Is Roth Conversion Worth It?

For most pre-retirees with large traditional IRA balances, Roth conversion during the golden window is one of the highest-return financial moves available. But the math depends on your specific numbers. Here's the decision framework — with the five factors that determine the answer.

The core math: rate differential

A Roth conversion is a bet that you'll pay tax at a lower rate now than you (or your heirs) would have paid later. The value lives in that spread.

The conversion tax: Every dollar converted from a traditional IRA or 401(k) counts as ordinary income in the year of conversion. Convert $100,000 at a 24% federal rate, and you owe $24,000 now.

The future tax avoided: Without conversion, that $100,000 stays in the traditional IRA and eventually gets taxed — either as RMDs at 73 (or 75 for those born 1960 or later⁴), or when inherited by your heirs. If the effective rate on that withdrawal is 32%, the future tax would have been $32,000.

That's an $8,000 savings on $100,000 of principal — before accounting for anything the Roth earns tax-free in the interim.

When Roth conversion is clearly worth it

You're in the golden window with a large traditional IRA

The ideal conversion candidate: retired or semi-retired, Social Security not yet started, RMDs haven't begun, traditional IRA balance of $1M or more. The bracket math during this window is often dramatically favorable. A couple with $60,000 in baseline income (dividends, part-time work) may have over $140,000 of room in the 22% bracket — converting at 22% versus 32–37% later when RMDs force large distributions is a straightforward win.

See The Roth Conversion Golden Window for a year-by-year framework on how the window opens and closes.

Your projected RMDs will push you into a higher bracket

Run the math forward. If your traditional IRA compounds at 6–7% annually for 10+ years without withdrawals, the RMDs beginning at 73 or 75 will be very large. A $2M IRA today becomes roughly $3.5M at age 73 if left untouched at 7%. The IRS Uniform Lifetime Table requires a payout of approximately 1/23.8 of the balance at age 74 — that's over $147,000 of forced income, stacked on top of Social Security and any investment income. Most of it lands in the 32–35% bracket. Converting now at 22–24% is often the better trade by a wide margin.

Your heirs are in high tax brackets

Under the SECURE Act's 10-year rule, most non-spouse beneficiaries must drain inherited traditional IRAs within 10 years.³ If your children are earning $200K+ when they inherit, those forced distributions will be taxed at 32–37% — on top of their salary. Inherited Roth IRAs also must be drained in 10 years, but qualified distributions are completely tax-free. Converting at 22% now so your heirs receive Roth dollars is often a clear win even when the personal NPV for you is close.

You plan to move to a no-income-tax state

Converting after relocating to Florida, Texas, Nevada, or another state with no income tax saves you both federal and state taxes versus converting while still in California, Oregon, or Minnesota. For a California resident in the 9.3% state bracket, timing a large conversion to the first year of post-move residence can save tens of thousands of dollars in additional state tax — before counting the federal savings.

When the math is genuinely less clear

Your time horizon is short

A Roth conversion recoup period depends on how long the converted dollars compound inside the Roth before they're withdrawn. If you're 72 with a modest IRA and expect to spend it down over the next decade, the break-even on paying the conversion tax upfront may be longer than your holding period. Short horizons compress the compounding advantage.

Your future rate won't be much higher

If your IRA is modest (under $400K) and your projected RMDs will be small, you may face roughly the same 12–22% effective rate both now and in retirement. The rate differential narrows, and conversion becomes a closer call — especially if your state taxes the conversion amount and you have no plans to move.

You'd pay the conversion tax from inside the IRA

Paying the conversion tax by withholding from the converted funds is a significant value drain. If you convert $100,000 and have $24,000 withheld for federal taxes, you've moved only $76,000 into the Roth — and the withheld $24,000 never gets a chance to compound tax-free. The optimal approach is to pay all conversion taxes from outside savings (taxable brokerage, savings account). If that's not possible, conversion is still potentially worth it, but the math is tighter. See the common mistakes guide for more on the withholding trap.

The estate planning case

Even when your personal lifetime NPV is borderline, there's usually an estate planning argument for converting that tips the balance.

Traditional IRA balances pass to heirs with embedded income tax liability — the IRS gets paid by whoever withdraws the money, and the 10-year rule compresses that timeline significantly for adult children. Roth IRA balances also pass through the estate, but the embedded tax liability is gone. Your heirs receive Roth dollars and drain them over 10 years without ever paying income tax on the principal or growth.

If you're likely to die with a substantial traditional IRA balance — meaning you won't spend it all — conversion now often wins on the estate benefit alone, independent of the personal NPV calculation. The full analysis in our estate planning guide walks through the heir-bracket math in detail.

Break-even: how long to recoup

These estimates assume the conversion tax is paid from outside the IRA and a 6–7% annual growth rate inside the Roth.

• 10-point rate differential (22% now vs. 32% later): break-even in roughly 10–12 years. Dollars converted and held in the Roth beyond that point are ahead of non-converted dollars.
• 5-point rate differential (22% now vs. 27% blended later): break-even around 18–22 years. Requires a longer window.
• Zero rate differential (same rate now and later): no personal NPV advantage — but the estate planning case still applies, since heirs receive Roth dollars rather than taxable traditional IRA dollars.

These are rough estimates; your actual break-even depends on your specific bracket trajectory, state taxes, and RMD timing. Use our lifetime NPV calculator to model your specific scenario year by year.

The five deciding factors

1. Rate differential. What rate are you paying on the conversion now versus what you (or your heirs) would pay later? A 10+ point spread is a strong case. A 0–3 point spread requires the estate planning argument to carry the trade.
2. Time horizon. How long will the converted dollars compound in the Roth before being withdrawn? 15+ years: strong case. Under 5 years: weak case for personal NPV (estate case may still apply).
3. Outside assets to pay the tax bill. Can you pay the conversion tax from taxable savings without touching the IRA? If yes, the math is clean. If no, the effective cost is higher and the break-even extends.
4. RMD trajectory. What will your forced distributions look like at 73 or 75 if you don't convert? If the answer is "more than I can spend," converting now avoids paying higher rates on those forced distributions later.
5. Heir brackets. If your estate will pass to beneficiaries in the 32%+ bracket, the estate planning case often closes the deal even when your personal NPV is borderline. Inherited Roth is tax-free; inherited traditional IRA is fully taxed.