Many people spend decades building the largest possible retirement account, only to discover they’re facing significant tax challenges in retirement. If you’ve saved north of seven figures and are approaching or already in retirement, you might be wondering whether Roth conversions make sense for your situation.

The truth is, Roth conversions aren’t the magic solution that some financial media personalities make them out to be. However, there are specific situations where converting your traditional IRAs or 401(k)s to Roth accounts can provide substantial benefits. More importantly, there’s a limited window of opportunity to make these conversions work in your favor.

In this guide, we’ll explore:

1. Seven compelling reasons you might consider Roth conversions
2. When these conversions make the most sense
3. The critical timing window you need to understand.

Whether you’re just entering retirement or planning for the future, understanding these strategies can help you minimize your lifetime tax bill and maximize your retirement security.

What is a Roth conversion?

What is a Roth conversion? Simply put, it’s the process of moving assets from a pre-tax IRA or tax-deferred account, like a 401(k), to a Roth account. This transfer involves converting funds from accounts where you haven’t paid taxes yet into accounts where future growth and withdrawals can become tax-free.

How Does It Work?

When you convert to Roth, you’re essentially paying taxes today on the converted amount in exchange for tax-free growth and distributions in the future. For example, if you have $1 million in a traditional 401(k) and decide to convert the entire amount, you’ll pay income taxes on that full million dollars in the year you make the conversion.

Most people don’t convert everything at once because doing so would push them into the highest tax brackets. Instead, they might spread the conversion over several years. Using our million-dollar example, you might convert $100,000 annually over ten years, paying taxes on $100,000 each year rather than the full amount at once.

The essential question becomes: Does it make sense to pay these taxes now to potentially save on taxes later? The answer depends on several factors we’ll explore in the seven reasons below.

The Key Benefits of Roth Conversion for Your Retirement

Before diving into specific scenarios, it’s important to understand that Roth conversions offer several fundamental advantages. These benefits include

• Eliminating future required minimum distributions
• Creating tax diversification
• Potentially leaving a more tax-efficient legacy for your beneficiaries.

However, these benefits come with a cost. You must pay taxes on the converted amount in the year of conversion. This means you’re paying taxes you wouldn’t otherwise owe until you reach the required minimum distribution age. The strategy only makes sense when the long-term benefits outweigh these immediate tax costs.

Reason #1: Convert to Roth to Reduce Future RMDs

The most compelling reason for many people to convert to a Roth is to reduce future required minimum distributions (RMDs). Once you reach age 73 or 75 (depending on your birth year), you must start taking distributions from your traditional retirement accounts, whether you need the money or not.

These RMDs can create what’s known as the “tax trap” of traditional retirement accounts. You’re forced to take these distributions, even if you have other income sources covering your needs, such as:

• Social Security
• Pensions
• Taxable investment accounts

The problem compounds because RMDs increase each year as your life expectancy shortens.

Example

Consider a couple who have worked with me for nearly a decade. Both have pensions (one military, one teaching). Both are collecting Social Security and have enough guaranteed income to cover all their expenses. In fact, they were reinvesting excess income into their taxable accounts because they didn’t need it. When they reached RMD age, they suddenly had six figures of additional taxable income they had zero need for.

How RMDs Can Affect Your Retirement

Unwanted RMDs can affect you in several ways. They can

• Push you into higher tax brackets
• Trigger Medicare surcharges (IRMAA)
• Make more of your Social Security taxable
• Activate net investment income taxes on your other investments.

All of these consequences add unnecessary taxes to your retirement years.

By converting to Roth during your early retirement years, you can significantly reduce the size of your traditional accounts, thereby reducing future RMDs. Since Roth accounts have no RMDs during your lifetime, this strategy can help you maintain better control over your taxable income in later retirement.

Reason #2: Create Tax Diversification in Retirement

Having all your retirement savings in tax-deferred accounts creates a significant limitation. Every dollar you withdraw gets taxed as ordinary income. This lack of tax diversification can be problematic when you face unexpected expenses or opportunities.

Imagine you need a larger distribution for a new roof, unexpected medical expenses, or to help an adult child. If all your money is in traditional retirement accounts, you’ll pay income taxes on the entire withdrawal. Depending on your tax bracket, you might need to withdraw 20% or more to net the cash flow you need.

Tax diversification through Roth conversions gives you more flexibility. With money in Roth accounts, taxable brokerage accounts, and traditional retirement accounts, you can choose which “bucket” to draw from based on your current tax situation. This flexibility becomes especially valuable when managing your income to stay within certain tax brackets or avoid triggering other tax consequences.

For example, if you’re trying to keep your income low enough to qualify for Affordable Care Act premium tax credits before age 65, having tax-free Roth money available for large expenses can help you maintain those valuable subsidies.

