When (and Whether) to Convert to a Roth

A Roth conversion moves money from a traditional IRA (where withdrawals are taxed) to a Roth IRA (where withdrawals are tax-free). You pay ordinary income tax on the converted amount today in exchange for tax-free growth and withdrawals later. The math is straightforward in concept and surprisingly subtle in practice.

When conversions usually make sense

• Years between retirement and Social Security / RMDs — typically ages 60–72, when income is low and you control your tax bracket
• Following a sabbatical, gap year, or business loss — anywhere your taxable income is unusually depressed
• When you expect higher tax rates later — either from your own future income or from legislative changes
• To reduce future Required Minimum Distributions (RMDs) that would push you into a higher bracket
• To leave a tax-free legacy to heirs who would inherit the IRA in their peak earning years

When conversions usually don't make sense

• You're already at the top of your bracket and would jump into a much higher one
• You'd have to pay the conversion tax from the IRA itself — that almost always wipes out the benefit
• You expect to be in a lower bracket in retirement than you are today
• You plan to leave the IRA to charity (charities don't pay tax on traditional IRAs)

The mechanics that get missed

Three details account for most Roth-conversion regrets:

1. The IRMAA cliff. A conversion can push your modified adjusted gross income across thresholds that increase Medicare Part B and Part D premiums for a year. The premium hike can wipe out the conversion benefit entirely.
2. The pro-rata rule. If you have any pre-tax money in IRAs, you can't cherry-pick after-tax contributions for conversion. The IRS treats all your IRAs as one pool.
3. Estimated taxes. A large conversion creates a tax bill that's due in the quarter you convert — not in April. Underpayment penalties apply.

The conversion ladder

Rather than converting a large amount in one year, most clients are better served by a multi-year ladder — converting an amount each year that fills up a target tax bracket without spilling into the next. Modeled correctly with your CPA, the cumulative tax savings over a decade can be substantial.

At IronBridge, we model conversion ladders alongside the client's CPA, accounting for IRMAA thresholds, capital-gain stacking, and projected legislative scenarios. Schedule a conversation if you'd like to see what your window looks like.