A Roth conversion moves money from a Traditional IRA or 401(k) into a Roth IRA, where it grows completely tax-free. The converted amount is added to your taxable income in the year you convert — so timing and amount matter enormously.
The goal of smart Roth conversion isn't to avoid taxes — it's to pay them at the lowest possible rate. The most common approach is bracket filling: converting just enough to use up the remaining room in your current bracket without spilling into a higher one. Use the calculator below to compare three strategies side by side.
The Three Strategies Explained
- No conversion — baseline. Your Traditional IRA continues growing tax-deferred. Withdrawals in retirement will be taxed as ordinary income, and RMDs start at age 73.
- Fill the bracket — convert just enough to reach the top of your current bracket. Every dollar pays the same marginal rate — no jump.
- Custom amount — test any specific conversion. Shows the full tax impact even if it crosses into a higher bracket.
What Is IRMAA and Why Does It Matter?
IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare Part B and Part D surcharge based on your income from two years prior. A large Roth conversion today can raise your Medicare premiums in two years. In 2024, surcharges begin at $103,000 (single) or $206,000 (MFJ) and can add $840–$5,000+/year in premiums.
When Does a Roth Conversion Make the Most Sense?
The best windows are low-income years — early retirement before Social Security starts, a job gap, or years with business losses. Converting locks in a low rate permanently. Also powerful for reducing future RMDs or protecting a surviving spouse from higher single-filer brackets.
Pay the tax from outside funds, not the converted amount itself — using IRA money to pay the tax reduces what enters the Roth and can trigger a 10% early-withdrawal penalty if you're under 59½.
Frequently Asked Questions
What is a Roth conversion?
A Roth conversion moves money from a Traditional IRA or 401(k) into a Roth IRA, where it grows completely tax-free. The converted amount is added to your taxable income in the year you convert — so timing and amount matter enormously.
When does a Roth conversion make the most sense?
The best windows are low-income years — early retirement before Social Security starts, a job gap, or years with business losses. Converting locks in a low tax rate permanently. It's also powerful for reducing future Required Minimum Distributions (RMDs) or protecting a surviving spouse from higher single-filer brackets.
What is bracket filling?
Bracket filling means converting just enough to reach the top of your current tax bracket without spilling into a higher one. Every dollar converted pays the same marginal rate — no jump. This is the most common and tax-efficient Roth conversion strategy.
What is IRMAA and why does it matter for Roth conversions?
IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare Part B and Part D surcharge based on your income from two years prior. A large Roth conversion today can raise your Medicare premiums in two years. In 2024, surcharges begin at $103,000 (single) or $206,000 (MFJ) and can add $840–$5,000+/year in premiums.
Should I use IRA funds to pay Roth conversion taxes?
No — pay the tax from outside funds, not the converted amount itself. Using IRA money to pay the tax reduces what enters the Roth and can trigger a 10% early-withdrawal penalty if you're under 59½.