The best time to convert depends on your income this year, your tax bracket, and whether you expect to be in a higher bracket later

A Roth conversion makes the most sense when your taxable income is temporarily low — a year you took unpaid leave, sold a business at a loss, retired before Social Security starts, or had a major deduction. The tax you pay on the conversion happens in that low-income year, not when you withdraw the money decades later. If you convert in a year when you would pay 22% tax on the conversion, but expect to pay 24% or 32% tax in retirement, you come out ahead.

The opposite is also true: converting in a year when you are already in a high tax bracket usually costs more than waiting. If you are still working full-time and earning $150,000, converting $50,000 from a traditional IRA pushes you into a higher bracket and triggers more tax than you would pay if you converted the same amount after you retired and your income dropped.

Timing also matters for Medicare premiums, student loan payments, and state taxes. A conversion that raises your Modified Adjusted Gross Income (MAGI) can increase what you pay for Medicare in the following year. Some states tax conversions as income; others do not. These factors shift the math for whether a conversion makes sense in a particular year.

Key Takeaways

  • Converting in a year when your income is unusually low — such as after retirement, a job loss, or a sabbatical — means you pay tax at a lower rate than you might in future years.
  • If you are still working and earning a high income, converting in that same year usually costs more in taxes than waiting until your income drops.
  • A conversion increases your Modified Adjusted Gross Income (MAGI) for that tax year, which can raise your Medicare premiums two years later and affect other tax-based thresholds.
  • Some states tax Roth conversions as ordinary income; others do not, so your state of residence affects whether a conversion saves you money overall.
  • Converting small amounts over several years often costs less in total tax than converting a large amount in a single year.

Low-income years when a conversion usually makes sense

The clearest case for a conversion is a year when your income drops sharply. If you retired at 62 and will not claim Social Security until 70, the years between 62 and 70 are often your lowest-income years. You have no W-2 wages, no business income, and no Social Security yet. Your only income might be a small pension or part-time work. Converting $30,000 or $50,000 from a traditional IRA in that window means paying tax at 12% or 22% instead of the 24% or 32% you might pay once Social Security and required minimum distributions start.

Other low-income windows include the year you leave a job (especially if you leave mid-year), a year you take unpaid leave, or a year you sell a business at a loss. If you sold a rental property at a loss, that loss can offset other income and lower your tax bracket for that year — making it a good year to convert. A year you take a sabbatical, reduce your hours, or transition between jobs can also create a temporary dip in income that makes a conversion cheaper.

The key is that the low income is temporary. If you are permanently retired and your income will stay low, you do not need to rush a conversion into a single year. You can spread it across multiple years at the same low rate. But if you know your income will jump — because you are returning to work, Social Security starts, or required minimum distributions begin — converting before that jump happens locks in a lower tax rate.

High-income years when you should usually wait

If you are still working full-time and earning $120,000 or more, converting in that same year usually costs more than waiting. A conversion adds to your taxable income for the year. If you convert $40,000 from a traditional IRA while earning $150,000 as a salary, you are paying tax on $190,000 of income. That $40,000 conversion is taxed at your marginal rate — the highest bracket you are in — which might be 24% or 32%. If you wait until you retire and your income drops to $50,000, that same $40,000 conversion is taxed at 12% or 22%.

The math changes if you are self-employed or have variable income. If you had a very profitable year and expect lower profits next year, converting in the lower-income year makes sense. But if you are on a steady salary and expect to keep earning it, there is no advantage to converting now instead of after you retire.

One exception: if you are in the 12% bracket and expect to jump to 22% or higher, converting enough to fill the rest of the 12% bracket can be worthwhile. For 2024, the 12% bracket for single filers goes up to $11,600 of taxable income. If your current income is $8,000, you could convert up to $3,600 and stay in the 12% bracket. That conversion is "free" in the sense that it does not push you into a higher bracket. But this only works if you have room left in your current bracket.

How conversions affect Medicare premiums and other thresholds

A Roth conversion increases your Modified Adjusted Gross Income (MAGI) for the year you convert. Medicare uses your MAGI from two years prior to set your premiums. If you convert in 2024, your 2024 MAGI is higher, which means your Medicare premiums in 2026 will be higher. The increase is not dollar-for-dollar — Medicare has income brackets and surcharges — but a $50,000 conversion could raise your premiums by $100 to $300 per month for both you and your spouse.

A conversion also affects other tax thresholds. It can push you over the limit for the Earned Income Tax Credit, the Child Tax Credit, or the Saver's Credit. It can make more of your Social Security taxable. It can trigger the Net Investment Income Tax (3.8% on investment income above certain thresholds). Before you convert, calculate your MAGI for the year and see where it lands relative to these thresholds.

