Compare converting now vs staying put.

What a Roth conversion is

A Roth conversion is the deliberate movement of pre-tax dollars from a traditional IRA (or an eligible employer plan) into a Roth IRA. The converted amount is added to ordinary income for the year and taxed at the account owner's marginal rate. From that moment forward the dollars grow tax-free inside the Roth and qualified withdrawals are tax-free for the rest of the owner's life. The conversion is voluntary, can be sized in any dollar amount, and is commonly staged across multiple tax years.

Why advisors run this conversation

Advisors run conversions for four overlapping reasons:

• Bracket management. If a client is temporarily in a lower bracket (early retirement, business loss, gap year before Social Security), converting up to the top of the current bracket locks in that lower rate on those dollars.
• RMD reduction. Dollars converted to a Roth are no longer subject to lifetime RMDs. Reducing the traditional balance now reduces the size of forced distributions later, which reduces ordinary income in retirement.
• IRMAA and tax diversification. Smaller future RMDs mean smaller Medicare IRMAA exposure and less taxable Social Security. A mix of pre-tax, Roth, and taxable buckets in retirement gives the client control over what to draw from in any given year.
• Legacy planning. Under the SECURE Act 10-year rule most non-spouse beneficiaries must empty an inherited IRA within ten years. An inherited Roth is still emptied on that schedule but the distributions are tax-free, which materially changes the picture for high-earning heirs.

Pay the tax from outside funds

The single most important operational principle is to pay the conversion tax from outside funds (a taxable brokerage or savings account), not by withholding from the conversion itself. Withholding shrinks the amount that lands in the Roth, and if the account owner is under 59 and a half, the withheld portion is also treated as an early distribution and can trigger the 10% penalty. Paying from outside funds preserves the entire converted amount for tax-free growth, which is where the long-term math favors conversion.

Why converting in low-income years matters

Bracket arbitrage is the core of the conversion decision. Every dollar converted at a 12% marginal rate is a dollar that will never be taxed at 22%, 24%, or higher in retirement. The window between a client's last working year and the year Social Security and RMDs both kick in is often the lowest-bracket stretch of their adult life. Systematic conversions during that window are typically the single most impactful advanced-planning move an advisor can execute.

Interaction with RMDs and IRMAA

Every dollar left in a traditional IRA becomes a future RMD, which becomes future ordinary income, which pushes more Social Security into taxation and can trigger Medicare IRMAA surcharges two years later. Converting today trades a known tax cost for elimination of that downstream cascade on the converted dollars. Running this calculator alongside the RMD and inherited IRA calculators gives the full picture: what conversion costs now and what it saves later.

No recharacterization since 2018

Before 2018, a Roth conversion could be reversed (recharacterized) by the tax deadline of the following year. The Tax Cuts and Jobs Act eliminated that option. A completed conversion is final. This is why staged, sized conversions with a projection in hand are the standard advisor workflow rather than large one-time conversions.

Where an advisor adds real value

The math of a single-year conversion is arithmetic. The value of an advisor is in the sequencing: how much to convert this year to stay under a bracket ceiling, how much to convert next year to stay under the next IRMAA tier, when to accelerate before an expected tax law change, and how to coordinate with charitable giving and other income events. That planning conversation is exactly what this calculator is intended to frame.