Should You Do A Roth Conversion? A Data-Driven Guide
- Joe Boughan
- 11 minutes ago
- 8 min read
Roth conversions have become one of the most commonly discussed strategies in retirement planning.
If you’ve searched the internet recently, you’ve likely seen a wide range of opinions—I have personally seen a lot of people online talking about how to “never convert anything because you might be paying unnecessary taxes today.”
I think any view that is that strong is misleading. The reality is more nuanced.
Unfortunately, certainty and simplicity are going to sell much better than hard, but complicated truth.
Roth conversions can be useful, harmful, or neutral, depending entirely on the specifics of your financial life: your tax bracket today vs. later, future required minimum distributions (RMDs), your spending needs, state taxes, capital gains interactions, Medicare surcharges, survivor tax brackets, and your longevity outlook.
If you find you want assistance with your retirement strategy, including navigating taxes, please check out our Free Consultation Offer
This guide will walk through:
How a Roth conversion works
Seven reasons a conversion may make sense
Six reasons a conversion may not make sense
A real case study (Dan & Melissa)
A decision checklist you can use to evaluate your own scenario
Throughout this guide, we will also reference high-credibility third-party resources such as the IRS, the Social Security Administration (SSA), the Medicare IRMAA tables, and retirement research from academics like Dr. Wade Pfau.
What Is a Roth Conversion?
A Roth conversion means moving money from a tax-deferred account—like a Traditional IRA or 401(k)—into a Roth IRA.
When you convert:
You report and pay ordinary income tax on the amount converted
The money then grows tax-free
Qualified withdrawals in retirement are tax-free
Roth IRAs do not have required minimum distributions
Reference: IRS Roth IRA rules (IRS.gov).
A Roth IRA conversion is essentially the act of “buying out” the IRS's future share of your tax-deferred account at today’s known tax rate—so that the future growth is entirely yours.
The math works best when:
Your future tax rate is expected to be higher than your tax rate today
You can pay the tax using non-IRA money
You have enough time to let the Roth grow
You want to manage RMDs, Medicare surcharges, or survivor tax brackets
But this is not always the case. So let’s examine both sides.
PART 1 — The Case For Roth Conversions
Roth conversions are most effective when the timing and context align. Here are the primary reasons they may offer value.
1. Tax-Rate Arbitrage: Paying Known Taxes Today vs. Unknown Taxes Later
Today’s tax rates are historically low compared to many periods in U.S. history, especially for middle-income earners. According to Tax Policy Center and IRS historical tables, marginal tax rates have fluctuated significantly over the decades.
A Roth conversion lets you:
Pay a known tax rate today
Avoid potentially higher rates later
Control when taxes occur
For many households—especially those with large tax-deferred balances—this “timing control” helps smooth lifetime taxation.
2. Controlling Future Required Minimum Distributions (RMDs)
Traditional IRAs and 401(k)s require taxable withdrawals beginning at age 73 or 75 (per the SECURE Act 2.0). Roth IRAs do not.
Large pre-tax balances can create:
High forced distributions
Higher marginal tax rates
Medicare IRMAA surcharges
Additional taxation of Social Security benefits
When a conversion shrinks these future RMDs, it may help maintain a more even tax profile across retirement.
More info: IRS RMD page.
3. The “Roth Conversion Window” Between Retirement and RMD/Social Security
Many retirees have a tax window between:
Full-time work ending
Social Security starting
RMDs beginning
During this period, taxable income is often temporarily low. This creates a strategic opportunity to “fill” lower tax brackets deliberately—12%, 22%, or 24%—with Roth conversions.
Retirement expert Dr. Wade Pfau has demonstrated in academic research that using lower-income years for strategic conversions can increase after-tax wealth for households that have:
Significant pre-tax savings
Sizable taxable accounts
Longer planning horizons
See Outcome of scenario comparison on different potential strategies for one case:
4. Early Retirement Access via Roth Conversion Ladders
Each Roth conversion has its own 5-year clock. After five years, the conversion principal can be accessed without penalty—even before age 59½.
This is often used by early retirees who want to:
Fund early retirement
Reduce dependency on taxable accounts
Avoid the 10% early withdrawal penalty
5. Estate Planning Benefits for Non-Spouse Beneficiaries
Under the SECURE Act, most non-spouse beneficiaries must empty an inherited IRA within 10 years. This may cause higher tax burdens during peak earnings years for adult children.
A Roth IRA:
Has no required distributions for beneficiaries
Does not increase their taxable income
Offers more withdrawal flexibility
This can be valuable when leaving assets to a trust as well, especially when trust tax rates are compressed.
6. Planning for Survivor Tax Rates
When one spouse dies and the survivor switches from filing jointly to filing as an individual, tax brackets become narrower. Many widows and widowers find that their tax bill increases substantially—even when income stayed about the same.
A Roth conversion reduces potential future tax exposure in this scenario.
7. 0% Bracket Conversions
In some low-income years, a household's standard deduction may shelter part of a conversion—creating an effective federal tax rate close to 0%.
Not taking advantage of this could mean leaving a rare opportunity unused.
PART 2 — The Case Against Roth Conversions
Roth conversions are powerful, but they can also harm a plan if executed in the wrong context.
Here are the common pitfalls.
1. You Must Pay Taxes Today, in Cash
For conversions to work optimally, the taxes should be paid from money outside the IRA. Paying taxes from within the IRA reduces the amount that makes it into the Roth and may undermine the benefit.
