How Much Should I Convert to a Roth IRA?

Most retirement planning revolves around accumulating as much wealth as possible so people can enjoy more of it later. Far fewer spend time thinking about how much of those savings can be lost to taxes, which means they ultimately keep less of what they worked so hard to build.

A Roth IRA conversion is one of the most effective ways to reduce taxes in retirement – there's no doubt about it. The real question is: how much should you convert each year to maximize your tax savings while avoiding unnecessary tax costs today?

This article explains how to determine the right conversion amount for your situation, when it may make sense to convert beyond your target tax bracket, and the common mistakes to avoid along the way.

How Much Should You Convert to a Roth IRA?

The amount you should convert to a Roth IRA depends on how much income you can recognize this year without pushing yourself into a tax bracket you’re not comfortable paying.

It is a balancing act. You want to make sure you’re moving enough money out of tax-deferred accounts to reduce future required minimum distributions (RMDs) and build a larger source of tax-free retirement income without triggering an unnecessarily large tax bill today.

One way to think about it, and a common approach among middle-aged adults, retirees, and those approaching retirement, is to convert just enough to "fill up" your current tax bracket. No more, no less.

That way, you create more flexibility for your future self and reduce the risk of facing a larger tax bill later in retirement, while also avoiding the mistake of converting so much that you pay more tax than necessary today.

How to Calculate Your Roth Conversion Amount

You can use our Free Roth IRA Conversion Calculator to help you run the numbers quickly and test out different scenarios. But we've provided a step-by-step below to help you understand the elements being considered and why it matters.

Step 1: Estimate Your Taxable Income for the Year

Consider the following when estimating your taxable income:

• Social Security income (and the taxable portion of it)

• Pension income

• Investment income (interest, dividends, capital gains)

• Any part-time or other earned income

Then subtract your standard deduction or itemized deductions, which typically include mortgage interest, state and local taxes, medical expenses, and so on.

What you’re left with is your estimated taxable income, which determines where you currently sit within the tax brackets. 

Step 2: Choose the Highest Tax Bracket You're Comfortable Paying

Decide how far up the tax brackets you’re willing to go. Whether you stay entirely within the 12% bracket or step into the 22% bracket (perhaps you're expecting higher taxes later due to RMDs, pensions, or changes in filing status), what matters is that you set a ceiling before making the conversion.

Step 3: Calculate Your Remaining Bracket Capacity

With your current income and chosen bracket in mind, you can now calculate your remaining capacity.

Say, the top of your target bracket is $96,950 and your taxable income is $60,000; you have roughly $36,950 of space before you cross into the next bracket.

Step 4: Convert Up to That Amount

Your remaining bracket capacity, which in our earlier example is $36,950, represents how much additional income you can add – and simultaneously, how much you can convert to a Roth IRA while staying within your chosen tax rate.

Conversion Strategy Sample Scenario

Recently retired couple with several low-income years ahead

• Ages 58 and 57, both recently retired

• $1.8 million in traditional IRAs

• $700,000 in a taxable investment account (used to fund early retirement expenses)

• $150,000 in Roth IRAs

• Estimated combined Social Security benefits of approximately $48,000 per year (starting at age 67)

• No pension, no earned income, no other taxable investments

• Conversion window: 15 years (ages 58-72) before RMDs begin at age 73

Without Roth Conversions

If no Roth conversions are completed, their traditional IRA could continue growing throughout retirement. Assuming a 6% average annual return, it can reach approximately $4.3 million by age 73.

Using current IRS RMD factors, that balance could generate a first-year RMD of roughly $162,000. When combined with an estimated $48,000 of annual Social Security benefits, the couple could have approximately $210,000 of retirement income at age 73.

Those mandatory withdrawals would be added on top of future Social Security benefits and any other retirement income sources. As a result, a larger portion of their retirement income may become taxable, potentially placing them in a higher tax bracket and increasing their overall tax burden later in retirement.

Roth Conversion Strategy & Potential Benefits

The couple has an opportunity to take advantage of today's lower tax brackets before Social Security and RMDs begin adding to their taxable income. One approach is to convert approximately $90,000 per year from traditional IRAs into Roth IRAs while their taxable income remains relatively low.

Assuming annual conversions of $90,000 over the 15-year conversion window, the couple could move roughly $1.35 million from traditional IRAs into Roth IRAs before RMDs begin.

Under the same 6% growth assumption, the traditional IRA balance at age 73 could be reduced to approximately $2.3 million, resulting in an estimated first-year RMD of roughly $87,000 instead of $162,000. Combined with the same $48,000 of annual Social Security benefits, taxable retirement income would fall from approximately $210,000 to roughly $135,000.

Over the 15-year planning period, the strategy could generate meaningful tax savings while creating substantially more tax-free assets for future retirement spending and estate planning goals.

No Roth Conversion vs Roth Conversion Comparison Table

No Roth Conversion vs Roth Conversion Comparison Table

Assumes a 6% average annual return over the 15-year period.
* RMD estimates use the IRS Uniform Lifetime Table factor of approximately 26.5 at age 73.

Five Factors to Consider When Determining the Ideal Roth Conversion Amount

Your Current Tax Bracket

A Roth conversion adds to your taxable income for the year. As long as you stay within your current bracket, each converted dollar is taxed at that rate. Once you cross into the next bracket, additional amounts are taxed higher.

A Potentially Higher Future Tax Bracket

Many people approach retirement with the assumption that their tax rate will fall once they stop working. That’s not always the case for everyone. Often, several income sources pile up at once, such as:

• Social Security benefits, which can be up to 85% taxable depending on total income.

