Roth conversion strategy
Moving money from a traditional IRA or 401(k) into a Roth account means paying tax now to avoid tax later. Whether that trade makes sense depends on your specific situation, and the math is worth doing.
How conversions work
A Roth conversion moves money from a pre-tax retirement account (traditional IRA, traditional 401(k), SEP IRA, or similar) into a Roth account. The amount converted is added to your taxable income for that year, and you pay income tax on it at your current marginal rate. In return, that money grows tax-free in the Roth account and can be withdrawn tax-free in retirement.
There is no limit on how much you can convert in a year: this is different from annual contribution limits. You can convert $10,000 or $500,000 in a single year if you want to. The only constraint is tax: the larger the conversion, the more income you add, and the higher your marginal rate on the converted amount.
The core trade-off
The decision to convert comes down to one question: will you pay more tax on this money now, or later?
If your tax rate now is lower than it will be when you'd otherwise withdraw the money, converting now saves money. If your tax rate now is higher, it costs money. The challenge is that you're making a decision today about a tax rate that depends on future income, future tax law, and future account balances: all of which are uncertain.
What makes the math tractable: you can model it. You know roughly how large your tax-deferred accounts are, when RMDs will force you to take distributions, what your other income sources will be, and what tax brackets look like today. That's enough to make a reasonably informed decision.
Note on tax law: the 2017 Tax Cuts and Jobs Act lowered rates and increased brackets. The One Big Beautiful Bill Act, signed July 4, 2025, made most of these provisions permanent: including the lower individual brackets and the higher standard deduction. Current 2026 rates are expected to remain stable for the foreseeable future, though future Congresses could always change them.
When it makes sense
Roth conversions tend to make sense in specific situations:
The year you retire but before Social Security begins, or any year with unusually low income, creates a window of low marginal rates. Converting up to the top of the 12% bracket in those years "fills the bracket" with cheap tax.
If your traditional 401(k)/IRA will generate large Required Minimum Distributions after 73, you may face higher brackets and heavier taxation of Social Security. Reducing the balance now through conversions can smooth that out.
The longer converted money stays in a Roth (growing tax-free), the bigger the advantage. If you're 55 converting money you won't touch until 80, the compounding benefit is substantial.
Inherited Roth IRAs don't generate ordinary income for heirs (unlike inherited traditional IRAs, which create a large income tax liability under the 10-year rule). Roth is more tax-efficient for legacy planning.
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The conversion window: gap years before RMDs
For most retirees, the optimal window for Roth conversions is the gap between when paychecks stop and when RMDs begin at age 73 or 75 (depending on your birth year under SECURE 2.0). This is the single highest-leverage period in retirement tax planning: it's where lifetime tax savings on the order of $50,000 to $250,000+ get won or lost.
Three things line up during this window:
Earned income has stopped (or dropped significantly). Your taxable income is lower than it was during working years, which means each additional dollar of conversion fills a low bracket instead of stacking on top of a six-figure salary.
Social Security hasn't started yet (if you're delaying to 67 or 70), so that income isn't in the picture and there's no "Social Security torpedo" effect adding 50–85% of every conversion dollar to taxable income through provisional income.
RMDs haven't begun, so you have full control over how much tax-deferred income you take each year. Once RMDs start, that control is gone — the IRS dictates the floor.
This combination (lower income, before SS, before RMDs) creates a window where the marginal tax rate on additional income (i.e., conversions) may be 12% or even 10%. That's often lower than the rate you'd pay on the same money as RMDs at 73+, when the same dollar lands in the 22% or 24% bracket on top of Social Security. The same window also opens up the 0% capital gains bracket, which competes with conversions for the same low-income space and is worth evaluating side by side.
The "shrink the RMD base" math. Every dollar you move out of tax-deferred accounts during the gap years is a dollar that never gets RMD'd. The RMD at age 73 is roughly 3.8% of the prior-year balance, climbing to ~5% at 80 and over 8% by 90. Convert $200,000 in the gap years and you've removed roughly $7,600 from the first RMD, $10,000 from age-80 RMDs, and $16,000+ from age-90 RMDs — every year, compounded. The lifetime tax saved is usually a multiple of the tax paid up front.
The widow's-tax-cliff hedge. When one spouse dies, the survivor goes from MFJ brackets to single brackets — roughly the same income, half the bracket widths. A pre-conversion plan that looks fine for a couple can become punishing for the surviving spouse. Conversions during the gap years compress the future tax-deferred balance, shrinking the size of that cliff before either of you has to live with it.
How much to convert
The most common approach is to convert up to the top of a specific bracket (usually the 12% bracket) each year during the conversion window. Here's the logic:
Determine your baseline income for the year: Social Security (if applicable), pension, any part-time income, and the portion of taxable brokerage dividends and gains you'll realize.
Calculate the gap between that income and the top of the 12% bracket (for 2026, $50,400 in taxable income for single filers and $100,800 for married filing jointly: that's $66,500 and $133,000 in gross income after the standard deduction).
Convert that amount from your traditional IRA or 401(k) to a Roth. You've now filled the bracket at the lowest available rate.
The following year, repeat the calculation. Your baseline income may be different (Social Security may have started, a part-time job may have ended), so the conversion amount will vary.
This is called bracket filling or bracket management. It requires running the numbers each year rather than applying a fixed conversion amount.
What can go wrong
Roth conversions have real costs and real risks:
You pay real money now. Converting $50,000 might add $6,000 to your tax bill this year. That's cash out of pocket. If you don't have the liquidity to pay the tax from non-retirement money (rather than the converted amount itself), the math gets worse because you're using tax-deferred dollars to pay the tax.
You might be wrong about future rates. If tax rates drop (or stay the same), you've pre-paid tax unnecessarily. There's no refund.
IRMAA Medicare surcharges. Income over certain thresholds in a given year triggers Medicare Part B premium surcharges (IRMAA). Part D surcharges also exist but vary by plan. Large conversions can push you over those thresholds for the following two years. This adds real cost that the conversion math needs to account for. Drawdown Arc models IRMAA Part B surcharges at age 65+: enable the IRMAA toggle in the tax settings to see the impact. See our IRMAA guide for a full breakdown of the thresholds, and the Roth conversions and IRMAA spoke for the sizing math and the pre-63 golden window.
Roth conversions are irreversible. Prior to 2018, you could undo a conversion (a "recharacterization"). That's no longer allowed. Once converted, there's no undoing it if your tax situation changes.
Try it yourself
Drawdown Arc models your accounts separately, traditional IRA/401(k), Roth, taxable brokerage, and shows you how each withdrawal type is taxed year by year. You can see exactly what your RMDs will be, what bracket you'll be in at each age, and how much space you have for tax-efficient conversions.
Pro users can compare withdrawal strategies side by side (including a Roth Conversion strategy on the Roth Analysis tab), to see how conversion timing changes total lifetime taxes and portfolio longevity.