When should I convert to a Roth IRA?
Depends on current and future tax rates
Under IRC §408A(d)(3), the taxable portion of a traditional IRA converted to a Roth IRA is included in income in the year of conversion. Qualified Roth distributions are later tax-free. A conversion tends to make sense when your rate now is lower than your expected rate later and you can pay the tax from other funds. Conversions made after 2017 cannot be recharacterized, so model the year first.
Reviewed by Ebot Mbi, CPA, EA · Last reviewed · Law and figures current as of September 17, 2026
Key takeaways
- Converted pre-tax amounts are taxed at your graduated rates in the conversion year.
- After-tax basis is recovered under the pro-rata rule on Form 8606.
- Tax withheld from the conversion is a distribution that can trigger the 10% additional tax before age 59½.
- Each conversion has its own 5-year period for the 10% additional tax before age 59½.
- Higher income can affect Medicare premiums, Social Security taxation, and credits.
What it is
A Roth conversion moves money from a traditional IRA, or an eligible employer plan, into a Roth IRA. You pay income tax now on the pre-tax amount converted. After that, qualified distributions, generally made after age 59½ and after the five-year Roth holding period, are tax-free, and Roth IRAs have no required minimum distributions during the owner's lifetime.
The decision is a comparison of tax rates: the rate on the converted dollars now versus the rate you or your heirs would pay on the same dollars later.
What the law says
IRC §408A(d)(3)(A) includes in gross income any amount that would be includible if it were not part of a qualified rollover contribution, and it exempts the conversion from the 10% additional tax at the time of conversion. Treas. Reg. §1.408A-4 provides that converted amounts are includible in gross income as a distribution under IRC §408(d)(1) and (2), which is where the pro-rata rule applies.
IRC §408A(d)(6)(B)(iii), added in 2017, prevents recharacterizing a conversion. IRC §408A(d)(3)(F) applies the 10% additional tax to converted amounts withdrawn within five years before age 59½. The 2026 brackets come from Rev. Proc. 2025-32.
Requirements and tests
Before converting, check these points:
- Your projected taxable income for the year and how far the conversion extends into higher brackets.
- Any nondeductible IRA basis, and all traditional, SEP, and SIMPLE IRA balances at year-end, which determine the taxable percentage.
- SIMPLE IRA money can be converted only after the two-year period.
- Cash outside the IRA to pay the tax.
- Effects on Medicare premiums (based on income two years earlier), taxation of Social Security benefits, premium tax credits, and other income-based items.
- Required minimum distributions for the year must be taken before converting.
How it works
Many people convert in years with unusually low income, such as a gap between jobs, early retirement before Social Security and required distributions begin, or a year with business losses. Converting enough to fill a lower bracket, and stopping before the next one, limits the rate paid.
Paying the tax with money outside the IRA keeps the full converted amount growing in the Roth. If tax is withheld from the IRA instead, the withheld amount is a taxable distribution that is not converted, and it can be subject to the 10% additional tax if you are under 59½.
Converting does not always help. Charitably inclined IRA owners age 70½ or older may prefer qualified charitable distributions, which move pre-tax IRA money to charity without income tax. If your future rate is likely to be the same or lower, or if the conversion raises other costs, keeping the money in a traditional IRA may produce a better result.
Conversions can be spread over several years to manage brackets, and a conversion late in the year allows a more accurate income projection. The conversion does not have to be all or nothing, and each year's decision can be made with that year's facts.
Assumptions: Tax year 2026; single filer, age 62; taxable income before conversion is exactly $50,400 (the start of the 22% bracket).; 2026 single brackets: 22% from $50,400 to $105,700; 24% from $105,700 to $201,775.; No nondeductible IRA basis; tax is paid from outside funds.; For comparison, the same dollars are assumed to be taxed at 32% if withdrawn later; this is an assumption, not a forecast.; Ignores state tax, Medicare premium effects, and Social Security taxation.
| Convert $55,300 (fills the 22% bracket): tax | $12,166 |
|---|---|
| Convert $100,000: tax ($55,300 × 22% + $44,700 × 24%) | $22,894 |
| Tax on $100,000 at the assumed later rate of 32% | $32,000 |
| Difference under that assumption | $9,106 |
| Difference if the later rate were 22% instead | −$894 (converting costs more) |
Converting $100,000 costs $22,894 in 2026 and is favorable only if the later rate on those dollars is expected to be higher than the blended rate paid now.
Illustration only; not a projection of your results.
Risks and IRS scrutiny
The main risks are converting too much in one year, overlooking IRA basis or other IRA balances, missing the Form 8606 filing, and underpaying estimated tax on the added income. Because a conversion cannot be undone, a market decline after conversion does not reduce the tax already owed. Underpayment and accuracy-related penalties can apply if the income is not reported and paid correctly.
Heirs are also affected. Most non-spouse beneficiaries must empty inherited IRAs within 10 years. A traditional IRA inherited by a beneficiary in a high bracket is taxed at that beneficiary's rate, while a Roth IRA can generally be distributed tax-free if the five-year period has been met. Comparing your rate now with your heirs' expected rates is part of the analysis, especially when the IRA is meant for the next generation.
Who it is not for
Roth conversions usually do not fit people in a peak-income year, people who would need to pay the tax from the IRA before age 59½, people who expect a lower rate in retirement, or people whose conversion would push them into higher Medicare premiums or lose valuable credits without an offsetting benefit.
How ebotCPA helps
We project your income for the year, size the conversion to your brackets, check basis and pro-rata effects, estimate Medicare and other side effects, and plan estimated payments so the tax is paid on time.
Book a $497 Case Analysis to have Ebot Mbi, CPA, EA review your facts before you act.
Frequently asked questions
Is there an income limit for Roth conversions?
No. The income limit on conversions was removed beginning in 2010. Income limits apply only to regular Roth IRA contributions.
Can I undo a Roth conversion?
No. Conversions made after 2017 cannot be recharacterized back to a traditional IRA.
What is the 5-year rule for Roth conversions?
Each conversion has its own five-year period. If you are under 59½ and withdraw converted amounts within that period, the 10% additional tax can apply to the portion that was taxable at conversion.
Should I withhold tax from my Roth conversion?
Usually not if you are under 59½, because the withheld amount is a distribution that can be taxed and penalized. Paying from other funds keeps more money in the Roth.
Have facts like these?
Book a $497 Case Analysis to have Ebot Mbi, CPA, EA review your facts before you act.