A Roth IRA conversion is the process of moving money from a traditional IRA (or other pre-tax retirement account) into a Roth IRA. You pay income tax on the converted amount now, but the money then grows tax-free and comes out tax-free in retirement. In 2026, Roth conversions remain one of the most powerful tax planning tools available.
How a Roth IRA Conversion Works
When you convert traditional IRA money to a Roth IRA, the converted amount is added to your ordinary income for that tax year. You pay income tax at your current marginal rate. Once the money is inside the Roth, it grows tax-free and qualified withdrawals in retirement are completely tax-free — including all the decades of growth.
There are no income limits for converting — anyone can do a Roth conversion, regardless of how much they earn.
The Tax Bill from Converting
The key downside is the tax hit. If you have $100,000 in a traditional IRA and you convert the full amount, you add $100,000 to your taxable income for that year. If you are in the 22% bracket, that is a $22,000 tax bill. The money to pay that tax should ideally come from outside the IRA — paying the tax from the converted funds reduces the compounding power of the conversion.
Partial Conversions: A Smarter Approach for Many People
Most people do not convert the entire traditional IRA at once. Instead, they convert a specific dollar amount each year — just enough to “fill up” their current tax bracket without pushing into the next one.
For example, if your taxable income is $60,000 and the top of the 22% bracket for a married couple is $94,050, you could convert up to $34,050 without jumping into the 24% bracket. This approach spreads the tax burden over multiple years while still moving money into the Roth.
When a Roth Conversion Makes the Most Sense
Conversions are most powerful in specific situations:
- Lower income years. If you have a gap in employment, early retirement before claiming Social Security, or a year with unusually low income, your marginal tax rate is lower — making a conversion cheaper.
- Before RMDs begin. Traditional IRAs require Required Minimum Distributions (RMDs) starting at age 73. Converting before RMDs begin reduces the balance subject to RMDs, potentially lowering your future tax burden.
- You expect higher taxes in retirement. If you expect to be in a higher tax bracket in retirement than you are now — due to Social Security, pensions, or other income — paying tax now at a lower rate is smart.
- Estate planning. Roth IRAs are not subject to RMDs during the owner’s lifetime, and they pass to heirs income-tax-free, making them excellent estate planning tools.
When a Roth Conversion Does Not Make Sense
Conversions are less attractive if you are currently in a high tax bracket and expect to be in a lower one in retirement (common for high earners who will have limited income once they stop working). They also make less sense if you need the converted money within 5 years — Roth conversion earnings must sit in the account for 5 years before you can withdraw them penalty-free.
The Roth Conversion Ladder (for Early Retirees)
Early retirees who have substantial traditional IRA balances sometimes execute a “Roth conversion ladder.” They convert money each year during their low-income early retirement years, pay minimal taxes, and then access the converted funds 5 years later without penalty. This strategy requires careful planning but can eliminate taxes on large retirement balances.
Roth Conversion and the Pro-Rata Rule
If you have both pre-tax and after-tax (non-deductible) contributions across all your traditional IRAs, the IRS applies a pro-rata rule. You cannot convert just the after-tax portion tax-free — each conversion is treated as coming proportionally from both pre-tax and after-tax funds. This is an important detail to understand before converting if you have made non-deductible IRA contributions.
How to Execute a Roth IRA Conversion
Contact your IRA custodian (Fidelity, Vanguard, Schwab, etc.) and request a conversion. It is typically done online or by phone. You specify the amount, and the custodian moves the money from the traditional IRA to your Roth IRA. You will receive a Form 1099-R in January showing the taxable amount, which you report on your tax return.
Make sure you have enough cash set aside to pay the tax bill — either from savings or by adjusting your withholding so you do not owe a large amount at tax time.
Roth Conversion Rules in 2026
The 5-year rule applies separately to each conversion. Converted amounts can be withdrawn penalty-free 5 years after the conversion (even before age 59.5). Earnings on converted amounts follow the standard Roth IRA rules — age 59.5 and the 5-year rule on the original Roth account opening date must both be met for penalty-free withdrawal of earnings.
Bottom Line
A Roth IRA conversion is not right for everyone, but for people in lower-income years, those approaching RMD age, or those planning their estate, it can reduce lifetime taxes significantly. The optimal approach for most people is a series of partial conversions over several years — converting enough each year to maximize low tax brackets without jumping into a higher one. A financial advisor or tax professional can help you model the numbers for your specific situation.