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Roth Conversions have been the topic of intense debate lately. Some swear by them. Others think they’re the wrong move in nearly every circumstance.
But should there really be this much debate over a single financial planning strategy?
No. And here’s why: it’s not an all-or-nothing move. Roth Conversions aren’t something you do once and forget, or avoid entirely because someone on the internet told you to. They’re voluntary. You can use them in some years and skip them in others. The amount you convert is entirely at your discretion.
So what are they, in the simplest possible terms?
A Roth Conversion is paying the tax today on money that would otherwise be taxed later. You’re moving dollars from a pre-tax account, where they’ve never been taxed, into a Roth account, where future growth and withdrawals are tax-free (provided you’ve met the 5-year rules).
The strategy tends to make sense for people who are likely to be in a higher tax bracket in the future than they are today. If that’s you (or if you suspect it might be) then paying tax now, in a lower and known bracket, may be the smarter play.
Yes, tax law can change. Nothing is guaranteed. But if you believe income taxes will continue at the federal level, and you expect your tax exposure to grow, it’s at least worth running the numbers.
So who should actually be considering this? Not everyone.
The person who will clearly pay more tax now than in the future shouldn’t pile on more tax today by converting unnecessarily.
But there are several types of retirees for whom Roth Conversions deserve serious consideration. Here are the five most common:
1. Retirees Who Don’t Need Their RMD
This is a great problem to have, but it is still a problem worth solving.
Some retirees find themselves with healthy Social Security income, a pension or two, low expenses, and little to no debt. They’ve done a great job saving into pre-tax accounts for decades. They don’t actually need to touch those accounts to live comfortably.
The issue is that the IRS doesn’t care whether you need the money. Required Minimum Distributions (RMDs) kick in at age 73 (or 75, depending on your birth year), and the government will require you to take withdrawals — and pay tax on them — whether you want to or not.
Here’s what that can look like in practice: a retiree at 68 with $900,000 in a traditional IRA might have modest taxable income today, well within the 22% bracket. But by age 73, that account could grow to $1.2 million or more. At that point, the RMD alone could be $45,000 to $50,000 annually which is on top of Social Security and any other income. That combination can push retirees into the 24% bracket, trigger higher Social Security taxation, and raise Medicare premiums through IRMAA surcharges.
Converting some of that pre-tax balance now — while you’re in a lower bracket — can reduce the future RMD, reduce future tax exposure, and give you more control over when and how you pay the IRS.
A simple three-step framework to evaluate your situation:
1. Assess your current income and effective tax bracket.
2. Project your RMD at age 73 (or 75) using a reasonable growth rate assumption.
3. Determine whether that future RMD — stacked on top of Social Security and other income — will push you into a higher bracket or trigger additional taxes.
If the answer to step three is yes, a Roth Conversion strategy is worth exploring.
2. Retirees Who Expect More Income Later
A straightforward way to think about Roth Conversions: do you expect more income now, or later? If the answer is later (and by a meaningful margin) converting now may make sense.
This plays out more often than you might think. Consider a retiree who leaves the workforce at 62. Their income drops significantly, they’re not yet drawing Social Security, and their pension hasn’t started. That’s a window, sometimes several years wide, where their taxable income is relatively low. That window is a conversion opportunity.
Fast-forward a few years: Social Security starts, the pension kicks in, and suddenly their taxable income has climbed back toward — or beyond — their working years. The conversion window has closed.
Example: A couple retires at 62. For the next few years, their only taxable income is modest investment income. They’re in the 12% bracket. By 67, both have claimed Social Security, and the pension has started — they’re now in the 22% or 24% bracket. Converting during those early retirement years at 12% versus waiting to withdraw at 22%+ is a meaningful difference.
A separate scenario worth mentioning: expected inheritances. If you anticipate receiving assets from a parent or family member, and the bulk of those assets are held in pre-tax accounts, you may be looking at a significant ordinary income event in your future. That’s more money coming at you at whatever your future tax rate happens to be.
This isn’t a reason to bank on an inheritance. You shouldn’t plan around money that isn’t yours yet. But if it’s a realistic expectation, it’s worth factoring into your conversion analysis. You may want to get ahead of it.
3. Retirees Who Worry for a Surviving Spouse
This one doesn’t get talked about enough, and it should.
When one spouse passes away, the surviving spouse faces what’s commonly called the widow’s penalty. The income drop isn’t always as dramatic as you might expect. The lower of the two Social Security benefits goes away, but the higher benefit remains. That’s something.
The tax situation, however, can deteriorate significantly.
Nearly every tax threshold that matters to retirees is substantially less favorable for a single filer than for a married couple filing jointly.
