When They Might Make Sense:

Low-income years

If your income is temporarily lower (for instance, early in retirement or between jobs), converting to a Roth IRA may allow you to pay taxes at a lower rate.

Legacy planning

Roth IRAs are not subject to RMDs during the original owner's lifetime, which can offer more flexibility for those looking to pass on assets.

Tax diversification

Having both pre-tax and Roth assets can give you more options for tax-efficient withdrawals later.

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When They Might Not:

If it pushes you into a higher bracket

A large conversion could lead to a bigger tax bill than expected.

Short time horizon

If you plan to withdraw soon after converting, the tax cost may outweigh the benefits.

Impact on other benefits

Increased income from a conversion might affect Medicare premiums or taxation of Social Security.

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Bottom Line:

Roth conversions can offer long-term tax benefits, but the strategy needs to be carefully analyzed within the context of your broader financial picture.

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Thinking about a Roth conversion but unsure if it’s the right move?

The potential tax advantages can be significant, but timing and personal circumstances are key. If you’re exploring this strategy and want to make an informed decision, Jason can help walk you through the pros and cons. Schedule a call using the button below to see what makes sense for you.