How Roth Conversions Work: Timing, Taxes and Required Minimum Distributions
Educational content about Roth conversions, required minimum distributions and retirement tax planning.
A Roth conversion affects more than one tax year
A Roth conversion adds income in the year you convert. Looking at several years of brackets, Medicare IRMAA, state tax and required minimum distribution timing can help show how a conversion fits, ideally with a qualified tax professional.
Market timing is only one factor
Some people wait for a market decline before converting. Other factors, such as your income in the years before required minimum distributions begin, can also affect the tax cost of a conversion.
Smaller conversions are not automatically safer
A smaller conversion leaves more in the traditional account, which can mean larger required minimum distributions later and may affect tax brackets and IRMAA surcharges. Whether that matters depends on your situation.
Roth Account Growth
Qualified Roth withdrawals may be free of federal income tax, if IRS rules are met
RMD Rules
Required minimum distribution rules for Roth accounts differ from those for traditional accounts.
Estate Benefits
Roth assets can pass to beneficiaries under different tax rules than Traditional IRAs
Model Your Roth Conversion Scenarios
Enter your information below to see an illustrative estimate of the tax impact
Your current taxable income
Current Traditional IRA balance
Calculation Assumptions
- • 4% withdrawal rate in retirement
Roth Conversion: Your Questions Answered
What is a common Roth conversion timing mistake?
Doing a single large conversion in a year with high ordinary income, or missing a lower-income period between retirement and the point when required minimum distributions begin.
Is it too late for a Roth conversion later in life?
Not necessarily. Whether a conversion makes sense later in life depends on your situation. Reasons people discuss it include legacy planning (qualified Roth IRA distributions to heirs are generally free of federal income tax if IRS rules are met, while Traditional IRA distributions are generally taxed to heirs as income) and spouse planning (a surviving spouse who files as single may face higher tax brackets). A qualified tax professional can help you weigh these.
I don't want to pay taxes now — why would I convert?
Would you rather pay taxes on the seed or on the harvest? Withdrawals from a Traditional IRA are generally taxed as ordinary income at the rates in effect when you take them. With a Roth conversion, you pay tax on the converted amount in the year of the conversion, and qualified Roth withdrawals later may be free of federal income tax if IRS rules are met. Whether that trade-off makes sense depends on your situation and future tax rates, so consider talking with a qualified tax professional.
How is the Model Q® Roth Strategy different from going it alone?
Model Q® runs the math across your full retirement horizon and coordinates the conversion with the other Q strategies to offset the conversion tax — something DIY calculators cannot model.