Roth and Roll: Is Now the Time to Make Your Big Money Move?
Retirement money can sit in a variety of account types. Each account type has different benefits and restrictions. It pays to know the difference and insure you capture the greatest benefits to you.
Roth IRAs give you tax-free income in retirement. Since the money’s already been taxed on the way in, you don’t owe a dime when you take it out—assuming you follow the rules. So, what are the rules? When is it the right time to consider moving money into a Roth?
Is a Roth Conversion Right for You? (Maybe—But Let’s Not Wing It)
Let’s talk about one of the most buzzed-about moves in retirement planning: the Roth conversion.
On the surface, it sounds pretty magical: you take money from a traditional retirement account (like a 401(k) or IRA), pay the taxes now, and then enjoy tax-free growth and withdrawals forevermore. No Required Minimum Distributions (RMDs). No tax surprises later. Just sweet, silent growth in a Roth IRA.
But—like most things in finance—there’s fine print. And timing is everything.
Why Roth IRAs Are Such a Big Deal
Roth IRAs give you tax-free income in retirement. Since the money’s already been taxed on the way in, you don’t owe a dime when you take it out—assuming you follow the rules.
And here's where it gets interesting: when the market takes a dip and your account temporarily loses value, it might be the perfect moment to consider a Roth conversion. Why? Because you’ll owe taxes based on your account value at the time of conversion. Converting at a lower value = lower tax bill = potential win.
When a Roth Conversion Might Be a Smart Move
Here are a few green lights that signal it could be worth exploring:
✅ You expect to be in a higher tax bracket later
Maybe your income will rise, or you're planning to move to a higher-tax state in retirement. In that case, better to pay taxes now while they’re “on sale.”
✅ Your retirement account is temporarily down
Yes, losses hurt. But a market dip can actually make a conversion more cost-effective by lowering the taxable amount.
✅ You have cash outside the account to pay the tax bill
Because using the IRA itself to pay taxes? That’s like eating your cake while trying to save it for later. It reduces your future growth potential—and might trigger penalties if you’re under age 59½.
When You Might Want to Pump the Brakes
Not every Roth conversion is a slam dunk. Consider holding off if:
🚩 You’ll likely be in a lower tax bracket in retirement
Paying a big tax bill now just to save less later? That’s not a smart trade.
🚩 You don’t have cash on hand to cover the taxes
No matter how good the strategy sounds on paper, if it drains your savings today, it could do more harm than good.
🚩 You’ll need the money within five years
IRS rules say you’ll owe a penalty if you tap your Roth funds within five years of converting. So if you’re converting today but retiring in three years... that’s a problem.
(*Note: You can always access direct Roth contributions at any time. A “conversion” is different than a direct contribution.)
Bottom Line: No One-Size-Fits-All
Roth conversions are a powerful tool in the retirement planning toolbox. But they come with strings attached—and once you convert, there’s no un-do button. The IRS will be looking for their piece of the pie due as a result of converting money from a pre-tax to a post-tax account.
If you’re even thinking about a conversion this year, let’s talk. I’ll walk you through your options, help you crunch the numbers, and figure out if it’s actually worth it—not just theoretically, but in your real life.