There’s something about the phrase “tax-free growth” that makes people’s ears perk up. Especially when it’s paired with terms like “Roth IRA” and “retirement income.” Over the last few years, Roth conversions have become a buzzword—touted in blog posts, financial podcasts, and increasingly even in casual conversations between financially savvy friends. But if you’ve ever found yourself wondering whether a Roth conversion is truly a smart tax strategy or just another financial trend catching steam, you’re not alone.

The truth is, like most things in financial planning, it’s complicated—but not in a bad way. Just in a personal way.

So let’s slow it down, take a practical look, and give this strategy the thoughtful evaluation it actually deserves.

First, What’s a Roth Conversion—Really?

Let’s start with the basics. A Roth conversion means taking money from a tax-deferred retirement account—like a Traditional IRA or 401(k)—and moving it into a Roth IRA. When you do that, you trigger ordinary income taxes on the amount converted. But in exchange, you get a big potential payoff: tax-free growth and tax-free withdrawals for the rest of your life.

You also get out of future required minimum distributions (RMDs), which are mandatory withdrawals the IRS makes you take from traditional retirement accounts after a certain age. Those withdrawals increase your taxable income in retirement, whether you need the money or not.

So a Roth conversion is essentially a trade: pay taxes now so you don’t have to pay them later.

Sounds simple, right?

Well… sure. But whether it’s worth it is where the nuance lives.

Why It’s So Hyped

There are a few reasons Roth conversions have surged in popularity. For one, today’s income tax brackets are relatively low—historically speaking, anyway. Under the Tax Cuts and Jobs Act, the top federal rate is 37%. But unless Congress extends those provisions, we’re set to return to higher rates after 2025. For some folks, that means they have a shrinking window to pre-pay taxes at a discount.

Another reason? Demographics. Many retirees or near-retirees are sitting on large pre-tax balances from decades of contributions to 401(k)s and IRAs. As these balances grow, so does the size of their future RMDs—which could cause higher taxes later in life, increase Medicare premiums, and reduce eligibility for other credits and deductions.

A Roth conversion can offer a way to gradually reduce the tax burden on those future distributions by “front-loading” the tax liability into a year where your income might be lower.

And finally, there’s the legacy aspect. Roth IRAs are powerful tools for passing wealth to heirs tax-free. After the SECURE Act killed the “stretch IRA” for most non-spouse beneficiaries, inherited Roth IRAs became even more appealing.

So yes—there are good reasons why Roth conversions are trending.

But not every trend is right for everyone.

The Real Question: Does It Make Sense for You?

This is where theory meets reality. Because while Roth conversions look great in concept, they don’t fit neatly into every financial picture. They’re especially helpful when your current tax rate is lower than your expected future rate. But if you’re in your peak earning years, or if a conversion pushes you into a higher tax bracket, the math might not pencil out.

Here are a few scenarios where a conversion often makes sense:

• You’re in a temporary low-income year—Maybe you took a sabbatical, sold a business last year, or retired early. If your income is unusually low, this could be a golden opportunity to convert at a discount.
• You haven’t started Social Security or RMDs yet—There’s often a sweet spot between retirement and age 73 (when RMDs begin) where you can take advantage of lower taxable income.
• You have the cash to pay the taxes from outside funds—This is a big one. If you use the IRA itself to pay the tax, you’re giving up future tax-free growth on that money and possibly triggering penalties if you’re under 59½.
• You’re concerned about tax rates going up—This isn’t fear-mongering; it’s a real possibility given national debt levels and expiring tax law provisions.

But here are a few caution lights:

• You’re already in a high tax bracket—If you’re in the 35% or 37% range, paying taxes now to maybe avoid taxes later isn’t always efficient.
• You’d need to tap retirement funds to cover the tax bill—Not ideal, and sometimes flat-out counterproductive.
• You’re relying on ACA subsidies or managing income thresholds—The extra income from a conversion could cost you more in lost benefits than it’s worth in tax savings.

Like most financial strategies, the devil is in the details. And those details are different for everyone.

The Power of Partial Conversions

Here’s where the conversation gets interesting. You don’t have to go all in.

In fact, partial Roth conversions are often the most effective approach.

Think of your income like a staircase with different tax brackets layered on top of each other. If you’re in the 22% bracket and the top of that bracket is still $30,000 away, you could convert just enough to “fill the bracket” without creeping into the next level. It’s strategic. It’s deliberate. It’s measurable.

This kind of bracket-filling strategy can be repeated year after year, gradually shifting pre-tax dollars into tax-free territory without any major tax shocks.

It’s also a great way to maintain flexibility. If your income goes up next year or Congress raises rates, you’re not stuck with the consequences of converting too much too soon.

The Five-Year Rule (and Why It Matters)

There’s a technical wrinkle with Roth conversions that catches some people off guard: the five-year rule.

Each Roth conversion has its own five-year waiting period before the converted amount can be withdrawn penalty-free. That’s true even if you’re over 59½. The rule is mainly aimed at preventing people from using conversions as a loophole to avoid early withdrawal penalties.

What does that mean for you? If you’re planning to tap the converted funds soon—say, within five years—you’ll want to be cautious. Otherwise, this rule probably won’t affect your long-term planning, but it’s one of those fine-print details that deserves your attention.

Watch Out for the Pro-Rata Rule

Here’s a curveball that surprises a lot of people—especially those who’ve made non-deductible contributions to a Traditional IRA: the pro-rata rule.

This IRS rule says that when you do a Roth conversion, you can’t just isolate and convert the after-tax dollars. The IRS views all of your Traditional IRAs as one big pool—so each conversion must include a proportional mix of pre-tax and after-tax dollars based on your total IRA balances.

