When should I do a Roth conversion?
Last updated August 2026
Short answer
A conversion is a decision to pay tax now instead of later. Everything about timing it comes down to which rate you expect to be lower.
The windows worth using
The gap between retiring and claiming Social Security, when earned income has stopped and benefit income has not started.
A year with unusually low income for any reason: a career break, a business loss, a sabbatical.
Early in retirement generally, before required distributions at 73 force taxable income out whether you want it or not.
Why it reduces later tax
Traditional balances generate required distributions from 73, calculated from the balance regardless of what you need.
Those distributions are ordinary income, and for a large balance they can push a retiree into a higher bracket than they were ever in while working.
Converting earlier moves money into an account with no lifetime distribution requirement, which shrinks the forced income later.
Pay the tax from outside
Using outside money converts the full amount and leaves the entire balance compounding tax-free.
Withholding the tax from the IRA reduces what actually converts, and under 59.5 the withheld portion is treated as an early distribution.
If there is no outside money to pay with, the case for converting is considerably weaker.
Try it in Walnut
Walnut connects to your brokerage and reads your IRA balances, which is the figure the pro-rata calculation and any conversion plan depend on.
Convert in tranches
Converting a fixed amount each year fills the lower brackets without spilling into higher ones.
Because recharacterisation no longer exists, a conversion cannot be undone, so incremental is safer than decisive.
Doing it late in the year, when income is nearly known, gives the most accurate view of how much room remains in the bracket.
The costs beyond income tax
Medicare premium surcharges are assessed on income from two years earlier, so a conversion at 63 raises premiums at 65.
More taxable income can make a larger share of Social Security benefits taxable.
Under 65, additional income can reduce marketplace premium subsidies, which for some households outweighs the bracket saving entirely.
When not to convert
When your current rate is higher than you expect it to be in retirement, which is the ordinary case at peak earnings.
When the tax would have to come out of the IRA itself.
When you intend to leave the balance to charity, which receives a traditional IRA without paying income tax on it, making the conversion pointless.
A worked example
A retired couple with $80,000 of spending, funded partly from taxable savings, might have taxable income well below the top of a low bracket.
Converting enough to fill that bracket each year, and no more, moves money at a known rate rather than leaving it to be forced out at 73 at an unknown one.
Over a decade that can move several hundred thousand dollars into Roth treatment without ever entering a higher bracket, which is the whole strategy stated plainly.
Sources
Conversion rules, the pro-rata calculation and the five-year requirements are in IRS Publication 590-A and Publication 590-B. Required distribution rules are in the RMD FAQs, and benefit taxation in Publication 915. Walnut is informational and is not an investment adviser. This guide is educational and not personalized tax advice.
FAQ
When is the best time for a Roth conversion?
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A year when your marginal rate is lower than you expect it to be later. The classic window is after retiring and before both Social Security and required distributions begin, when income can be unusually low.
Is there an income limit on conversions?
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No. Roth contributions are income-limited; conversions are not, and there is no cap on the amount. That asymmetry is what makes the backdoor Roth possible.
How is a conversion taxed?
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The converted amount is ordinary income in the year of the conversion, except for any after-tax basis. It stacks on top of your other income, so a large conversion can push part of itself into a higher bracket.
Should I pay the tax from the IRA?
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Preferably not. Paying from outside money converts the full amount and, if you are under 59.5, avoids the withheld portion counting as an early distribution. Paying from the IRA shrinks the balance being converted.
What is the pro-rata rule?
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Conversions draw proportionally from all your traditional, SEP and SIMPLE IRA balances rather than from specific dollars. Existing pre-tax money therefore makes part of any conversion taxable, which is what complicates a backdoor Roth.
Can I undo one?
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No. Recharacterisation of conversions was removed, so a conversion is permanent once made. That is a reason to convert in tranches during the year rather than all at once in January.
Does a conversion have its own five-year clock?
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Yes. Each conversion carries a five-year period before the converted amount can be withdrawn penalty-free if you are under 59.5. It is separate from the five-year clock on the Roth account itself.
What should I watch besides brackets?
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Medicare premium surcharges, which are based on income from two years earlier, the taxation of Social Security benefits, and marketplace premium subsidies if you are under 65. A conversion can be cheap in income tax and expensive in all three.
How much should I convert in a year?
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Usually enough to fill the current bracket and no more, calculated late in the year when income is nearly known. Because conversions cannot be undone, filling a bracket deliberately each year for a decade beats one large conversion that spills into higher rates.