• Pension income

• Required minimum distributions, which force taxable withdrawals whether you need the money or not.

Another thing to consider is the widow’s penalty, wherein when one spouse passes, the surviving partner moves from married filing jointly to single. The brackets shrink, but the income may not fall by the same proportion, resulting in a higher effective tax rate on the same dollars.

Layer these together, and the taxable income may climb up even higher than your working years.

The Size of Your Traditional IRA

Traditional IRAs grow tax-deferred, but the tax liability grows alongside them. A larger IRA leads to:

• Larger required minimum distributions (RMDs)

• Higher taxable income in retirement

• A greater chance of being pushed into higher tax brackets

Converting a significant portion of your Traditional IRA into a Roth IRA can help address these risks over time.

How Many Years Remain Before RMDs Begin

The number of years before RMDs begin determines how much opportunity you have to spread out Roth conversions.

If you have more years, which is often the case for those who retire shortly after leaving full-time work, you can convert smaller amounts annually while staying within lower tax brackets.

On the other hand, if you're working with a much smaller window, you'll have to make larger annual conversions, increasing the likelihood of being pushed into a higher tax bracket today.

Remember that the point of doing a Roth conversion is to recognize income at lower tax rates now, so you’re not forced to recognize larger amounts at higher rates later.

Whether Leaving Money to Family Is a Priority

When heirs inherit a traditional IRA, they also inherit the tax bill. Under current IRS guidelines, most beneficiaries must withdraw the entire balance within 10 years.

The larger the IRA being inherited, the larger the taxable withdrawals, which can push beneficiaries into higher tax brackets during that 10-year period.

That said, if leaving money to family is a priority, you may choose to convert more over time. While the goal is to do it while staying within your target bracket, stepping into a higher one may still be justified as long as you're comfortable paying that rate today.

Should You Convert More Than Your Tax Bracket Allows?

When you convert beyond your current tax bracket, a portion of that conversion is taxed at a higher rate. If you're comfortable paying that higher rate today in exchange for potential tax savings later, converting more can make sense. Below are some situations where that trade-off may be justified:

• Larger future RMDs: If your IRA is large, future required minimum distributions may push you into higher tax brackets than what you would pay today. In that case, paying a slightly higher rate now can reduce a larger tax burden later.

• Changes in filing status (widow’s penalty): Married couples benefit from wider tax brackets. When one spouse passes, the surviving spouse may face higher taxes on the same income. Converting more while filing jointly can reduce that future risk.

• Leaving money to heirs: Traditional IRAs pass on a tax liability, often compressed into a 10-year withdrawal window. Converting more during your lifetime reduces how much of that inheritance remains taxable.

Common Roth Conversion Mistakes

Avoid these common mistakes that have cost retirees thousands of dollars in unnecessary taxes when making Roth conversions:

• Converting too much in one year. Large conversions can push income across multiple tax brackets, causing portions to be taxed at higher rates than intended. Instead, convert in stages by filling one tax bracket at a time to keep more of your conversion taxed at lower rates.

• Triggering Medicare IRMAA surcharges. Higher income from conversions can increase Medicare Part B and Part D premiums, sometimes adding high costs beyond the tax itself. Monitor IRMAA thresholds and keep income below key cutoff levels when possible.

• Making more of your Social Security taxable. As income rises, up to 85% of your Social Security benefits can become taxable, increasing your total tax exposure beyond what your bracket alone suggests. Factor in how conversions affect Social Security taxation before finalizing the amount.

• Paying conversion taxes from your IRA. Using IRA funds to cover taxes reduces how much ends up in the Roth and limits the benefit of future tax-free growth. Instead, use funds outside of your IRA.

• Focusing only on this year’s tax bill. Looking only at the immediate tax cost can lead to missed opportunities to reduce future RMDs, manage tax brackets, and improve outcomes over time. You should evaluate conversions over multiple years based on your full retirement timeline.

Final Thoughts: How Much Should You Convert to a Roth IRA?

As a general rule of thumb, you should make Roth conversions just enough each year to stay within a tax bracket you’re comfortable paying. At the same time, you should also recognize that there are opportunities where converting more can make sense, as long as you understand the implications of moving into a higher bracket and are comfortable paying that rate today.

If you’re unsure how much to convert or how to approach it, we at Smart Financial Lifestyle can help you build a plan designed to maximize your tax savings, avoid costly mistakes, and put you in a better position for future retirement income. Schedule a FREE call today!

FAQs

Is there a limit on Roth conversions?

No, you can convert as much as you want. However, it's generally wise to keep conversions within your target tax bracket to minimize your current tax liability. Converting more than that can push you into a higher tax bracket and trigger other tax-related costs.

Should I convert my entire IRA to a Roth?

Converting your entire IRA to a Roth in a single year can result in a substantial tax bill, which is not ideal. The wiser route is to spread Roth conversions over several years to better manage the tax impact. If you'd like help determining the right strategy for your situation, book a call with our team.

Is a Roth conversion worth it after age 70?

A Roth conversion can still be worthwhile after age 70. While the conversion window may be narrower, especially with required minimum distributions (RMDs) beginning at age 73, a Roth conversion can still reduce future taxable income and support estate planning goals by leaving heirs with more tax-free assets.

Can I do multiple Roth conversions in one year?

Yes, you can complete multiple Roth conversions throughout the year. For tax purposes, all conversions are added together and treated as one total amount, so the combined value is what matters when determining your tax bracket and any related tax consequences.