# Roth Conversions Don't Always Wait Until Retirement. Here's Why Timing Matters Now

Waiting to convert traditional IRA funds to a Roth might feel logical if retirement is five to ten years away. That strategy often backfires. The decision to convert depends on several moving parts that change before you actually retire, and delaying could cost you tens of thousands in taxes over your lifetime.

A Roth conversion takes money from a traditional IRA, where contributions grew tax-deferred, and moves it to a Roth IRA. You pay income tax on the converted amount in that year, but all future growth and withdrawals come out tax-free. The key tension: converting now locks in today's tax rates. Waiting gambles that rates stay the same or fall, which rarely happens.

Here's what actually matters when deciding whether to convert now or later.

**Tax brackets shift before retirement.** Your income in your fifties may sit in a 24% or 32% federal bracket while working. Once you stop working and live on retirement savings, you might drop into the 12% bracket. This creates a window. Years when you have no wages but haven't yet claimed Social Security or started required minimum distributions offer lower brackets. But that window closes quickly. If you wait until 70 and start RMDs, your income spikes, pushing you back into higher brackets. Converting during the low-income years between retirement and RMDs makes financial sense.

**Tax law isn't static.** Congress can raise rates. The Tax Cuts and Jobs Act rates expire at the end of 2025, which means federal income tax rates are scheduled to climb across all brackets. Converting a $200,000 traditional IRA at today's 24% rate costs $48,000. That same conversion after 2025, assuming rates revert to pre-2017 levels, could cost over $55,000. The Treasury runs a deficit. Rate increases for high earners are likely.

**Your income in your sixties may surprise you.** Pension payments, part-time work, portfolio withdrawals, or business income might keep your income higher than expected. Self-employed people often work longer than planned. If your earnings stay high, conversion windows close.

**RMDs force the conversion at worse rates.** At age 73, required minimum distributions kick in. RMDs push your income into higher brackets whether you want them to or not. If you haven't converted earlier, you're forced to take taxable RMDs alongside any new conversions, creating a tax spiral.

**State taxes matter.** Residents of California, New York, Massachusetts, and other high-tax states face state income tax on Roth conversions. A $100,000 conversion in California costs roughly $9,300 in state tax alone. But if you plan to move to a no-income-tax state like Texas, Florida, or Nevada before retirement, converting before the move saves state taxes entirely.

**The breakeven point.** Roth conversions only win if you hold the account long enough for tax-free growth to exceed what you paid in taxes. The longer your retirement horizon, the more powerful the Roth becomes. If you're 55 and might live to 90, you have 35 years of tax-free compounding. That justifies paying taxes now.

Don't assume waiting works. Run the numbers for your specific situation. Work with a tax professional who can model your income across both scenarios: converting now versus converting later. The difference between these two paths often reaches hundreds of thousands of dollars.