Roth Basics

A Roth conversion is a taxable transfer of money from a pretax retirement account to a Roth IRA. The converted amount is added to your taxable income this year and taxed at your marginal rate. In exchange, the money grows tax-free going forward and qualified withdrawals are tax-free for the rest of your life — and your spouse's life, and arguably your heirs' first ten years.

The strategic question is straightforward to state and difficult to model: is your marginal tax rate today lower than your expected marginal tax rate when the money would otherwise be withdrawn? If yes, converting is positive-expected-value. If no, it isn't. The "low-tax window" between retirement and either Social Security claiming or Required Minimum Distributions (currently 73) is the cheapest tax-planning window of most retirees' lives — and easy to miss.

This category covers Roth conversion mechanics, the five-year rule (which is actually two rules, often conflated), the gap-year framing, and the IRMAA interaction that makes "convert until just under the next IRMAA tier" a useful sizing rule when MAGI is near a threshold.