Reason #3: Hedge Against Future Tax Increases

While no one can predict future tax policy with certainty, there are reasons to believe tax rates could increase over time. The country faces nearly $40 trillion in debt, an aging population, rising healthcare costs, and increasing interest on government borrowing.

The Tax Cuts and Jobs Act, which lowered Federal tax brackets, was recently made permanent through the One Big Beautiful Bill Act of 2025. However, future Congresses could still change tax policy, and the federal government’s financial challenges aren’t disappearing.

If you believe tax rates might be higher in the future, paying taxes today through Roth conversions could be advantageous. This strategy essentially locks in today’s tax rates on the converted amounts. Even if you’re not certain about future tax increases, having some assets in tax-free accounts provides a hedge against this uncertainty.

The key is not to convert everything based on fear of tax increases, but to consider this possibility as part of a balanced approach to tax diversification.

Reason #4: Protect Your Spouse from Higher Tax Rates

One of the most overlooked benefits of Roth conversions is protecting a surviving spouse from what’s often called the “surviving spouse tax penalty.” This issue affects married couples where one spouse is likely to outlive the other by several years.

When one spouse dies, the surviving spouse faces a significant tax challenge. They lose the benefit of married-filing-jointly tax brackets, which are roughly double those for single filers. However, they may still have the same retirement account balances generating RMDs, and their living expenses might not decrease proportionally.

Example

If a couple was taking $50,000 in RMDs while filing jointly, the surviving spouse might still need to take similar distributions but would now face the compressed single-filer tax brackets. This can push them into much higher marginal tax rates than they experienced as a married couple.

This situation is particularly relevant if there’s an age gap between spouses or if family health history suggests one spouse might outlive the other by many years. By converting some assets to Roth during the years when both spouses are alive and can file jointly, you can reduce the traditional account balances that will generate taxable RMDs for the surviving spouse.

Reason #5: Take Advantage of Market Downturns

Market volatility can create opportunities for more efficient Roth conversions. When your account values drop during market corrections or bear markets, you can convert the same number of shares for fewer tax dollars.

For instance, if you own 100 shares of a stock worth $10 per share ($1,000 total), but the price drops 10% to $9 per share, you can now convert those same 100 shares for only $900 in taxable income instead of $1,000. Or, you could convert more shares with the same Roth conversion amount.  If the investment recovers, those shares will grow tax-free in the Roth account.

This isn’t about trying to time the market perfectly, but rather taking advantage of opportunities when they present themselves. If you’re already considering Roth conversions and the market experiences a significant downturn, it might be an opportune time to execute your conversion strategy.

The key is to have a conversion plan in place so you can act when these opportunities arise, rather than making conversion decisions based solely on market movements.

Reason #6: Limited Charitable Giving Plans

If charitable giving isn’t a major priority in your retirement plans, this can support the case for Roth conversions. Here’s why: one of the most tax-efficient strategies for people with large traditional retirement accounts is using Qualified Charitable Distributions (QCDs) starting at age 70½.

QCDs allow you to give money directly from your traditional IRA to qualified charities, and these distributions count toward your RMD requirement without being taxable to you. For someone already giving $10,000 annually to charity, QCDs can effectively reduce their taxable RMD dollar-for-dollar.

However, if you’re not charitably inclined or don’t plan to make significant charitable contributions, you won’t benefit from this strategy. In this case, Roth conversions become more attractive because you won’t have the QCD option to help manage your future RMD tax burden.

This doesn’t mean you should convert to Roth just because you don’t give to charity, but it can be an additional factor supporting conversion if you’re already considering it for other reasons.

Reason #7: Make Your Legacy More Tax-Efficient

Perhaps the most compelling reason for Roth conversions is creating a more tax-efficient inheritance for your beneficiaries. This has become increasingly important since the passage of the SECURE Act in 2019, which eliminated the “stretch IRA” for most beneficiaries.

Under the old rules, if you left a traditional IRA to your adult children, they could take distributions over their own life expectancy, potentially stretching the tax deferral for decades. Now, most beneficiaries must empty inherited retirement accounts within 10 years, significantly accelerating the tax burden.

Consider leaving a $3 million traditional IRA to an adult child who’s a high earner—perhaps a physician, attorney, or business owner already in the top tax bracket. Under the 10-year rule, they’ll need to add roughly $300,000 to their taxable income each year to fully distribute the account. This could result in hundreds of thousands of dollars in additional taxes.

In contrast, if you leave that same $3 million in a Roth IRA, your beneficiary still faces the 10-year rule, but they can let the money grow tax-free for the entire 10 years and then withdraw it all tax-free in year 10. The tax arbitrage can be substantial, especially if your beneficiaries are in their peak earning years when they inherit.

This strategy does require some educated guessing about your beneficiaries’ future tax situations, but if you expect them to be high earners when they inherit, the case for Roth conversions becomes very compelling.