Taxes Retirees May Face
- Ordinary income tax brackets are roughly half as wide for single filers.
- Long-term capital gains brackets are cut significantly.
- The Social Security income thresholds that determine how much of your benefit is taxable are much lower for single filers.
- IRMAA thresholds, which determine Medicare Part B and D surcharges, are nearly cut in half.
- The Net Investment Income Tax (3.8%) kicks in at $200,000 for single filers vs. $250,000 for married couples.
A real-world illustration: a married couple with $80,000 in RMDs might owe a modest federal tax bill. When one spouse passes, the survivor may have only slightly less income, but now they’re filing as a single taxpayer. That same $80,000 could push them into a higher bracket, increase how much of their Social Security is taxed, and potentially trigger an IRMAA surcharge, all at once.
And unlike some of the other scenarios in this list, there’s no real resolution to the widow’s penalty until the surviving spouse passes. RMDs don’t stop. The tax brackets don’t expand. It can become a permanent feature of their financial life.
Roth Conversions done while both spouses are alive, and while you’re still filing jointly with the favorable brackets, can reduce or eliminate this problem. Roth withdrawals don’t count as taxable income, which means they don’t affect Social Security taxation, IRMAA calculations, or capital gains brackets.
If there’s a meaningful age gap between spouses, or if one has health concerns, this becomes an even more pressing consideration.
4. Retirees Who Will Pass Assets to Their Children
For many retirees, the focus is (and should be) on their own retirement. But for others, leaving an inheritance matters deeply. If that’s you, how your heirs receive your assets is worth thinking through carefully.
Prior to 2020, non-spouse beneficiaries who inherited an IRA could stretch distributions over their own lifetime, which spread the tax bill over many years. The SECURE Act eliminated that for most non-spouse beneficiaries. Now, the entire inherited account must be liquidated within 10 years.
What this means in practice: if your adult child is in a high-income bracket, say, earning $200,000 per year in a high-tax state, and they inherit a $500,000 traditional IRA, they’re required to distribute that entire balance within 10 years. Those distributions count as ordinary income and get stacked on top of their existing salary. In a worst-case scenario, they could be paying 32%, 35%, or more in federal tax alone on those inherited dollars.
Roth IRAs inherited by non-spouse beneficiaries are subject to the same 10-year distribution rule. The key difference: those distributions are tax-free.
This is a meaningful consideration if your goal is to maximize what actually reaches your heirs and not what percentage goes to the federal government.
Yes, this is a good problem to have. But if leaving a tax-efficient inheritance matters to you, Roth Conversions during your lifetime can shift the burden from your heirs to you, and that can be beneficial if done at a lower tax rate.
5. Retirees Who Plan to Move to a Higher-Tax State
Retirement often brings a change of address. As a result, state taxes deserve consideration.
There are currently nine states with no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Several other states (including Illinois, Mississippi, and Pennsylvania) don’t tax retirement income specifically, even if they have a general income tax.
On the other end of the spectrum, states like California, New York, New Jersey, and Minnesota have some of the highest marginal income tax rates in the country, in some cases exceeding 10% at higher income levels.
If you currently live in a no-tax or low-tax state but plan to retire to a higher-tax state, your current window (before the move) may be the best opportunity to convert. Every dollar converted before the move is a dollar that won’t be taxed by your new state later.
The reverse is also true, and it’s worth stating: if you’re currently in a high-tax state and plan to retire to a state with no income tax, converting now means paying state tax you might have avoided entirely. In that case, waiting could be the smarter move.
A change in location can change the math, and thus, the validity, of your Roth Conversion strategy.
The Bottom Line
Roth Conversions can be used one year, and not the next. The amount you convert can vary from year to year.
If you recognize yourself in one or more of the scenarios above, that’s a signal worth paying attention to and Roth Conversions should be considered.
The years between retirement and the start of RMDs are often the single best window for this kind of tax planning. Once RMDs are in full force, your options narrow considerably. Acting in that window, deliberately and with a plan, is one of the more impactful moves available to a retiree.
Actionable steps:
- Identify which of the five scenarios above apply to your situation.
- Run a basic projection of your future RMD using your current account balance and a reasonable growth assumption.
- Map out your expected income sources, and when they start, to find your lowest-bracket years.
- Consider the widow’s penalty math if you’re married, especially if there’s a meaningful age or health difference between spouses.
- Review your state’s tax treatment of retirement income, particularly if a move is in your plans.
If you’re unsure where to start, that’s exactly the kind of conversation worth having with a financial planner who specializes in retirement income planning. The numbers will tell you what makes sense, but first, you have to run them.