A Roth conversion means moving money from a Traditional IRA to a Roth IRA and paying income tax on the converted amount now. The appeal is that future growth and withdrawals are tax-free, and you eliminate Required Minimum Distributions. The cost is a potentially large tax bill today. Whether this trade makes sense depends on your age, income, balance, and how long the money has to grow.
The converted amount gets added to your regular income for the year. If you earn $100,000 and convert $200,000, your taxable income jumps to $300,000 — pushing you into much higher tax brackets. This is the biggest risk of conversion: a large lump-sum conversion can trigger a massive tax bill that takes decades to recover from.
Critical rule: You should pay the conversion tax from outside funds, not from the IRA itself. If you pull money out of the IRA to pay the tax, you're reducing the balance that gets to grow tax-free, which significantly undermines the benefit of converting.
Every dollar you pay in conversion tax is a dollar you can't invest elsewhere. If you convert $200,000 and owe $50,000 in tax, that $50,000 — invested at 7% with 15% capital gains drag — would grow to approximately $85,000 over 10 years. Your conversion needs to beat that opportunity cost to be worthwhile.
Instead of converting everything at once, you can spread the conversion over 2-5 years. This keeps each year's converted amount smaller, avoiding the bracket-jumping problem. For example, converting $200,000 over 4 years ($50,000/year) might keep you in the 22% bracket each year instead of spiking into the 32% or 35% bracket with a lump sum.
The tradeoff is that the unconverted portion continues growing in the Traditional account, meaning later tranches are larger and taxed at potentially higher amounts. But the tax savings from staying in a lower bracket usually outweigh this effect.
Here's the analysis that changes most people's thinking: project your Traditional balance to age 73 and calculate the RMD. If your balance will be $1 million, your first RMD is about $37,700. Add that to Social Security and any pension income. If the total pushes you into a higher bracket than what you'd pay to convert now, conversion is likely worthwhile.
Roth IRAs have no RMDs at all. This isn't just a tax issue — it's a flexibility issue. With a Roth, you withdraw only what you need, when you need it, with no tax consequences.
See your conversion tax, opportunity cost, and how spreading it over multiple years affects your outcome. Uses 2026 brackets and RMD projections.
Analyze your conversion free →Roth conversion is one of the most powerful tax planning tools available — but only when the timing is right. The ideal candidate has a large Traditional balance, years until retirement, and either a temporarily low income or a willingness to spread the conversion over multiple years. Run the numbers carefully, because a poorly timed conversion can cost you tens of thousands of dollars in unnecessary taxes.