Question 1

When does a Roth IRA conversion make financial sense?

Accepted Answer

A Roth conversion makes sense when your current tax rate is lower than your expected rate in retirement. Key scenarios where it works: (1) Low-income year — job loss, sabbatical, business loss; (2) Early retirement before Social Security and RMDs kick in (ages 60–72); (3) Large traditional IRA that will force large RMDs later; (4) Expecting tax rates to rise (likely given current federal debt levels). It makes less sense if you're in your peak earning years and the conversion bumps you into a higher bracket.

Question 2

How much does a Roth conversion cost in taxes?

Accepted Answer

The converted amount is added to your ordinary income for the year. Converting $50,000 at the 22% bracket costs $11,000 in additional federal taxes (plus state income tax where applicable). The key: pay the conversion taxes from non-IRA funds, not from the converted amount. If you convert $50,000 and pay the $11,000 from the IRA itself, you effectively converted only $39,000 while paying taxes on $50,000 — a losing proposition. Always use outside savings to cover conversion taxes.

Question 3

What is the 5-year rule for Roth conversions?

Accepted Answer

Each Roth conversion has its own 5-year clock before you can withdraw the converted principal penalty-free (before age 59½). Roth contribution earnings have a separate 5-year clock from your first Roth contribution ever. Practically: if you convert at 56, the converted funds must stay for 5 years (until 61) before withdrawal — but at 59½, the 10% early withdrawal penalty doesn't apply anyway, making the 5-year rule most relevant only if you're under 54 and plan to access converted funds before 59½.

Question 4

Should I do a Roth conversion ladder for early retirement?

Accepted Answer

Yes — the Roth conversion ladder is the standard FIRE strategy for accessing traditional 401(k) funds before age 59½ without the 10% penalty. The process: in Year 1 of early retirement, convert Year 6's living expenses from traditional IRA to Roth. Repeat each year. In Year 6, withdraw Year 1's conversion tax-free (the 5-year clock has run). You need to fund the first 5 years from taxable accounts or Roth contributions. At low post-retirement income, conversions happen at 0%–12% tax rates vs the 22%–32% they'd face as RMDs.

Question 5

What is the Roth IRA contribution income limit in 2026?

Accepted Answer

In 2026, Roth IRA contributions phase out at $150,000–$165,000 MAGI for single filers and $236,000–$246,000 for married filing jointly. Above those limits, direct Roth contributions aren't allowed — but Roth conversions have no income limit (the 'backdoor Roth' strategy). A backdoor Roth: contribute $7,500 to a traditional IRA (non-deductible), then immediately convert to Roth. No income taxes owed since you contributed after-tax funds. Works cleanly if you have no other traditional IRA balances (the pro-rata rule can complicate it otherwise).

Roth Conversion Calculator

What You Should Know

Charts & Projections

Portfolio Mix

Growth Scenarios

Wealth Over Time

Overview

Roth Conversion Strategy in 2026

The RMD Problem

The Break-Even Calculation

Frequently Asked Questions

Sources & Methodology

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