🔁 What Is a Roth Conversion?
A Roth conversion moves money from a pre-tax retirement account (like a traditional IRA or 401(k)) into a Roth IRA to enjoy tax-free withdrawals later. You pay ordinary income tax on the converted amount now. The money then grows tax-free and can be withdrawn tax-free in retirement.
The most common goal is to convert at the lowest possible tax rate, ideally before required minimum distributions (RMDs) begin at age 73 or later. By doing systematic partial Roth conversions during years in which your projection entails low income tax brackets relative to future years (which sometimes occurs after you've stopped working but before required minimum distributions, social security, pensions and annuities (if applicable), it’s possible to remain in and fully utilize the lower tax brackets, avoid higher tax rates today, and reduce pre-tax accounts to the point that you won’t be subject to higher tax rates in the future, either.
Your Roth Conversion Strategy should be founded upon your unique circumstances and your personal goals.
Goal 1: Minimize Lifetime Taxes
Goal 2: Protect a Surviving Spouse
Goal 4: Charitable Legacy Plan
Goal 5: Maximize Lifestyle Spending
Goal 1: Minimize Lifetime Taxes
Roth conversions help minimize lifetime taxes by allowing you to shift taxable income from high-tax future years into lower-tax current years — giving you more control over when and how much tax you pay.
💡 How Roth Conversions Minimize Lifetime Taxes
1. Lock in Lower Tax Rates Today
If you expect to be in a higher tax bracket in the future (due to RMDs, Social Security, pensions, or rising tax laws), converting now while you're in a lower bracket can reduce your overall tax bill.
🧮 Example:
Convert $50,000 now at 12% → pay $6,000 tax
That same income later could be taxed at 22% → pay $11,000 tax
→ $5,000 saved over time
2. Reduce Future RMDs
Traditional IRAs require Required Minimum Distributions starting at age 73 or later. These:
Force taxable income
May push you into a higher tax bracket
May increase your Medicare premiums (IRMAA)
May affect taxation of Social Security
✅ Roth IRAs do not have RMDs and qualified withdrawals are tax-free, helping you stay in a lower tax bracket longer.
3. Smooth Your Tax Bracket Over Time
Rather than waiting until your 70s when RMDs, Social Security, and pensions hit all at once, you can spread income over multiple years using Roth conversions.
This reduces the risk of:
“Bracket creep”
Sudden tax jumps
Loss of deductions, credits, or healthcare subsidies
💸 How Much to Convert:
Convert just enough each year to "fill up" your current marginal tax bracket—especially if you're temporarily in a lower bracket (e.g., early retirement before claiming Social Security or pensions).
Example: If you’re in the 22% bracket, convert up to the top of that bracket without spilling into the 24%.
🧭 When to Convert:
Early retirement years before RMDs and Social Security
Years with lower-than-usual income
When market values are temporarily low (you convert more shares for the same tax)
Before major tax law changes or known tax increases
🧩 Strategy Summary:
Convert gradually over time, ideally filling lower tax brackets.
Stop conversions once you approach age 63 or two years prior to your Medicare coverage year to prevent crossing IRMAA thresholds, unless you're doing it intentionally.
IRMAA is often described as a “cliff” because once your income crosses a specific threshold, your Medicare premiums jump sharply—not gradually. Here’s what that means:
Suppose the IRMAA threshold is $206,000 (for married filing jointly).
If your MAGI is $205,999, you pay the standard Medicare Part B and D premiums.
But if your MAGI is $206,001, you suddenly pay significantly higher premiums—often hundreds or even thousands of dollars more per year.
✅ Bottom Line:
Roth conversions help you take control of when you're taxed. Done strategically, they may:
Lower your total tax paid over life
Reduce RMDs
Shield against rising tax rates
Support more efficient withdrawals and estate planning
→ Use the the Boldin Roth Conversion Explorer's Tax Bracket Strategy to discern which years and amounts would be appropriate.
Goal 2: Protect a Surviving Spouse
A large traditional IRA might not seem like a big problem while filing jointly, but for a widow(er), it can force high taxes and IRMAA at the worst time—when they're grieving and dealing with estate matters.
When one spouse dies, the survivor often:
Becomes the owner of the deceased spouse’s IRA and has to take larger RMDs
Moves to single filing status, where tax brackets compress significantly, So the same income results in higher tax rates for the survivor.
Is more vulnerable to IRMAA
IRMAA surcharges kick in based on Modified Adjusted Gross Income (MAGI) — and thresholds are much lower for singles than for couples.
✅ Roth conversions while both spouses are alive
reduce RMDs
reduce future taxable income
shield the survivor from higher taxes and Medicare surcharges
give the surviving spouse more tax control
→ Strategic Roth conversions while both spouses are alive protect the survivor.
🔍 Example:
Couple currently has $1M in IRAs and $40K in taxable income.
