ROTH CONVERSIONS
Pay tax now to skip it later — when it makes sense.
A Roth conversion moves money from a traditional IRA into a Roth IRA. You pay tax on the converted amount today, but future withdrawals — including growth — can be tax-free.
What Is a Roth Conversion — and Why Does It Matter?
A Roth conversion means moving money from a traditional IRA or 401(k) — where contributions were made pre-tax — into a Roth IRA, where future growth and withdrawals in retirement are tax-free. You pay ordinary income tax on the amount converted in the year of the conversion, but after that, the money grows and comes out tax-free for the rest of your life (and potentially your heirs' lives too).
Most retirement savers have the majority of their money in tax-deferred accounts. That means every dollar they withdraw in retirement will be taxed as ordinary income — including Required Minimum Distributions (RMDs) starting at age 73. A Roth conversion can reduce that future tax burden by shifting some of that money to tax-free territory before those withdrawals are forced.
Roth conversions aren't right for everyone, and the timing matters enormously. But for the right person at the right time, they can be one of the most powerful tax-planning moves available. The rest of this page will help you understand whether it's worth exploring for your situation.
Why people consider them
If you expect to be in a similar or higher tax bracket later, paying tax now at a known rate can be cheaper than paying it later at an unknown one. Roth dollars also don't carry required minimum distributions.
Why they aren't for everyone
Conversions add to this year's taxable income. If that pushes you into a higher bracket, raises Medicare premiums, or strains cash flow, the math can flip. Timing and amount matter.
The window that's easy to miss
Many people have a few low-income years between retiring and starting Social Security or RMDs. Those years are often the cheapest time to do partial conversions — but the window can close quickly.
What this means for you
A Roth conversion strategy should always be modeled before it's executed. Start with the Assessment, then we can dig in together.
FAQ
Common questions about retirement
The questions we hear most often from people trying to figure out if their plan really works.
How do I know if I will have enough money to retire?
Compare your expected annual spending to your projected income — Social Security, any pension, and a sustainable withdrawal (often around 4%) from your savings. When income covers spending with a little room to spare, you're in a strong spot. The free Retirement Assessment walks you through it in about five minutes.
How much money do most people retire with?
Recent Federal Reserve data shows the average retirement savings for Americans aged 55–64 is around $538,000, with a median near $185,000. The encouraging part: your savings is only one piece of the picture — Social Security, home equity, and a thoughtful plan can stretch those dollars much further than the headline number suggests.
What is the most important thing to get right in retirement planning?
Building a plan that accounts for the full 25–30 years of retirement, including taxes, healthcare, and inflation. The good news is that once you have that bigger picture, most decisions get simpler — you just check each new choice against the plan rather than guessing.
Can I retire at 62 with $500,000?
Yes — many people do. At 62, $500,000 can generate roughly $1,500–$1,700/month using a 4% withdrawal, alongside early Social Security of around $1,400/month. With a reasonable lifestyle and a healthcare plan in place for the years before Medicare, it's a very workable starting point.
What is the difference between a retirement assessment and a retirement calculator?
The assessment gives you an at-a-glance readiness score across savings, income, and timing — so you know where you stand. The calculator lets you test specific scenarios and see what's possible. Most people enjoy starting with the assessment, then using the calculator to explore ideas.
Is Will We Have Enough free to use?
Yes — both the Retirement Assessment and the Retirement Calculator are completely free, with no obligation. The site exists to help you see your situation more clearly, whether or not we ever speak.
Ready to see where you stand?
It only takes a few minutes — and you'll get a clearer picture of what comes next.
Who Might Benefit from a Roth Conversion?
A Roth conversion isn't a one-size-fits-all strategy. It tends to make the most sense in specific situations — here are some of the most common ones worth considering.
You're in a Lower-Income Year
If your income is temporarily lower — perhaps you've retired early, taken a sabbatical, or had a business slowdown — you may be in a lower tax bracket than you expect to be in later retirement. Converting now means paying tax at today's lower rate.
You Expect Tax Rates to Rise
Nobody knows exactly what future tax rates will look like. If you believe rates will be higher in the future than they are today — either for you personally or broadly — converting now locks in the current rate.
You Have Time for Tax-Free Growth
The longer the money has to grow after conversion, the more valuable the tax-free status becomes. If you're 10 or more years from needing the funds, the math often favors converting.
Estate Planning Is a Priority
Roth IRAs are not subject to Required Minimum Distributions during the owner's lifetime, and heirs can inherit them tax-free. For those who want to pass wealth to the next generation efficiently, a Roth can be a powerful estate planning tool.
You Want to Reduce RMD Burden
Required Minimum Distributions from traditional IRAs and 401(k)s can push you into a higher tax bracket in your 70s — and those forced withdrawals may also affect Medicare premiums and the taxability of Social Security. Converting some funds ahead of time reduces that future pressure.
You Have a Balanced Tax Diversification Goal
Having a mix of taxable, tax-deferred, and tax-free accounts gives you flexibility in retirement to draw from whichever bucket is most advantageous in a given year. If all your savings are in pre-tax accounts, a Roth conversion can help rebalance that mix.
Key Things to Consider Before Converting
A Roth conversion can be a smart move — but timing and context matter. Here are the most important factors to think through before deciding whether it makes sense for you.
What's the tax cost in the year you convert?
When you convert funds, the converted amount is added to your taxable income for that year. Depending on how much you convert and your other income sources, this could push you into a higher bracket. It's important to model out the tax impact before moving forward — converting too large an amount at once can trigger more tax than you save. Many people convert in smaller increments over several years to manage the bracket exposure.
Could a conversion affect your Medicare premiums?
Medicare Part B and Part D premiums are based on your income from two years prior — a calculation called IRMAA (Income-Related Monthly Adjustment Amount). A large Roth conversion can temporarily spike your income and trigger higher Medicare premiums two years later. This doesn't mean you shouldn't convert, but it's a factor worth planning around — especially if you're 63 or older.
Do you have the cash to pay the tax bill?
Ideally, you pay the taxes on a Roth conversion from savings outside the IRA — not by withholding from the converted amount itself. If you use IRA funds to cover the tax, you reduce the principal that will benefit from tax-free growth. Having non-retirement cash available to cover the tax makes the conversion more effective.
How long do you have before you'll need the money?
The break-even point for a Roth conversion — where the tax-free growth outweighs the upfront tax cost — typically takes several years to reach. The longer your time horizon, the more favorable the conversion math becomes. If you expect to need the funds within a few years, the numbers may not work in your favor.
Is a partial conversion better than a full one?
You don't have to convert an entire account at once. Many advisors recommend converting just enough each year to fill up a lower tax bracket without crossing into the next one. This "bracket-filling" approach captures conversion benefits over time while keeping the annual tax hit manageable.
Not Sure If a Roth Conversion Makes Sense for You?
Everyone's tax situation is different. Scott Farrow at Farrow & Associates can help you look at your specific numbers — income, accounts, timeline, and goals — and figure out whether a Roth conversion fits your retirement plan. Before scheduling, the Retirement Assessment and Retirement Calculator are great starting points.
This page is for educational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional regarding your specific situation.