When Should You Convert an IRA to Roth: The Conversion Window

Understanding when to convert an IRA to a Roth is crucial for maximizing the strategy’s benefits. The optimal time for most people is during the “Roth conversion window”—the period between retirement and the start of RMDs.

This window typically starts when you fully retire (or when the higher-earning spouse retires) and your employment income drops to zero or near zero. It ends when you reach RMD age, which is 73 or 75 for most people, depending on your birth year.

For someone who retires at 60 with an RMD age of 75, this creates a 15-year conversion window. During these years, your income might consist only of investment dividends, interest, and capital gains distributions—potentially putting you in much lower tax brackets than during your working years.

However, the conversion window has different phases with varying considerations:

Ages 60-65 (Pre-Medicare)

During this period, you’ll likely need health insurance from the healthcare exchanges, and you might qualify for valuable premium tax credits under the Affordable Care Act. Large Roth conversions could reduce or eliminate these credits, so conversions need to be carefully planned during this phase.

Ages 65-75 (Post-Medicare, Pre-RMD)

This is often the sweet spot for Roth conversions. You’re on Medicare, so you don’t have to worry about losing ACA premium credits. While large conversions might trigger Medicare surcharges (IRMAA), these costs are typically much less than the potential savings from reduced future RMDs.

The key is to use this window strategically. You might convert enough each year to “fill up” lower tax brackets—perhaps converting enough to reach the top of the 12% or 22% bracket, depending on your situation.

Understanding the Rules for Converting to a Roth IRA

The rules for converting to a Roth IRA are relatively straightforward, but there are important details to understand. Unlike Roth IRA contributions, there are no income limits on conversions—anyone can convert traditional retirement account funds to a Roth IRA, regardless of income level.

The converted amount is added to your taxable income for the year, so timing and amount are crucial considerations. You’ll want to work with your tax professional to understand how the conversion will affect your overall tax situation, including potential impacts on Medicare premiums, Social Security taxation, and other income-based benefits.

One important rule: if you have multiple traditional IRAs with different tax characteristics (some with deductible contributions, some with non-deductible contributions), the IRS requires you to convert proportionally from each account. This is known as the “pro-rata rule” and can complicate conversion strategies for some people.

How to Convert to a Roth IRA: Implementation Considerations

When you’re ready to move forward with how to convert to a Roth IRA, you’ll typically work with your financial institution to execute the conversion. This can often be done as a direct transfer between accounts, avoiding any risk of penalties or missed deadlines.

The most important consideration is having a plan for paying the taxes on the conversion. Ideally, you’ll pay these taxes from sources outside your retirement accounts to maximize the benefit of the conversion. Using retirement account funds to pay conversion taxes reduces the amount that can grow tax-free in the Roth account.

Many people use taxable investment accounts or cash savings to pay conversion taxes, viewing it as an investment in future tax savings. This is where working with a qualified financial planner becomes valuable—they can help you model different conversion scenarios and determine the optimal strategy for your specific situation.

Should I Convert My IRA to a Roth? Making the Decision

This question doesn’t have a one-size-fits-all answer. The decision depends on

• Your current tax situation
• Expected future tax rates
• Retirement income needs
• Legacy goals
• The specific timing of your retirement

The strategy works best for people who expect to be in similar or higher tax brackets in retirement, have other sources of funds to pay conversion taxes, and have a long enough time horizon for the tax-free growth to offset the upfront tax cost.

It’s also important to remember that Roth conversions are about reducing uncertainty, not eliminating it. You can’t know with certainty what future tax rates will be or exactly what your retirement will look like. But by creating tax diversification through strategic conversions, you give yourself more options and flexibility in retirement.

The Bottom Line on Roth Conversions

Roth conversions can be a powerful tool for the right person in the right situation, but they’re not appropriate for everyone. The seven reasons outlined here provide a framework for evaluating whether conversions make sense for you.

1. Reducing RMDs
2. Creating tax diversification
3. Hedging against tax increases
4. Protecting a surviving spouse
5. Taking advantage of market downturns
6. Limited charitable plans
7. Creating tax-efficient legacies

The decision to convert requires careful planning and coordination with your overall retirement plan. Consider working with a qualified financial planner who can model different scenarios and determine the optimal approach for your specific situation. The goal isn’t just to minimize taxes, but to create a retirement plan that maximizes your financial security and peace of mind.

At Imagine Financial Security, we help individuals over 50 with at least $1 million saved navigate complex retirement decisions. If you are looking to

• Maximize your retirement spending
• Minimize your lifetime tax bill
• Worry less about money

You can start by taking our Retirement Readiness Questionnaire on our website at www.imaginefinancialsecurity.com, so we can learn more about how we can help you on your journey to and through retirement.

Not quite ready to take the questionnaire, but want helpful tips and resources? Sign up for our monthly newsletter and/or subscribe to our YouTube channel. This is for general education purposes only and should not be considered as tax, legal, or investment advice.