A Roth conversion moves pre-tax retirement funds (Traditional IRA, 401(k), etc.) into a Roth IRA, where future growth and withdrawals are tax-free. You pay income tax on the converted amount in the year of conversion, but all future growth is never taxed again.
22 steps across 7 sections
1. Inventory Your Pre-Tax Retirement Balances
- Total all Traditional IRA, 401(k), 403(b), and other pre-tax retirement account balances
- This is the total amount you may want to convert over time
- Include any SEP-IRA or SIMPLE IRA balances
2. Project Your Income for 3-5 Years
- Estimate wages, pensions, Social Security, dividends, interest, and other income
- Identify years with lower income (early retirement, gap years, sabbaticals)
- Factor in any planned large capital gains or asset sales
3. Identify Your Target Tax Bracket
- Review 2026 federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%)
- Most people target the top of the 24% or 32% bracket
- Calculate how much "room" you have between projected income and the bracket ceiling
4. Calculate Conversion Amount for Each Year
- Conversion room = Bracket threshold minus projected taxable income
- Example: Married filing jointly, 24% bracket tops at ~$206,700; if income is $80,000, you have ~$126,700 of conversion room
- Adjust for standard deduction ($32,200 for married filing jointly in 2026)
5. Execute the Conversion
- Contact your IRA custodian to request a conversion
- Specify the dollar amount to convert
- The custodian transfers funds from Traditional IRA to Roth IRA
- This can be done multiple times per year — no limit on frequency
6. Pay Taxes from Non-Retirement Funds
- The converted amount is added to your taxable income for the year
- Pay the resulting tax from savings, not from the converted funds
- Using retirement funds to pay the tax reduces the benefit significantly
7. Adjust Annually and Repeat
- Recalculate each year based on actual income
- Spread conversions over multiple years to avoid large bracket jumps
- Continue until pre-tax balance is reduced to desired level
Common Mistakes
- Converting too much in one year
- Paying conversion taxes from retirement funds
- Ignoring IRMAA
- Forgetting state taxes
- Not taking RMD first
Pro Tips
- The "golden window" for Roth conversions is between retirement and age 73 (or...
- Use tax software or a CPA to model exact conversion amounts each year — the m...
- Convert in January to maximize time for tax-free growth before paying taxes t...
- If you are charitably inclined, consider Qualified Charitable Distributions (...
- Consider the "senior deduction" phaseout for ages 65+ when sizing conversions...