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When a Roth Conversion May Make Sense for Retirement Savers

If you've spent years contributing to a traditional IRA or workplace retirement plan, you've likely benefited from tax deductions or pre-tax contributions during that time. Eventually, though, many retirement savers begin asking a different question: Would it make sense to pay taxes now in exchange for tax-free withdrawals later?

That's the basic idea behind a Roth conversion, a strategy that allows you to move assets from a traditional IRA, SEP IRA, SIMPLE IRA1, or an eligible employer plan such as a 401(k), into a Roth IRA.2 In exchange for paying taxes on the converted amount today,1 future qualified withdrawals from the Roth can be tax-free.2

A Roth conversion isn't right for everyone,3 because the upfront tax cost can be significant, and conversion timing matters. But under the right circumstances, a conversion can provide greater tax flexibility and potentially help you manage future retirement income more efficiently.3


Understanding How Roth Conversions Work

A Roth conversion transfers money from a traditional IRA, or in some cases another eligible retirement account, into a Roth IRA. Because contributions to traditional retirement accounts are often made with pre-tax dollars, the amount converted is generally treated as taxable income in the year of the conversion.1

For example, if you convert $25,000 from a traditional IRA to a Roth IRA, that $25,000 is typically added to your taxable income for the year.1

Once the money is in the Roth IRA, however, future qualified withdrawals can be tax-free if they meet IRS requirements.2 Unlike traditional IRAs, Roth IRAs also do not require withdrawals during the original owner's lifetime.2

Regardless of your income, you may be able to convert amounts from a traditional IRA into a Roth IRA.4 There is also no specific dollar limit on the amount you can convert in a given year.5


Situations Where Investors Often Consider Conversions

One common reason investors consider a Roth conversion is that they expect to be in a higher tax bracket later. You may be early in your career and expect your income to rise substantially over time, or you may believe future tax rates will climb regardless of your own earnings. In either case, paying taxes on a conversion now may be preferable to paying taxes on withdrawals later.6

Some investors also consider conversions during years when their taxable income is temporarily lower than normal, such as after a job loss or another gap in earnings.6

Retirees sometimes use Roth conversions as part of a broader tax management strategy.7 Converting portions of traditional retirement assets before required minimum distributions (RMDs)8 begin may help reduce future taxable distributions and provide additional flexibility later in retirement.8

Because state tax treatment of Roth conversions varies widely, where you live, or plan to retire, can also affect your conversion math. Some states tax retirement income, including converted amounts, the same as ordinary income, while others exempt some or all retirement income, and a handful have no state income tax.9 Investors who are considering relocating in retirement may want to factor potential state tax savings into their timing decisions.

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Paying taxes now with a Roth conversion instead of later could pay off.

Another potential benefit is estate planning.2 Because Roth IRAs are not subject to lifetime RMDs for the original owner, assets can potentially continue growing tax-free for a longer period.10


Potential Benefits and Tradeoffs

The primary benefit of a Roth conversion is the potential for tax-free qualified withdrawals in retirement.2 This can provide flexibility when managing taxable income during retirement because you may have both taxable and tax-free sources of income available.

A Roth conversion may also help reduce future RMDs by lowering the balance held in traditional retirement accounts.7 However, the strategy comes with tradeoffs.

The most obvious is the tax bill.1 Because the converted amount is generally treated as taxable income, a large conversion could push you into a higher tax bracket or increase your tax liability for the year.5 Conversions can also affect other parts of your financial picture. Higher income resulting from a conversion may influence Medicare premium surcharges, taxation of Social Security benefits, or eligibility for certain tax credits and deductions.11

In addition, Roth conversions cannot be reversed once completed.1 Finally, investors should understand the Roth five-year rule.12 Depending on your age and circumstances, withdrawals of converted amounts may be subject to additional rules and potential penalties if taken too soon after the conversion.12


Questions To Discuss With Your Advisor

Because a Roth conversion affects taxes, retirement income planning and long-term wealth-building goals, it can be helpful to evaluate the decision as part of a broader financial strategy.

Questions to consider include:

  • Am I likely to be in a higher or lower tax bracket in retirement?
  • How much tax would a conversion create this year?
  • Would converting only a portion of my retirement assets make sense?
  • Do I have funds available outside my retirement accounts to pay the resulting taxes?
  • How might a conversion affect future RMDs and retirement income flexibility?
  • Could a conversion affect Medicare premiums or other tax-related considerations?

For some investors, the answer may be that a Roth conversion isn't necessary. For others, a carefully planned conversion strategy spread over several years may provide meaningful long-term benefits.

The key is understanding both the opportunities and the tradeoffs before making a decision. When used thoughtfully and in the right circumstances, a Roth conversion can become another tool for creating greater flexibility in retirement.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Internal Revenue Service, "Retirement plans FAQs regarding IRAs,” November 16, 2025. Accessed August 11, 2026. Back
  2. Internal Revenue Service, "Roth IRAs,” August 26, 2025. Accessed August 11, 2026. Back
  3. Steven L. Rich, “Should You Jump on the Roth Conversion Bandwagon? A Financial Adviser Weighs In,” Kiplinger, February 15, 2026. Accessed August 11, 2026. Back
  4. Internal Revenue Service, "Topic No. 309, Roth IRA Contributions" May 8, 2026. Accessed August 11, 2026. Back
  5. Greg Daugherty, "Roth IRA Conversion Rules,” Investopedia, May 6, 2026. Accessed August 11, 2026. Back
  6. Greg Daugherty, "Converting Traditional IRA Savings to a Roth IRA,” Investopedia, April 14, 2025. Accessed August 11, 2026. Back
  7. Beth Pinsker, “Roth conversions may suddenly seem like a bad idea, but here's why retirees are still considering them,” MarketWatch,December 17, 2024. Accessed August 11, 2026. Back
  8. Isaac Morris, “How to Optimize Your RMDs in Retirement,” Kiplinger, May 13, 2024. Accessed August 11, 2026. Back
  9. Gabriella Cruz-Martines, "16 States Don't Tax Pension Income in 2026,” Kiplinger, May 27, 2026. Accessed August 11, 2026. Back
  10. Internal Revenue Service, "Retirement Topics - Required Minimum Distributions (RMDs),” April 8, 2026. Accessed August 11, 2026. Back
  11. Donna LaValley, “7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later,” Kiplinger, June 11, 2026. Accessed August 11, 2026. Back
  12. Joy Taylor, “What to Know About the Five-Year Rules for Roth IRAs,” Kiplinger, January 14, 2025. Accessed August 11, 2026. Back