Published: | Last reviewed: November 2026 by Jeff Judge, CFP®
Part of our guide: Should I do Roth conversions during the gap years before RMDs?
When not to do a Roth conversionMoving money from a traditional pre-tax IRA to a Roth IRA, paying income taxes now in exchange for tax-free growth and withdrawals in the future. Conversions make the most sense when your current tax rate is lower than what you expect in the future — making the years between retirement and RMD age a prime window for strategic action. comes down to four situations: today's tax rate is higher than the rate you expect later, the tax bill would have to come out of the IRA itself, the money is headed to heirs on a short horizon, or a move to a lower-tax state is coming. In any of those, waiting often beats converting on autopilot. A conversion is a tool, not a virtue, and the same move that helps one household can cost the one next door.
Key Takeaways
- A conversion is taxed as income in the year you do it, so it fits when today's rate runs below your expected later rate.
- In 2026, a married couple's 22% bracket ends at $211,400 of taxable income, so a conversion stacked on peak wages can spill into 24%.
- Under age 59½, tax withheld from the IRA itself can count as an early withdrawal and draw a 10% additional tax.
- Convert less, or wait, when outside cash is short, your retirement bracket may be lower, or a move to a lower-tax state is planned.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has been helping families and business owners in Harford County and the Baltimore metro area navigate retirement tax planning since earning his CFP® certification in 2013, by using Chesapeake's signature process, the R.U.D.D.E.R. Method™. "Before I model a conversion, I ask whether this is the right year to pay the tax, because sometimes the right move on the table is to wait."
Is your tax rate today higher than the rate you expect in retirement?
The logic of a conversion is simple: pay tax now, at today's rate, to avoid tax later. That works only when today's rate is lower than the rate you will face down the road. So the first question behind "should I do a Roth conversion?" is a bracket question, not a market question.
Convert in a peak earning year and you do the opposite. Your wages already fill the lower brackets, so every converted dollar lands above them, at one of the highest rates you will pay in your career. The Roth conversion tax bracket math below shows how quickly a big conversion climbs.
| 2026 taxable income where the bracket ends | Married filing jointly | Single |
|---|---|---|
| 22% bracket | $211,400 | $105,700 |
| 24% bracket | $403,550 | $201,775 |
A conversion that fits inside the 22% bracket in a low-income year can jump into 24% or higher when it rides on a full salary. A large conversion also lifts your modified adjusted gross income, and Medicare surcharges begin above $109,000 for a single filer and $218,000 for a couple in 2026. Our post on the Roth conversion mistake that triggers a Medicare surcharge covers that trap in detail.
Can a high-income year ever justify a conversion? Sometimes. If you expect an even higher bracket later, such as large required withdrawals that start at age 73 and rise to 75 for people who reach 74 after 2032, or a surviving spouse filing as single, paying at today's rate can still win. The test is the comparison, not the paycheck.
The opposite case gets less attention. Plenty of people land in a lower bracket once the paychecks stop, especially without enormous traditional balances. If you expect your retirement rate to be lower than today's, converting now means paying a higher rate to avoid a lower one. "Everyone's taxes are going up" is an assumption, not a fact. Test it against an honest estimate of your retirement income, Social Security and any pensionA defined benefit retirement plan where your employer promises a specific monthly payment for life in retirement, typically based on salary and years of service. Pensions are increasingly rare in the private sector but remain common in government and some union jobs — and if you have one, understanding your payout options is an important financial decision. included.
Jeff Judge often tells clients that the paycheck years and the gap years are two different tax environments, and a conversion belongs in the cheaper one. Our guide to Roth conversions in the gap years before RMDs shows where that cheaper window sits.
Should you convert if the tax bill has to come out of the IRA?
This is the quiet deal-breaker. A conversion works better when you can cover the Roth conversion tax bill from outside money, such as a taxable brokerage or savings account. If the only way to pay the tax on a Roth conversion is to pull extra from the IRA you are converting, you shrink the amount that reaches the Roth and give up years of earnings that qualified withdrawals could have delivered free of federal income tax.
Picture converting $100,000 and needing about a quarter of it for the tax. If that $25,000 comes out of the IRA, only $75,000 lands in the Roth. That is an illustration, not a projection for any real account.
Does money withheld for taxes count as a distribution? Yes. Amounts withheld from a conversion do not reach the Roth, so they can be treated as a taxable distribution, and if you are under age 59½ they can draw the 10% additional tax. On the illustration above, that is $2,500 in addition to the income tax.
In Jeff's experience, the households that regret a conversion are rarely the ones who misjudged a bracket. They are the ones who converted first and went looking for the cash to pay the tax second.
If there is no outside cash, wait until you have the liquidity or convert a smaller amount you can cover. Remember that each conversion carries its own five-year clock for penalty-free withdrawal of the converted amount, so money you shave off the conversion to pay tax also shaves off what that clock covers. The R.U.D.D.E.R. Method™ is Chesapeake Financial Planners' six-step planning process: Review and Recognize, Uncover and Understand, Design and Develop, Discuss and Decide, Execute and Empower, and Reassess and Refine. The cash-for-the-tax question belongs in the first two steps, before a single dollar moves.
Does a conversion still make sense when the money passes to heirs soon?
Estate considerations can flip the calculation. Picture someone late in life with a serious health situation whose assets are likely to reach heirs before long. Traditional IRA dollars left to heirs are taxed as those heirs withdraw them, which is a real cost. Appreciated stock in a taxable account is different, because it can receive a stepped-up cost basis at death under IRS rules, which can erase the embedded capital gain. Our explainer on how the step-up in basis works walks through the mechanics.
