Quick answer
A Roth conversion moves money from a Traditional IRA to a Roth IRA and taxes it now at your ordinary income rate, so it is worth doing whenever your current tax bracket is lower than the bracket you expect to withdraw in later. The best windows are a low-income year, a market downturn, or the years before Social Security and Required Minimum Distributions start adding to your taxable income. It is usually not worth it if your current bracket already matches or exceeds your expected future one, or if you would have to tap the IRA itself to cover the tax bill. Use the SwitchWize Money Map to check whether a conversion should come before or after other moves on your list this year.
A Roth conversion is straightforward in mechanics but requires careful tax planning to execute well. You direct your IRA custodian to transfer money from a Traditional IRA to a Roth IRA. The converted amount is added to your taxable income for the year and taxed at your ordinary income rate. Going forward, that money grows and can be withdrawn tax-free.
Why Convert: The Core Logic
Traditional IRA: tax deduction now, pay taxes on withdrawals later. Roth IRA: no deduction now, tax-free withdrawals later.
A conversion is essentially prepaying taxes. It is worthwhile when:
- Your tax rate now is lower than your expected rate when you withdraw
- You want to reduce future Required Minimum Distributions (RMDs) that start at age 73
- You want to leave tax-free assets to heirs
- You have a high balance in traditional accounts creating RMD risk
It is not worthwhile when:
- Your current tax rate is the same as or higher than your expected future rate
- You have to sell investments or tap the IRA itself to pay the conversion tax (the tax should be paid from outside funds)
When the Window Opens
Low-income years: Career gaps, sabbaticals, parental leave, early retirement before Social Security, years with large deductions from business losses or casualty losses. Any year your taxable income is unusually low is a conversion opportunity.
The gap years (62-72): Many retirees have a window between leaving work and claiming Social Security where their income drops significantly. Converting during this period, before Social Security and RMDs add to taxable income, is often optimal.
Market downturns: If your Traditional IRA balance falls 30% in a down market, converting the same number of shares costs 30% less in taxes. The money still grows back inside the Roth account once markets recover.
Before RMDs grow: At 73, the IRS requires minimum withdrawals from Traditional accounts whether you need the money or not. These add to taxable income, can push you into higher brackets, and can trigger IRMAA Medicare surcharges. Gradual conversions in your 60s reduce the future RMD burden. If you are still deciding between account types before any of this applies, our Roth IRA vs. Traditional IRA guide and capital gains tax guide cover the underlying mechanics conversions build on.
- Pay the conversion tax from non-IRA funds. Using IRA money to pay the taxes reduces your Roth balance and triggers an early withdrawal penalty if you are under 59½. The conversion is most powerful when you have taxable savings to cover the tax bill separately.
- Partial conversions, converting a specific dollar amount each year to fill a tax bracket, are often more efficient than converting everything at once. Converting up to the top of the 22% bracket each year, for example, keeps the tax cost manageable while gradually building Roth assets.
- The 5-year rule applies to converted funds: each conversion has its own 5-year clock before the converted principal can be withdrawn penalty-free (if under 59½). If you are over 59½, this rule does not apply to you.
How to Calculate the Tax Cost
- Determine the amount you want to convert
- Add it to your expected taxable income for the year
- Calculate your tax at the new total income level
- Subtract the tax you would have paid without the conversion
- That difference is the cost of the conversion
Example: You expect $50,000 in taxable income this year. You want to convert $20,000.
- New taxable income: $70,000
- Marginal rate on the $20,000 conversion: 22% (you were already in the 22% bracket)
- Conversion tax cost: $4,400
Is paying $4,400 now worth tax-free access to $20,000+ later? Yes, if your future rate will be 22%+; no, if your future rate will be 12%. See our tax brackets guide if you need to confirm which bracket the converted amount actually lands in, and Roth IRA vs. Traditional IRA for the underlying account mechanics if a conversion is new territory.
How to Execute a Roth Conversion
- Contact your IRA custodian (Fidelity, Vanguard, Schwab, etc.)
- Request a direct conversion. They transfer the specified amount or shares from your Traditional IRA to your Roth IRA at the same institution
- Choose in-kind (shares) or cash. Converting shares directly is simpler; you can also sell, move cash, and rebuy in the Roth
- Withhold or not. You can elect to have taxes withheld, but it is better to pay from outside funds (withholding reduces the converted amount)
- Report on Form 8606. The conversion is reported on your tax return; your custodian sends Form 1099-R
Conversions can be done any time during the calendar year and must be completed by December 31 for that tax year. There is no longer a recharacterization (undo) option; a conversion is permanent.
The Backdoor Roth for High Earners
High earners above the Roth contribution income limits ($165,000 single / $246,000 married in 2026) cannot contribute directly to a Roth IRA, but can use the backdoor Roth:
- Contribute to a non-deductible Traditional IRA (no income limit for contributions)
- Convert the Traditional IRA to Roth
The conversion triggers tax only on growth (usually minimal if converted quickly). The pro-rata rule complicates this if you have other Traditional IRA balances: the conversion is treated as coming proportionally from all IRA funds, not just the after-tax contribution.
Should You Convert This Year? A Quick Framework
- Action
- Convert up to the top of your current bracket
- Action
- Convert now; the same shares cost less in tax
- Action
- Convert gradually each year to shrink future forced withdrawals
- Action
- Skip conversion this year; revisit if income drops
Rule of thumb: never convert more than you can pay the resulting tax on from outside the IRA. Converting an amount you cannot cover with outside cash forces you to raid the IRA for taxes, which shrinks the very balance you were trying to grow tax-free. Check the Money Map if a conversion is competing with debt payoff or an emergency fund for the same dollars this year.
As of 2026, the current Roth contribution phase-out sits at $165,000 (single) and $246,000 (married filing jointly); these thresholds are indexed and change annually, so confirm the current-year figures directly with the IRS before finalizing a backdoor Roth. Use the Roth conversion window calculator to see how a specific conversion amount plays against your bracket this year, and run the decision through the Money Map alongside your other financial priorities.
What to Do Now
Sources
Required Minimum Distribution age and Roth conversion mechanics follow current IRS guidance on retirement plans (IRS.gov). Roth IRA contribution income limits and the conversion reporting requirement on Form 8606 are published directly by the IRS (IRS.gov); confirm the exact current-year phase-out figures there, since they are indexed annually. Roth conversion tax treatment and contribution limits change with legislation and annual inflation adjustments; consult a tax advisor before executing a large conversion.
Frequently Asked Questions
Is a Roth conversion worth it?
How do I calculate the tax cost of a Roth conversion?
What is the 5-year rule for Roth conversions?
What is a backdoor Roth IRA?
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