What Is a Roth Conversion?

A Roth conversion is the process of moving money from a traditional retirement account, like a 401(k) or IRA, into a Roth IRA. By doing this, you pay taxes on the converted amount now, but then enjoy tax-free growth and withdrawals in retirement.

The Rules of Roth Conversion

Taxable Event: The amount you convert counts as income for that tax year.
No Income Limits: Anyone, regardless of income level, can convert to a Roth IRA.
Timing Matters: Conversions can be done gradually, across multiple years, to help manage your tax bracket.
Five-Year Rule: Each conversion has a 5-year clock before those funds can be withdrawn penalty-free (for those under age 59½).

Is a Roth Conversion Right for You?

The decision depends on your current tax bracket, future income expectations, and retirement goals. A well-timed conversion can save you tens of thousands in taxes over your lifetime—but the wrong timing could cost you more than it saves.