Roth conversions

Volunteering to pay taxes early sounds like a scam. Done in the right years, it's one of the most reliable tax moves in retirement planning.

In plain English

A Roth conversion moves money from a traditional IRA/401k into a Roth account. You pay income tax on the amount this year — and in exchange, that money and all its future growth are tax-free forever, with no forced withdrawals, ever. The trick is doing it in years when your tax rate is temporarily low.

Why would anyone pay taxes early?

Because your tax rate isn't constant across your life — and a conversion is a bet on the difference. Every pre-tax dollar will be taxed eventually; the only question is at what rate. Pay 12–22% by choice in a quiet year, or pay 24–32% by force later when RMDs and Social Security stack up. Same dollar, very different haircut.

The golden window

For most people there's a stretch of unusually low-income years: after the paycheck stops, before Social Security and RMDs begin — roughly retirement to age 73. In those years you might have almost no taxable income at all. The 10%, 12%, and 22% brackets sit there empty. Conversions fill them deliberately.

Example: You retire at 62 with $900K in a traditional IRA and live on brokerage savings for a few years, so your taxable income is near zero. Converting ~$80K/year for eight years moves ~$640K into Roth at mostly 12–22% rates. Do nothing instead, and at 73 that IRA (still growing) produces RMDs that — stacked on Social Security — land in the 24%+ brackets and raise your Medicare premiums. The conversion window was worth roughly a six-figure difference in lifetime taxes.

Bracket-filling: the how

The core technique is simple: each year, convert just enough to fill your current bracket without spilling into the next one. If the 22% bracket tops out at some income level, you convert up to that line and stop. Predictable, repeatable, and it never accidentally buys you a 32% year.

Three cautions worth knowing:

Conversion income is real income — it can push you over Medicare's IRMAA thresholds (a premium surcharge) or the ACA subsidy cliff if you're under 65. The lines matter as much as the brackets.
Pay the conversion tax from taxable savings, not from the converted amount — otherwise you're shrinking the very balance you're trying to protect.
Conversions are irreversible ("recharacterization" was abolished in 2018). Size them carefully; December, when your year's income is nearly known, is the classic time.

What Vundii shows you

The Tax Planning page hosts the Roth Optimizer: pick a target bracket (say 22%) and it computes how much to convert each year, shows the year-by-year plan, and — crucially — tells you whether the strategy actually saves money versus doing nothing for your numbers.
It also shows your current pre-tax/Roth/taxable mix, so you can see how much rebalancing the buckets is even on the table.
The RMDs page shows the before/after: how conversions shrink the forced-withdrawal curve you're heading toward.

What to do about it

Check your bucket mix on Tax Planning. Mostly pre-tax? You're the candidate this strategy exists for.
Run the Roth Optimizer with a 22% target; compare lifetime taxes with and without. Let the math, not the vibe, decide.
If you'll be on ACA insurance before 65, weigh conversions against subsidy loss — sometimes the window truly opens at 65, not at retirement.
Discuss the specific yearly amounts with a tax professional before executing — this is the one guide topic where a second pair of eyes on your actual return pays for itself.

Related terms: Roth conversion · Roth Optimizer · IRMAA · bracket creep

See what the conversion window is worth for your numbers.

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