The best time to convert depends on your income this year and what you expect next year

A Roth conversion makes sense when your tax bracket is lower than it will be later, or when you have a one-time dip in income. The mechanics are straightforward: you move money from a traditional IRA (or similar pre-tax account) into a Roth IRA, pay income tax on the amount converted in that year, and then the money grows tax-free forever. The timing question is really about taxes — you want to convert when the tax bill is smallest relative to the benefit you'll get.

The most common windows are: a year you took early retirement before Social Security starts; a year between jobs; a year your business had lower profit; the year you turn 73 (before required minimum distributions begin); or a year your spouse died and you file as single instead of married filing jointly. You can also convert small amounts most years if your income is stable, just to chip away at your pre-tax balance over time.

Key Takeaways

  • Convert when your income is lower than usual — between jobs, after retirement, or in a year your business had a down year — because the tax bill on the conversion will be smaller.
  • If you have both traditional and Roth IRAs, converting only part of your traditional balance lets you control how much tax you owe that year.
  • The year you turn 73, before required minimum distributions start, is often a good window because you can convert without that forced withdrawal pushing you into a higher bracket.
  • Conversions in years when you have capital losses or other deductions can offset some of the tax cost of moving the money.
  • You do not have to convert all at once — spreading conversions across multiple years is a common strategy to stay in a lower bracket.

Converting during a year of lower income

If your income drops significantly in a single year, that year is usually the best time to convert. The IRS taxes the conversion as ordinary income in the year you do it, so a lower-income year means a lower tax rate applies to the conversion amount.

Common lower-income years include: the year you retire before claiming Social Security; a year between jobs or during a job search; the year your business had lower revenue; the year you took unpaid leave; or the year you sold a business and have no ongoing income. If you know income will be lower, you can plan the conversion in advance — you do not have to wait until December.

The math is simple: if you normally earn $120,000 and pay 22% tax, converting $50,000 costs you $11,000 in tax. But if you retire mid-year and earn only $40,000, that same $50,000 conversion might be taxed at 12%, costing $6,000 instead. That $5,000 difference stays in your Roth account growing tax-free.

Converting before required minimum distributions begin

The year you turn 73, you must start taking required minimum distributions (RMDs) from traditional IRAs. That forced withdrawal counts as income and can push you into a higher tax bracket. Converting before age 73 — especially in the year you turn 72 — lets you move money to a Roth on your own terms, before the IRS forces a distribution.

If you turn 72 this year and normally earn $100,000, you might convert $30,000 to a Roth while you still control the timing. Next year at 73, you will owe an RMD on whatever is left in the traditional IRA, but you have already moved some of it. This is particularly useful if you do not need the RMD money to live on — you can convert it instead of being forced to take it and pay tax on a larger amount.

Converting in a year with capital losses or major deductions

If you had significant capital losses (from selling investments at a loss) or a year with large deductible expenses, those reduce your taxable income. A conversion in that same year is taxed at a lower rate because your overall income is lower.

For example, if you sold a rental property at a $40,000 loss, that loss offsets other income. If you also convert a traditional IRA to a Roth that year, part of the conversion tax is absorbed by the loss. You are essentially using the loss to pay for the conversion at a discount. The same principle applies if you had large medical expenses, charitable donations, or other deductions that year.

Converting small amounts most years instead of one large conversion

You do not have to convert everything at once. Many people convert a small amount every year — $10,000, $20,000, or whatever keeps them in the same tax bracket. This spreads the tax bill across multiple years and avoids a single year where the conversion pushes you into a much higher bracket.

If you are in the 22% bracket and converting $50,000 would push you into the 24% bracket, you might convert $25,000 this year and $25,000 next year instead. Each year the tax is 22%, and you stay in control of your bracket. This strategy works especially well if you have decades until you need the money, because you have time to do multiple small conversions.

Spreading conversions also gives you flexibility. If the market drops and your IRA balance falls, you can convert less that year. If you have an unusually low-income year, you can convert more. You set the pace.

Conversions after a spouse's death

When a spouse dies, your tax filing status changes from married filing jointly to single (or head of household, depending on your situation). Single filers have narrower tax brackets, so the same income is taxed at a higher rate. However, the year of death, you can still file as married filing jointly, which gives you wider brackets for that one year.

The year after your spouse dies, you file as single and your brackets narrow. Some people convert in the year of death (filing jointly) to take advantage of the wider bracket one last time. Others wait until the following year when they are single, because their income may drop without their spouse's earnings. The best timing depends on your specific income and your spouse's income in the year they died.

When to avoid converting or delay it

Do not convert in a year when your income is unusually high — a bonus year, a year you sold a business, a year you had large capital gains, or a year you received a large inheritance. The conversion will be taxed at your highest marginal rate, which defeats the purpose.

Also avoid converting if you are about to claim Social Security or Medicare. The conversion counts as income and can trigger higher Medicare premiums (through the income-related adjustment amounts, or IRMAA). If you are within two years of claiming, check with a tax professional first — the Medicare cost might outweigh the Roth benefit.

If you have a large pre-tax IRA balance and convert a big chunk, the IRS applies the "pro-rata rule." This means you cannot convert just the earnings and leave the contributions behind — you must convert a proportional mix of contributions and earnings. If most of your balance is pre-tax money, this can create a large tax bill. In that case, spreading conversions over many years makes more sense than one large conversion.

Frequently Asked Questions

Can I undo a Roth conversion if my income ends up higher than I expected?

You can recharacterize a conversion — essentially undo it and move the money back to a traditional IRA — but only if you do so by the tax filing deadline (usually October 15 of the following year, if you file an extension). You must file an amended return and report the recharacterization to the IRS. This is useful if you converted expecting lower income but then received a bonus or had unexpected earnings.

What if I have both a traditional IRA and a Roth IRA already?

You can convert from the traditional IRA to the Roth IRA. The pro-rata rule still applies — if you have $100,000 in traditional IRAs total and $50,000 is pre-tax contributions, any conversion is 50% pre-tax and 50% after-tax. The Roth IRA you already own does not change; you are just adding to it.

Does a Roth conversion affect my Social Security benefits?

Yes, the conversion counts as income for the year you do it. If you are close to claiming Social Security, the extra income might trigger the earnings test (which reduces benefits if you earn above a certain amount before full retirement age) or increase your Medicare premiums. Check your expected Social Security start date before converting.

Can I convert a 401(k) to a Roth IRA?

Only if you have left the employer who sponsored the 401(k). While you are still employed, you cannot convert an active 401(k). Once you leave, you can roll it to a traditional IRA and then convert to a Roth, or some plans allow a direct Roth conversion. The tax rules are the same — you pay tax on the pre-tax portion in the year of conversion.

Is there an income limit for Roth conversions?

No. Unlike direct contributions to a Roth IRA, which have income limits, conversions have no income ceiling. Anyone can convert a traditional IRA to a Roth, regardless of how much they earn. This is why conversions are useful for high-income earners who cannot contribute directly to a Roth.