Roth Conversion

Retirement

A Roth conversion moves pre-tax retirement money (Traditional IRA, 401k) to a Roth IRA, paying ordinary income tax on the conversion amount in the year of conversion. The benefits: future growth and qualified withdrawals are tax-free, no RMDs during your lifetime, tax-free legacy for heirs. Best done in low-income years (sabbatical, early retirement before Social Security, after large business loss). Convert up to the top of a tax bracket to avoid pushing into higher brackets. Pay conversion taxes from non-retirement money — using IRA money to pay the tax negates much of the benefit. No income limits.