, or its growth, again.

The question isn't whether Roth conversions are good. It's whether they're good for you, and if so, how much and when.

When Roth Conversions Make Sense

The ideal time for Roth conversions is when your taxable income is temporarily low, typically the years between retirement and age 73, when required minimum distributions (RMDs) begin. During these years, you may be in a lower tax bracket than you were while working, and potentially lower than you'll be once RMDs kick in.

Converting during these “gap years” lets you fill up lower tax brackets with conversion income, paying a relatively low rate on money that will then grow tax-free for the rest of your life (and potentially your heirs' lives).

Tax Implications to Understand

The conversion amount is added to your taxable income in the year you convert. This means a large conversion can push you into a higher bracket, trigger Medicare premium surcharges (IRMAA), or cause your Social Security benefits to become more heavily taxed.

The key is careful sizing. We model conversions down to the dollar to fill up a specific bracket without spilling over. For many clients, converting $50,000-$100,000 per year over several years is more tax-efficient than one large conversion.

Timing Considerations

Beyond the gap years, other factors affect timing. Tax rates could change in the future, though most individual rates were made permanent by the One Big Beautiful Bill Act in 2025. Your estate plan may benefit from Roth assets (heirs inherit Roth IRAs tax-free). And the longer your Roth money has to grow, the larger the tax-free benefit becomes.

Conversely, if you expect your income to drop significantly in the near future, or if you'll need the converted funds within five years (the five-year rule applies a penalty for early withdrawals of converted amounts), the timing may not be right.

The Multi-Year Approach

Most successful Roth conversion strategies are multi-year plans, not one-time events. We build a conversion schedule that accounts for projected income, tax brackets, IRMAA thresholds, Social Security taxation, and your overall financial plan. The goal is to minimize your lifetime tax bill, not just this year's.