A Roth IRA conversion involves moving money from a pre-tax retirement account such as a Traditional IRA into a Roth IRA and paying income taxes on the amount converted. The potential benefit is tax-free growth and greater flexibility later in retirement.
However, whether a conversion makes sense depends largely on the tax rate you pay today compared with the rate you—or your beneficiaries—may pay in the future. A conversion should therefore be evaluated as part of your broader retirement, tax, and estate plan rather than as an isolated decision.
Key Takeaways
- A Roth conversion is generally most attractive when the tax rate you pay today is likely to be lower than the rate you would otherwise pay in the future.
- The years after retirement but before Social Security benefits, pension income, and required minimum distributions begin may create an attractive planning opportunity.
- Conversions can reduce future required minimum distributions and provide greater flexibility over where your retirement income comes from.
- Consider how conversions affect Medicare premiums, deductions, capital-gains rates, Social Security taxation, and the taxes your beneficiaries may eventually pay.
- The objective is to minimize lifetime taxes—not necessarily the taxes you pay this year.
Why Consider a Roth IRA Conversion?
1. You Are in a Temporarily Low Tax Year
A low-tax year is relative. Compare the tax rate you would pay on a conversion today with the rate you are likely to pay in the future.
To make that comparison, consider the income you may eventually receive from:
- Social Security benefits
- Pensions
- Interest, dividends, and capital gains
- Required minimum distributions from traditional retirement accounts
- Other recurring sources of retirement income
For many people, the years immediately after retirement create a window to execute conversions at preferable rates. Employment income has stopped, but Social Security benefits, pension income, and required minimum distributions may not have started. As a result, taxable income may be substantially lower than it will be later in retirement.
Deductions may allow a portion of a conversion to be completed with little or no federal income tax. Additional conversion income then moves through the 10%, 12%, 22%, 24%, 32%, 35%, and 37% federal ordinary-income tax brackets.
Conversions completed within the 10% or 12% brackets can be particularly attractive. The 22% and 24% brackets may also present worthwhile opportunities, especially when future required minimum distributions, Social Security benefits, or a change from married filing jointly to single status could produce a higher future tax rate.
Conversions in the 32%, 35%, or 37% brackets are generally less attractive, though every situation is different. A higher-bracket conversion may still make sense when the priority is to leave more assets tax-free to heirs.
2. Most of Your Liquid Assets Are in Pre-Tax Accounts
If most of your investments are held in traditional IRAs, 401(k)s, or other pre-tax retirement accounts, your future tax liability may continue growing along with those accounts.
Eventually, required minimum distributions may force you to withdraw more taxable income than you need for spending. Those distributions could increase your marginal tax rate and raise your Medicare premiums.
Converting gradually can create better tax diversification among:
- Taxable investment accounts
- Tax-deferred retirement accounts
- Tax-free Roth accounts
Greater tax diversification provides more control over where retirement income comes from and how much taxable income you recognize each year.
3. You Have Outside Funds Available to Pay the Tax
A conversion is generally more attractive when the resulting tax can be paid from cash or a taxable investment account.
Paying the tax from outside funds allows the entire converted amount to remain invested in the Roth IRA. This gives more money the opportunity to grow tax-free.
Using money from the IRA to pay the tax reduces the amount that reaches the Roth account and may reduce the benefit of the conversion.
4. You Want to Protect a Surviving Spouse From the “Widow’s Tax”
The “widow’s tax” describes the higher tax burden a surviving spouse faces after going from married filing jointly to filing as a single taxpayer.
For example, in 2026, $205,000 of taxable income falls within the 22% marginal federal bracket for a married couple filing jointly. The same taxable income would place a single filer in the 32% marginal bracket.
When one spouse dies, the surviving spouse may inherit the deceased spouse’s traditional IRA. The surviving spouse can generally roll it into an IRA in his or her own name, but future required minimum distributions will then be added to the survivor’s other income.
The surviving spouse could therefore have similar income but much narrower tax brackets. A Roth conversion completed while both spouses are alive may reduce future required minimum distributions and provide the survivor with a source of potentially tax-free income. If a surviving spouse treats an inherited Roth IRA as his or her own, the account is not subject to required minimum distributions during the surviving spouse’s lifetime.
5. Your Children Are High-Income Earners
The SECURE Act generally requires many non-spouse beneficiaries who inherit retirement accounts from someone who died after December 31, 2019, to empty the account by the end of the tenth year following the owner’s death.
Annual distributions may also be required during that period in certain circumstances, particularly when the original owner died after beginning required minimum distributions. The specific requirements depend on the beneficiary and the original account owner’s circumstances.
If your children are already in their highest-earning years, inherited traditional IRA distributions could be added to their employment income and taxed at relatively high rates. This may result in more of the inheritance going toward taxes instead of remaining with the family.
An inherited Roth IRA is generally still subject to the 10-year depletion rule for children and many other non-spouse beneficiaries. However, annual distributions typically are not required during that period. This means your children may be able to leave the assets invested for up to 10 years before withdrawing the remaining balance, allowing for additional tax-free growth. Withdrawals are generally income-tax-free, assuming the Roth IRA satisfies the five-year holding requirement.
6. You Are Concerned That Future Tax Rates May Be Higher
No one knows precisely where tax rates will be decades from now. However, if you believe tax rates will increase in the future, paying tax at a known rate today may be attractive.
Although no one can predict where tax rates are headed, current federal income-tax rates remain relatively low compared with much of U.S. history.
7. You Are Addressing a Potential Estate-Tax Liability
Roth conversions may also play a role in estate planning.