Some people convert in years when they are already close to a Medicare surcharge threshold, figuring the extra tax is already baked in. Others convert in years when they are well below the threshold, so the conversion does not trigger a surcharge. This requires looking ahead two years and estimating your income.

State taxes and where you live

Seven states do not tax income at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming. If you live in one of these states, a Roth conversion has no state tax cost. If you live in a state with income tax, the conversion is taxed as ordinary income in that state.

Some states have special rules. New York taxes conversions but allows a deduction for conversions of money that was never deducted federally. Illinois taxes conversions but exempts retirement income for people over 55 in some cases. A few states tax conversions at a lower rate than other income. Before you convert, check your state's treatment of Roth conversions. A conversion that saves you 10% in federal tax but costs you 5% in state tax is still a net win, but one that costs you more in state tax than you save in federal tax is not.

If you are considering moving to a lower-tax state, the timing of your conversion matters. If you move in January, you pay tax in your new state. If you move in December, you might pay tax in your old state. Some people time conversions to happen after they move, to take advantage of lower state tax rates.

Converting in chunks versus one large conversion

You can convert any amount from a traditional IRA to a Roth IRA in any year. Some people convert $10,000 one year, $15,000 the next, and $20,000 the year after. Others convert $100,000 in a single year. The total tax you pay depends on your income in each year and your tax bracket in each year.

Converting in smaller chunks over several years often costs less total tax than converting a large amount in one year. If you convert $100,000 in a single year, that entire amount is taxed at your marginal rate — potentially 24%, 32%, or higher. If you convert $25,000 in each of four years, and your income stays low in those years, each conversion might be taxed at 12% or 22%. The difference adds up.

The downside of spreading conversions across years is that you have to wait longer to get the money into a Roth account, where it grows tax-free. If you are young and have decades until retirement, the tax savings from spreading conversions might be smaller than the growth you miss by waiting. If you are close to retirement, spreading conversions across your low-income years usually wins.

The pro-rata rule and why it matters for conversions

If you have both traditional and Roth IRAs, the pro-rata rule affects how much tax you pay on a conversion. The rule says you cannot convert just the after-tax money in your traditional IRA and leave the pre-tax money behind. Instead, the IRS treats all your traditional IRAs as one pool. When you convert, you are converting a mix of pre-tax and after-tax money in the same proportion as your total accounts.

Example: You have $80,000 in a traditional IRA (all pre-tax) and $20,000 in a SEP-IRA (all pre-tax). You also have $10,000 in a traditional IRA that you funded with after-tax money. Your total is $110,000, of which $10,000 is after-tax (9%). If you convert $50,000, the IRS says you are converting $45,500 of pre-tax money and $4,500 of after-tax money. You pay tax on the $45,500, not just the $4,500.

This rule makes conversions more expensive if you have a lot of pre-tax money in traditional IRAs. If you have mostly after-tax money, the rule works in your favor. Before you convert, add up all your traditional IRAs, SEP-IRAs, and straightforward IRAs to see what percentage is pre-tax and what percentage is after-tax. That percentage determines how much of your conversion is taxable.

Frequently Asked Questions

Is there a best month to do a Roth conversion?

The month does not matter for federal tax purposes — only the calendar year matters. A conversion in January and a conversion in December of the same year have the same tax result. However, if you are trying to time a conversion around a major life event (retirement, a job change, moving states), the month might matter for when that event happens. Some people convert in December to lock in that year's tax bracket, but the tax result is the same as converting in January of the same year.

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

You can recharacterize a conversion — move the money back to a traditional IRA — but only if you do it by the tax-filing important date (usually October 15 of the following year, if you file an extension). You must file Form 8606 to report the recharacterization. If you discover mid-year that your income is higher than expected, you still have until October to undo the conversion. After that important date, the conversion is permanent.

Should I convert before or after I claim Social Security?

Usually before. Once you claim Social Security, your income jumps and your tax bracket rises. Converting before you claim Social Security means converting at a lower tax rate. The exception is if you are still working and earning a high salary — in that case, waiting until you stop working (even if Social Security has started) usually saves more tax than converting while you are still earning.

What if I have a Roth IRA already — does that change when I should convert?

Having a Roth IRA does not change the timing decision. The pro-rata rule applies to all your traditional IRAs combined, not to your Roth IRAs. The main difference is that you already have a Roth account open, so you do not need to open one before converting. The tax math and income timing are the same.

Do I have to convert the entire balance of my traditional IRA?

No. You can convert any amount — $1,000, $50,000, or the entire balance. You can also convert from one traditional IRA and leave others untouched. The pro-rata rule applies to all your traditional IRAs combined, but you choose how much to convert in any given year. This flexibility lets you convert small amounts in low-income years and skip conversions in high-income years.