A Roth conversion moves money from a pretax retirement account, such as a traditional IRA or 401(k), into a Roth IRA. You pay income tax on the converted amount in the year you do it.
The conversion amount gets added to your ordinary taxable income. If you convert $20,000 from a traditional IRA with all pretax dollars and fall in the 22% federal tax bracket, the conversion could create roughly $4,400 of additional federal income tax.
The appeal of a Roth conversion is the ability to lock in today's tax rates rather than pay unknown rates later. Once converted, money grows tax-free in the Roth IRA. Qualified distributions come out free from federal income tax. Roth IRAs also have no required minimum distributions during the original owner's lifetime.
The downside: converting increases your taxable income in that year. Too much at once could push you into a higher tax bracket, increase future Medicare premiums through IRMAA, or make more of your Social Security taxable.
The real question is not whether to convert, but how much to convert, when to do it, and how much tax you are willing to pay. Current federal income tax rates top out at 37% for 2026. Historical context shows rates have been much higher, such as 91% in the 1950s and early 1960s and 70% in the 1970s.
Certain windows make conversions particularly attractive. Retiring at 62 before required minimum distributions begin, experiencing a temporary income drop, delaying Social Security, or having unusually large deductions in a particular year can create opportunities. The key is understanding your future tax liability, especially if you have accumulated millions in pretax retirement accounts.