Do traditional IRA dollars get a step-up at death? No. Appreciated assets in a taxable account can receive a new cost basis at death, but traditional IRA balances do not, and heirs pay income tax as they withdraw.
So the real comparison has three parts: the tax you pay now at your bracket, the tax your heirs would pay later at theirs, and whether other assets already shrink the gain through the step-up. If your heirs sit in a higher bracket, converting can still help them. If a short horizon means you would spend tax dollars now to save little later, leaving the accounts alone and letting the estate plan work can be the better call. Maryland adds a wrinkle, because the state's estate tax exemption is $5,000,000 per person, and the income tax you pay on a conversion leaves your estate along with the check. Bring an estate planning attorney into the conversation before you act.
Can state taxes erase the federal benefit of a Roth conversion?
Federal brackets get the attention, but your state wants a cut too. Maryland starts from your federal income, so a conversion shows up on your Maryland return, taxed at a marginal state rate that reaches 6.5% for 2026, with county income tax of at least 2.25% added to it. The federal math can look fine on its own, then fall apart once state taxes on a Roth conversion join the bill.
Here is the local version of that problem. Families in Forest Hill and Bel Air rarely ask Jeff whether Maryland taxes a conversion. They ask whether to convert now, as Harford County residents, or after a move somewhere warmer with a lighter income tax. That question ties your geography to your tax strategy, and it deserves a straight answer from your actual numbers.
Should you wait for the move before converting? If you realistically plan to retire in a state with low or no income tax, waiting can sidestep the Maryland and county tax on the conversion. That depends on the new state's rules and on a genuine change of domicile, so confirm the details with your CPA first. If you plan to stay, the state layer is a cost on either path, and our guide to how Maryland taxes retirement income helps you weigh it. For the move itself, see our look at state tax considerations when relocating for retirement.
Bottom Line: How Do You Know When Not to Do a Roth Conversion?
Look at the four situations together and a pattern shows. A Roth conversion is not good or bad on its own. It is good or bad relative to your bracket today versus later, the cash you have to pay the tax, your estate plans, and your state. Strip those away and "just convert" is a slogan. It sounds responsible, which is exactly why people follow it without checking whether it fits their own numbers.
| Situation | Why it can backfire | What to weigh instead |
|---|---|---|
| High-income year | The conversion stacks onto wages and lands in a higher bracket | Wait for a lower-income year, or convert a smaller amount |
| Tax paid from the IRA | Less reaches the Roth, and withholding under 59½ can draw the 10% additional tax | Build outside cash first, or convert only what you can cover |
| Lower expected retirement rate | You prepay at a higher rate to avoid a lower one | Estimate retirement income, Social Security and pension included |
| Short horizon with a step-up | Tax dollars paid now may save little later | Compare your bracket with your heirs' and involve an estate attorney |
| Move to a lower-tax state | You pay state tax you could have skipped | Time the conversion around the move with your CPA |
I am not arguing against conversions. Used in the right years, with the tax paid from the right place, they remain one of the more useful tools for people heading into retirement. I am arguing against treating them as automatic. Knowing when not to do a Roth conversion is as valuable as knowing when to act, and sometimes the strongest outcome of a conversion analysis is the decision to wait.
Frequently Asked Questions
When should you not do a Roth conversion?
Hold off when your tax rate today is higher than the rate you expect in retirement, when you would have to pay the tax from the IRA itself, when a short estate horizon changes the math, or when a move to a lower-tax state is coming. Each situation depends on your own numbers, so test it before you convert.
Is it a mistake to do a Roth conversion while you are still working?
It can be, but it is not automatic. Working years often carry your highest bracket, so a conversion may be taxed at a higher rate than a later one. If you expect higher rates in retirement, such as from large required withdrawals, converting while working can still make sense. The comparison decides it.
Can you pay the tax on a Roth conversion from the IRA itself?
You can, but it often weakens the strategy. Tax withheld from the converted amount does not reach the Roth, and under age 59½ it can draw a 10% additional tax. Paying from a taxable account keeps the full converted balance working for you, which is why outside cash matters so much.
What if I expect a lower tax bracket in retirement?
Then converting now may mean paying a higher rate to avoid a lower one. Estimate your retirement income honestly, including Social Security, any pension, and required withdrawals. If the projected rate is lower than today's, ordinary withdrawals later may cost less than prepaying tax now, and waiting may be the better plan.
Does a Roth conversion help my heirs?
Sometimes. Heirs pay income tax on traditional IRA withdrawals but receive Roth withdrawals free of federal income tax when the rules are met. If your heirs sit in a higher bracket than you, converting can help them. If your horizon is short and other assets get a step-up, the benefit may be small.
Should I wait to convert until I move out of Maryland?
If a move to a state with low or no income tax is realistic, waiting may let you avoid Maryland and county tax on the conversion. The answer depends on the new state's rules and on actually changing your domicile. Review the timing with your CPA and your advisor before you decide.
Can I undo a Roth conversion if it turns out to be a mistake?
No, a Roth conversion cannot be reversed once it is done. The ability to recharacterize a conversion ended under the 2017 tax law. That permanence is exactly why the decision deserves a hard look at your bracket, your cash, your heirs, and your state before you move a dollar.
Ready to put a plan around your conversion decision? Jeff Judge and the Chesapeake team serve families and business owners across Harford County and the Baltimore metro. Schedule a no-obligation fit call and find out whether this is the year to convert or the year to wait.
A version of this article originally appeared in Kiplinger.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions.
This information is not intended to be a substitute for specific individualized tax, investment or legal advice. We suggest that you discuss your specific situation with a qualified tax, legal or financial advisor.
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Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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