Say you have $100,000 in Traditional IRAs. $80,000 is pre-tax, and $20,000 is after-tax (non-deductible contributions). If you convert $20,000 thinking it’ll be tax-free, think again—only 20% of that amount ($4,000) is considered after-tax. The other $16,000 will be taxed as ordinary income.

Worse, the IRS looks at all your Traditional, SEP, and SIMPLE IRAs combined—not just the account you’re converting from.

If you’ve been doing backdoor Roth contributions or have mixed pre- and post-tax IRA money, the pro-rata rule can have a huge impact on how much tax you owe. This is one of those details where working with a planner or CPA can save you from a very expensive surprise.

Market Timing and Investment Strategy: A Tempting Shortcut or a Useful Lever?

There’s a common instinct when the market drops: find the silver lining. For investors considering a Roth conversion, that often means asking, “Should I convert while my account values are down?”

It’s a fair question—and not without merit.

Let’s say your IRA holds $100,000 in a balanced portfolio. A 20% market correction knocks it down to $80,000. If you convert during the dip, you’re paying taxes on $80,000 instead of $100,000. When the market recovers (as it historically tends to), that $80,000 could bounce back to $100,000—now inside a Roth, growing tax-free for life.

In that sense, yes, timing can matter.

But let’s not overstate it. A conversion should never be driven solely by market movements. The tax implications, your income bracket, your liquidity, and your retirement timeline still matter more. In fact, chasing timing too closely can distract from the broader goal: building a tax-efficient income strategy that aligns with your long-term plan.

If you were already planning a conversion and the market happens to be down? Great—move forward. But if your entire rationale rests on a temporary drop in stock prices? That’s when it may be time to zoom out and reassess.

In short: use market timing as a lever, not a compass.

The Medicare and Social Security Connection: Beware the Income Ripple Effects

Roth conversions don’t happen in a vacuum. When you convert, that income gets reported—loud and clear—to the IRS, and it can create ripple effects that go well beyond your tax return.

Let’s start with Medicare.

For retirees 65 and older, Medicare Part B and Part D premiums are income-sensitive. If your modified adjusted gross income (MAGI) crosses certain thresholds—even by just a few dollars—you could face IRMAA surcharges (Income-Related Monthly Adjustment Amounts). These surcharges can add hundreds, even thousands, to your annual healthcare costs, and the kicker is: they’re based on your income from two years prior.

So a Roth conversion today could raise your Medicare premiums two years from now.

Now layer in Social Security. Up to 85% of your benefits can be taxed depending on your income. A sizable Roth conversion could tip you over those thresholds, causing more of your Social Security income to become taxable—something many retirees are actively trying to avoid.

This doesn’t mean conversions are off-limits in retirement. But it does mean you need to plan carefully. Understanding exactly where your income stands relative to these cliffs—and modeling out the effects of different conversion amounts—can help avoid unpleasant surprises down the road.

Roths and Your Legacy: Thinking Beyond Your Lifetime

Here’s where things start to stretch beyond your own retirement and into your family’s future.

Roth IRAs are not only powerful retirement tools—they’re also elegant estate planning vehicles. And recent changes to the tax law have made that fact even more relevant.

Before the SECURE Act, non-spouse beneficiaries could “stretch” distributions from inherited IRAs over their lifetime, minimizing annual tax hits. But now? Most heirs must empty an inherited IRA within 10 years—often during their own peak earning years. That means more income, higher taxes, and a faster depletion of what you hoped would be a lasting gift.

With Roth IRAs, those same heirs still have to empty the account in 10 years—but the withdrawals are tax-free. That 10-year window becomes a growth opportunity, not a tax burden. For children, grandchildren, or other heirs in high-income brackets, this can make a huge difference in how much they actually get to keep.

And don’t overlook the psychological side of gifting a Roth. There’s something profoundly different about leaving behind a tax-free, flexible asset with no strings attached—no complex calculations, no coordination with an accountant, no worry about tax bracket creep. Just time and growth.

If part of your retirement planning includes leaving a meaningful legacy, a Roth conversion may help make that legacy cleaner, simpler, and more impactful.

So… Smart Strategy or Just Another Trend?

It’s a fair question. We’re living in a time where financial concepts go viral—sometimes stripped of their complexity and sold as one-size-fits-all solutions.

Roth conversions are not that. They’re not hype. But they’re also not magic.

They’re a strategy—a tool in the toolbox. And like any good tool, their value depends entirely on how, when, and why you use them.

For some, Roth conversions offer a rare opportunity to control tax exposure, reduce RMD burdens, and build a tax-free income stream for retirement. For others, the upfront tax hit, Medicare complications, and ripple effects across Social Security and estate planning make them less compelling.

The key is knowing where you fall—and that’s not always obvious without crunching the numbers.

Because this decision isn’t just about this year’s tax return. It’s about your broader story: how you’ll generate income in retirement, how you’ll protect yourself from rising taxes, how you’ll support your family down the line, and how you’ll sleep at night knowing you made thoughtful, informed choices.

Want a Second Opinion?

You don’t need to figure this out on your own.

At Suttle Crossland, we help clients evaluate Roth conversions every year—sometimes encouraging them, sometimes advising patience, sometimes suggesting small, strategic moves over time. Because that’s what this is about: strategy, not trends.

Whether you’re five years from retirement or already drawing Social Security, the right approach to Roth conversions depends on the details—your tax situation, your health, your income sources, your goals, and yes, your legacy.

If you’d like a clear, data-driven analysis of whether a conversion makes sense for you—or just want to bounce around scenarios with someone who understands how all the moving parts fit together—reach out to us.

A Roth conversion might not be the right move for everyone. But asking the question? That’s always the right place to start.