Glossary
What is a Roth conversion?
A Roth conversion moves money from a tax-deferred account into a Roth account, and you pay income tax on the converted amount in the year you do it. In exchange the money grows tax-free, is withdrawn tax-free, and is not subject to required minimum distributions for you.
The whole question is whether you are paying tax at a lower rate now than you would later. If yes, converting is usually worthwhile. If no, it is not.
The most common opportunity is the window between your last paycheck and the start of Social Security and required distributions, when taxable income can be unusually low. Filling the lower brackets deliberately in those years can reduce decades of future tax.
It can backfire. A conversion that pushes you into a higher Medicare premium tier, or that happens in a year you also realize large capital gains, can cost more than it saves. Run the numbers before you convert.
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