How Roth conversions work

Learn when Roth conversions may make sense and what tradeoffs to model.

A Roth conversion is a strategic decision to pay tax now in exchange for future tax-free growth and withdrawals.

Use this guide to understand the tradeoffs quickly, then open one of the related models below if you want to turn the idea into a planning scenario.

What a conversion does

A conversion moves money from a pretax retirement account into a Roth account. The converted amount is usually taxable in the year of the conversion.

The benefit is that future qualified Roth withdrawals can avoid income tax.

They are often most useful in lower-income years, early-retirement gap years, or when future required minimum distributions are likely to be large.

The downside is the immediate tax bill and the need to avoid pushing yourself into costly tax cliffs.

Conversions are about tax timing, not free money. Model both the current tax cost and the long-term benefit before acting.

Tax Strategy3 min

Estimate the long-term tradeoff of paying tax now for future tax-free withdrawals.

Roth future value

$137,952

Tax Strategy3 min

Compare the projected after-tax value of Traditional and Roth IRA-style contributions.

Roth after tax

$472,542

6 min

Compare when paying tax now may beat a deduction today and when the opposite can be true.

5 min

A simple introduction to required minimum distributions and why they matter.