Roth Conversion Guide

What it means

Move money from traditional IRA → Roth IRA. Pay tax NOW on the amount converted. Future withdrawals are tax-free. Forever.

Why convert

• Lower tax now than future — early retirement (60-69) often has low income → low tax bracket.
• RMDs avoided — Roth has no Required Minimum Distributions. Trad IRA forces withdrawals at 73.
• Heir tax savings — Roth inheritances are tax-free.
• Medicare premium control — Roth withdrawals don't count toward IRMAA Medicare surcharges.
• Tax diversification — mix of traditional + Roth gives flexibility.

Best time to convert

• Years 60-72 — sweet spot. Retired, before RMDs, before higher Social Security taxes.
• Year of low income — no W-2, before SS starts.
• Market crash year — convert "low" + grow tax-free.
• NOT if you're in highest tax bracket NOW — wait.
• NOT if you'll need the money in next 5 years — Roth has 5-yr rule.

How to do it

1. Talk to fee-only fiduciary advisor first. This decision is complex.
2. Calculate: amount + your current tax rate vs expected future rate.
3. Convert in chunks (e.g., $20K-50K/year) to fill lower tax brackets.
4. Brokerage moves money internally. Done in days.
5. You'll receive 1099-R for converted amount.
6. Owe taxes April 15 next year on conversion.
7. Convert SAME WEEK as new tax year starts so you have full year to plan.

Costs to consider

• Higher AGI year → may push Medicare IRMAA surcharge.
• Higher AGI → may make more Social Security taxable.
• State income tax on conversion.
• Pay tax from OUTSIDE the IRA (not from converted amount) for full benefit.
• Free tools: Boldin Roth Conversion Explorer, Bogleheads Roth calc.