Maryland’s estate-tax exemption is $5 million per person. A married couple may effectively protect up to $10 million if the first spouse’s unused exemption is preserved by filing a timely Maryland estate-tax return and electing portability. For Maryland residents with estates above these thresholds and substantial pre-tax retirement assets, paying Roth-conversion taxes during life may reduce the size of the taxable estate.
When Might You Avoid or Delay a Roth Conversion?
You Expect to Pay a Lower Tax Rate Later
A Roth conversion is not automatically beneficial simply because tax-free income sounds appealing.
When you convert, you accelerate taxes that otherwise could have been deferred for years. You also reduce your available cash or taxable investments when you pay the conversion tax.
If both spouses live long lives, future tax rates remain the same or decline, and retirement income is manageable, it may take many years for the tax-free growth to compensate for the upfront tax cost.
Your Assets Are Already Tax-Diversified
If you already have a balanced mix of taxable, tax-deferred, and Roth assets, you may have enough flexibility to manage taxable income without making large conversions.
Tax diversification gives you more control over where your retirement income comes from. In some years, additional taxable income could push you into a higher marginal tax bracket. Having assets spread across taxable, tax-deferred, and tax-free accounts may allow you to draw from a Roth IRA instead of a traditional IRA, helping you avoid recognizing additional taxable income when it is least advantageous.
It can also provide flexibility when deciding which accounts to use for spending, charitable giving, and other financial needs. If you already have that flexibility, the benefit of additional conversions may be smaller.
You Value the Benefits of Remaining in a Lower Tax Bracket Today
You may prefer to preserve the benefits of being in a lower tax bracket today rather than accelerate income through a Roth conversion. This can be a reasonable choice if keeping your current tax bill lower is more important to you and you are comfortable with the possibility of paying more taxes in the future.
A Roth conversion requires paying taxes sooner in exchange for the possibility of greater tax flexibility and lower taxes later. Not everyone is comfortable making that tradeoff, even when a conversion may produce projected long-term tax savings.
You Expect to Move to a Lower-Tax State
Where you live when the conversion occurs can make a significant difference.
A Maryland resident could face combined state and local income taxes of approximately 9%, depending on the county. Florida does not impose an individual state income tax.
Someone who plans to move from Maryland to Florida may benefit from postponing a conversion until after becoming a Florida resident. On a $500,000 conversion, avoiding a 9% state and local tax could represent approximately $45,000 in potential savings.
Four Conversion Consequences People Often Overlook
Many Roth conversion strategies are described as “filling up” a tax bracket. For example, someone in the 22% bracket might convert enough from a Traditional IRA to a Roth IRA to reach the top of that bracket before moving into the 24% bracket. That can be a useful starting point, but it is not a complete evaluation.
1. Medicare Premiums
A Roth conversion increases modified adjusted gross income. For someone enrolled in Medicare—or approaching Medicare eligibility—that income could trigger an Income-Related Monthly Adjustment Amount, commonly called IRMAA.
IRMAA can increase both Medicare Part B and Part D costs. Medicare generally uses income from two years earlier, so a conversion this year could affect premiums two years from now.
2. The Enhanced Senior Deduction
Taxpayers age 65 and older may qualify for a temporary enhanced senior deduction of up to $6,000 per eligible person.
For married couples filing jointly, the deduction begins phasing out when modified adjusted gross income exceeds $150,000. A Roth conversion could reduce or eliminate this deduction, effectively increasing the conversion’s marginal tax cost.
3. The Net Investment Income Tax
The 3.8% Net Investment Income Tax can apply to a portion of investment income when modified adjusted gross income exceeds the applicable threshold.
The threshold is $250,000 for married couples filing jointly and $200,000 for single filers. A Roth conversion is not itself net investment income. However, because it increases modified adjusted gross income, it can cause more of a taxpayer’s interest, dividends, capital gains, or other investment income to become subject to the tax.
4. Other Income and Tax Consequences
A conversion may also:
- Cause more Social Security benefits to become taxable
- Reduce eligibility for certain deductions or credits
- Increase estimated-tax requirements
- Push long-term capital gains and qualified dividends into a higher tax bracket. Although a Roth conversion is taxed as ordinary income, the additional taxable income could cause some long-term gains or qualified dividends to be taxed at 15% instead of 0%, or at 20% instead of 15%.
This is why a conversion should be modeled within the taxpayer’s complete financial and tax picture.
How We Evaluate Roth IRA Conversions
Our process begins by estimating lifetime taxes under multiple scenarios rather than looking only at the current year.
We evaluate:
- Whether a conversion is likely to reduce lifetime taxes and which years may offer the best opportunities
- How much should be converted each year and whether to remain within a particular marginal tax bracket
- A current-year tax analysis comparing a Roth conversion scenario with a no-conversion scenario, including the projected federal and state taxes under each approach and the additional tax cost of completing the conversion
- How the conversion affects Social Security taxation, Medicare premiums, deductions, capital-gains rates, and investment income
- Whether available cash can cover the conversion tax without disrupting the retirement plan
The appropriate strategy is not always the one that produces the lowest tax bill this year. It is the one that best supports the broader retirement, estate, and lifetime-tax plan.
Final Thoughts
A Roth IRA conversion can be a powerful planning tool, but it is not automatically the right decision—and it should not be treated as a one-time, all-or-nothing choice.
For many retirees, the best approach is a series of measured annual conversions during lower-income years. The amount may change each year based on investment returns, tax-law changes, deductions, Medicare thresholds, charitable giving, and other income.
A Roth IRA conversion is not purely a quantitative decision. The analysis should consider the numbers, but also your personal goals, priorities, and comfort with paying taxes today in exchange for greater flexibility later. The right strategy depends not only on projected tax savings, but also on what you want your retirement income, estate plan, and family legacy to accomplish.