WSJ: Roth IRA Conversions: When's The Best Time to Start?

Published October, 2021

You may be reluctant to do it now because of the tax hit upfront. But that may be short-term thinking.

Most people for whom Roth IRA conversions make sense typically should start making them as early as their 40s and 50s.

Reader Question: My wife and I are about 10 years from retirement. We want to begin converting money in our individual retirement accounts to a Roth IRA, but the tax bite looks like a problem. We’re already in a higher tax bracket than we like. Any advice? When, or how, should we start converting?

Actually, starting today could make more sense than you think. As for “how,” the answer is: slowly but surely.

This question gives me the chance to address a common failing in retirement planning: waiting too long to begin converting a traditional IRA to a Roth IRA. (Assuming, of course, that such a move makes sense financially. More in a moment.) Yes, most IRA holders are aware that such conversions are possible. But many drag their feet. They recognize, as your question indicates, that the conversion itself is taxed; accordingly, they frequently wait—and wait—until they are in a low or lower tax bracket to begin the process.

In reality, though, and I can’t emphasize this strongly enough, “converting”—or, at the least, thinking about converting—should be part of one’s financial planning long before retirement. Certainly when you’re in your 40s or 50s.

Read more

Barron’s: Considering a Roth IRA Conversion? There’s No Time Like the Present.