If cash flow is tight or reserves are limited, a conversion can cause strain.
2. Break-Even Uncertainty
Conversions rely on long-term assumptions:
Will tax rates be higher later?
Will returns be strong enough to justify the tax paid today?
Will you live long enough to see the benefit?
If your future tax bracket does not increase—or if your time horizon is shorter—conversions may provide limited or no value.
Current Tax Rates Are Low Compared To History, but they COULD go lower.
3. Lost Opportunity for 0% Capital Gains Harvesting
Some households deliberately use low-income periods to harvest long-term capital gains at 0% federal tax.
A Roth conversion increases taxable income, which may:
Push capital gains from 0% into 15%
Create additional tax interactions
Reduce the room for other planning strategies
This interaction is often overlooked.
4. Medicare IRMAA and Other Cliffs
Roth conversions increase Modified Adjusted Gross Income (MAGI), which can trigger:
IRMAA Medicare surcharges
Net Investment Income Tax (NIIT)
Phaseouts of deductions
State tax implications
Since IRMAA uses a two-year lookback, a conversion today may raise premiums later.
Reference: Medicare.gov.
5. Administrative and Execution Risk
Conversions are irrevocable. Common errors include:
Missing quarterly estimated payments
Incorrectly calculating IRA basis (Form 8606)
Overlooking state taxes
Accidentally converting too much
Since recharacterizations are no longer allowed, mistakes are permanent.
6. Social Security Interaction
A conversion raises provisional income, which may:
Increase the taxable portion of Social Security
Push future years into higher brackets
Reduce planning flexibility
This requires modeling across multiple tax years—not just one.
Case Study: Dan & Melissa
(Details modified for privacy.)
Dan is in his 60s, still working, and expects to continue for another 5–7 years. His spouse Melissa is 73, recently began RMDs, and has a disability. Together they have approximately $3.4 million across all accounts.
Their situation involved several factors:
A major age gap
Growing pre-tax balances
Significant capital gains distributions from mutual funds
A potential future shift to single filing status
Possible future move to a lower-tax state
What We Identified
Their taxable holdings were distributing annual capital gains, increasing lifetime taxes.
Their pre-tax accounts were projected to produce high RMDs.
Melissa’s RMDs would continue to climb based on life expectancy tables.
A future survivor scenario created meaningful tax risk.
The Planning Approach
We modeled scenarios involving $200,000 annual Roth conversions filled to the 24% bracket, using cash outside the IRA to cover taxes.
We prioritized converting Melissa’s IRA, as her RMDs had just begun. Coordinating RMDs during conversion years required careful planning.
Outcomes Under Moderate Assumptions
RMDs reduced by approximately 90%
Medicare IRMAA was accepted in early years to create lower lifetime taxes
Under reasonable investment return assumptions, long-term after-tax wealth was projected to improve materially (Potentially over $1,000,000)
Dan gained clarity around his future survivor tax exposure
This plan will continue to be revisited annually.
Check out our video with more details here:
Decision Checklist: Should You Consider a Roth Conversion?
Here are practical factors to review. A Roth conversion may be worth deeper analysis if:
✔ You expect higher tax rates later
Either due to RMDs, Social Security, pensions, or survivor filing status.
✔ You have meaningful pre-tax savings
As a general rule of thumb (not advice):
Households with >$2.5M pre-tax often face bracket creep
Single retirees with >$1.5M may face higher survivor taxes
✔ You can pay taxes from outside assets
This preserves the full conversion amount.
✔ You have a long planning horizon
More years of tax-free growth means more potential benefit.
✔ You’re in a low-income year
Common during early retirement or before RMDs begin.
A Roth conversion may be less appropriate if:
✘ You need funds for near-term expenses
Taxes can create liquidity strain.
✘ You rely heavily on 0% capital gains harvesting
✘ You’re already close to an IRMAA threshold
✘ You expect to move to a much lower-tax state
Timing matters.
✘ Your investment horizon is shorter
Understanding these trade-offs typically requires multi-year tax modeling.
Final Thoughts
Roth conversions are neither universally “good” nor “bad.” They are a tool—one that requires context, analysis, and a clear understanding of how current-year taxes interact with future, multi-decade projections.
For many households in their 50s, 60s, and early 70s, a Roth conversion strategy can:
Smooth taxes
Reduce RMD-related risk
Improve survivor planning
Increase retirement spending flexibility
But they must be approached with care, especially regarding IRMAA, capital gains interactions, and state taxes.
If you want help evaluating your own situation, most advisors recommend creating a multi-year projection that includes:
RMD estimates
Social Security timelines
Longevity assumptions
State-specific tax effects
IRMAA thresholds
Survivor tax brackets
This helps clarify whether a conversion is a smart opportunity—or an unnecessary tax bill.
About Parkmount Financial Partners
I’m Joseph Boughan, CFP®, founder of Parkmount Financial Partners, an independent fiduciary financial planning firm based in the Boston area. I work with clients locally and also virtually with households across the U.S. where appropriately licensed or exempt.
My practice focuses on thoughtful, data-driven retirement planning, tax-efficient withdrawal strategies, and long-term wealth management grounded in fiduciary responsibility.
If you’d like to explore your own retirement or tax-planning scenario in more detail, feel free to reach out or explore the educational resources provided.
Disclosures Can Be Found Here: Parkmount Financial Investment Advisory Brochure
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