They could convert ~$60K/year and stay in the 22% bracket.
This trims down future RMDs, and when one spouse dies, the survivor won’t be forced into the 24–32% bracket just because the filing status changed.
→ Use the the Boldin Roth Conversion Explorer to find a Roth Conversion plan that meets your goals.
Goal 3: Maximize Tax-free Assets Passed to Your Heirs
🧾 Traditional IRAs Now Must Be Emptied in 10 Years
Under the SECURE Act, most non-spouse heirs (e.g., adult children) must fully withdraw inherited traditional IRA assets within 10 years of your death — and pay ordinary income tax on every dollar.
If your heirs are in their peak earning years (40s–60s), they may be forced to take large distributions in high tax brackets (24%–37%+). This can create a "tax time bomb."
✅ Roth IRAs grow and are withdrawn tax-free by your heirs. Roth IRAs also must be emptied in 10 years, but distributions are tax-free — so no spike in taxable income for your heirs. Convert traditional IRA or 401(k) funds to Roth during your lifetime to pay taxes now at your rate — and your heirs inherit tax-free.
→ Use the Boldin Roth Conversion Explorer to discern which years and amounts would be appropriate for you.
Goal 4: Charitable Legacy Plan
📜 If your legacy plan includes charitable giving, especially leaving assets to charity at death, it may actually make sense to limit Roth conversions or skip them entirely for the portion you plan to donate. Here's why:
💼 Charities Pay No Income Tax
When you leave traditional IRA assets to a qualified charity:
They receive 100% of it, tax-free.
You avoid ever paying taxes on those funds (neither you, your heirs, nor the charity).
🟢 So converting that portion to a Roth and paying taxes upfront would be unnecessary and inefficient.
📊 Example:
Let’s say:
You have $1 million in a traditional IRA.
You plan to leave $300,000 to a charity and $700,000 to your children.
A smart approach might be:
Convert only the portion going to your children to reduce their future tax burden.
Leave the traditional IRA portion earmarked for charity untouched, so the charity receives the full value tax-free.
🧠 Tax-Efficient Legacy Strategy:
Segment your IRA:
One portion for heirs → consider Roth conversions
One portion for charity → no conversion
Use Qualified Charitable Distributions (QCDs) if you're over age 70½ to give to charity during your lifetime using pre-tax IRA money, bypassing income tax.
🚩 When Roth Conversions May Still Make Sense:
If charitable giving is only a small part of your estate plan.
If you want to reduce future RMDs and stay in a lower tax bracket.
If you value the tax-free growth and estate flexibility a Roth provides.
✅ Bottom Line:
Only convert to Roth what you intend to leave to non-charitable heirs or use during your lifetime. For the charitable portion, traditional IRAs are the most tax-efficient asset to give.
→ Use the the Boldin Roth Conversion Explorer to find a Roth Conversion plan that meets your goals.
Goal 5: Maximize Lifestyle Spending
If your goal is to spend or give away all your money during your lifetime rather than leave a large inheritance—Roth conversions may or may not be worth it, depending on a few key factors:
✅ Roth Conversions May Make Sense If:
You Expect to Be in a Lower Tax Bracket Now Than Later
If your income is temporarily low (e.g., early retirement), converting at lower tax rates can reduce your lifetime tax bill, even if you spend it all yourself.
You Want Tax-Free Growth and Withdrawals
Roth IRAs offer tax-free withdrawals and no required minimum distributions (RMDs), giving you more control over your taxes in retirement.
You're Planning for a Long Retirement
The longer the money stays in the Roth, the more time it has to grow tax-free. This could make sense if you expect to live well into your 80s or 90s.
You're Concerned About Rising Tax Rates
If you believe your future tax rates (or national tax policy) will be higher, prepaying taxes now may be beneficial.
🚫 Roth Conversions May Not Be Necessary If:
You’ll Spend It All Before It Grows Much
If you're spending your retirement assets steadily and won't accumulate significant gains, paying taxes now via a Roth conversion might not pay off.
You’re Already in a High Tax Bracket
Paying 32%+ to convert may not be efficient if you're going to spend the funds soon anyway.
You’re Relying Primarily on Social Security and Modest Withdrawals
You may remain in a low tax bracket for life, making Roth conversions unnecessary.
You’ll Use Charitable Giving (e.g., QCDs or legacy donations)
As discussed earlier, giving from a traditional IRA avoids taxes anyway.
🔄 Possible Middle Ground:
Partial conversions: Convert just enough each year to "fill up" a lower bracket.
This gives flexibility, limits tax cost, and offers Roth benefits if you end up not spending everything.
🎯 Bottom Line:
If your spending plan is on track, your tax bracket is low, and you want maximum control over taxes in later years, strategic Roth conversions can still make sense—even with a "die broke" philosophy
→ Use the the Boldin Roth Conversion Explorer to find a Roth Conversion plan that meets your goals.