The Right Time to Convert to a Roth - And When to Wait

For most of the accumulation years, the traditional IRA and 401(k) feel like an unambiguous win. Contributions reduce taxable income today, the money grows tax-deferred, and the tax bill gets deferred to a later date when, the thinking goes, you'll be in a lower bracket. It's a reasonable assumption. It's also one that doesn't always hold up.

The problem isn't the traditional IRA itself. The problem is what happens when decades of tax-deferred growth collide with Required Minimum Distributions, Social Security income, and Medicare premium calculations all at once. What looked like a tax deferral strategy can quietly become a tax concentration problem, with a significant portion of retirement income arriving as ordinary income at rates that may be higher than expected.

The Roth conversion is the planning tool that addresses this. By converting traditional IRA assets to Roth, you pay taxes on the converted amount today in exchange for tax-free growth and tax-free withdrawals in the future, with no required distributions for as long as you live. The question isn't whether a Roth conversion makes sense in principle. It almost always does in the right circumstances. The question is when.

The window that most people miss

For many investors, the most powerful Roth conversion opportunity arrives in a period that doesn't feel like an opportunity at all. It sits in the gap between the end of a working career and the onset of Social Security income, or between a career transition and the age at which Required Minimum Distributions begin. Income in this window is often lower than it has been at any point in the previous two or three decades. Tax brackets that were previously out of reach become accessible. The opportunity to convert at a lower effective rate than was paid going in, and potentially lower than will apply later, is real and time-limited.

The question is a simple one, even if the answer requires careful planning: would you rather pay taxes on a smaller balance today, or a larger one later?

Most people either don't know this window exists or don't act on it because the tax bill in the conversion year feels uncomfortable. Paying taxes voluntarily, even strategically, runs against instinct. But the math is straightforward: converting at a lower rate today to avoid distributions at a higher rate later is a trade worth making, and the window to make it closes whether or not anyone is paying attention.

When to wait

Not every year is a good conversion year, and not every investor is a good conversion candidate. If current income is high, if the conversion would push meaningful assets into a bracket that eliminates the rate advantage, or if the investor has a shorter time horizon that limits the compounding benefit of tax-free growth, the calculus changes. Roth conversions work best when they are sized deliberately, coordinated with other income sources, and executed in years where the tax cost is genuinely lower than the expected future benefit.

This is precisely the kind of planning that requires a full picture. Conversion decisions interact with Social Security timing, Medicare premium thresholds, charitable giving strategies, and estate planning objectives in ways that make them impossible to evaluate in isolation. The right answer depends on your specific tax situation, your income trajectory, and your long-term goals — not on a general rule of thumb.

What is universally true is that the investors who think about this proactively, ideally years before the window opens, have far more flexibility than those who encounter it by accident. The Roth conversion isn't a last-minute tax move. It's a multi-year planning discipline that pays off over decades.

Björn Borg, CFP®  |  Net Worth Financial Planning    www.networthfp.com  |  © 2026