Converting Retirement Savings to a Roth IRA? Don't Do This
You might want to convert all of your savings to a Roth in one go, but you could end up paying hundreds of thousands more in taxes than you have to.


“I have $3 million saved for retirement — and I’m going to convert it all to a Roth.”
That was the statement someone made when they called to inquire about working with our team. The guy had read one of my previous articles on Kiplinger, Why I Love Roth IRAs and Roth Conversions, and he was fired up. He said he was convinced tax rates would go up in the near future and that now was the time to take advantage of lower taxes.
After talking with him about his goals for a bit, we pulled out our calculator and ran some quick numbers. Based on his current tax rates, we saw that he would pay over $1 million in taxes if he converted everything today. This wasn’t the news he was hoping for, but he still thought he could benefit from converting some of his money and paying the taxes today.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I liked his mindset, but he was missing part of the equation. Doing a Roth conversion is about paying your taxes at the lowest tax rate possible, not about paying all your taxes now vs later. Converting all of his savings now would have forced him into the highest tax bracket, resulted in other taxes (such as the net investment income tax, or NIIT) and pushed him into the highest Medicare tier — all things he wanted to avoid.

Joe has built a comprehensive retirement planning company focused on helping clients grow and preserve their wealth. Under his leadership, a team of experienced financial advisers use tax-efficient strategies, investment management, income planning and proactive health care planning to help their clients feel confident in their financial future — and the legacy they leave behind.
We suggested he look at a plan for converting his tax-deferred money into a Roth IRA over time instead of all at once. This way, he could lessen the tax hit now but still take advantage of the benefits of a Roth conversion.
The biggest benefit is that a Roth conversion allows you the opportunity to possibly pay taxes at a lower rate, since taxes will likely go up in the future. Some provisions in the Tax Cuts and Jobs Act (TCJA), which brought tax rates down, are scheduled to expire at the end of 2025. If they aren’t extended by Congress, taxes will go back up to their 2017 levels. But the U.S. has over $36 trillion in debt. Raising taxes is an obvious way to increase revenue, which can help combat this growing issue.
An added benefit of a Roth conversion
Another reason to convert to a Roth is that it provides diversification. The idea of diversifying your account types is similar to diversifying your investments. You probably don’t have all your money in one stock, right? No, you probably have it spread out among different investments in different asset classes. If you have all your money in tax-deferred accounts (such as a 401(k) or IRA), then all your income will be taxable when it’s time to start taking withdrawals. But since withdrawals from a Roth aren’t taxable, you’ll end up reducing your taxable income if you convert at least some of your money.
You may also want to keep some of your money in tax-deferred accounts to take advantage of the standard deduction. This is the amount of tax-free money the federal government lets you take each year. While this amount changes each year, the standard deduction offsets some of your taxable income. You may also be able to take advantage of some itemized deductions, such as medical expenses or charitable gifts. You won’t be able to write off these items if you don’t have any taxable income.
Do I think tax rates will go up in the future? I do. If tax rates rise, those who have been diligent savers over the years and have most of their money in tax-deferred investments could end up paying much more in taxes when they take withdrawals later.
A Roth conversion isn't for everyone
But while I agree that aggressive Roth conversions could make sense right now for the right people, it’s not the solution for everyone. The key is to work with a professional adviser who provides comprehensive planning to help you calculate how much you can convert to avoid paying too much in taxes today. Not all advisers use advanced planning software to compute taxes and uncover the potential impact to Social Security taxes, capital gains or Medicare premiums, so it is important to ensure your team is doing this level of tax planning.
Back to the guy at the beginning of this article. We were able to find a sweet spot between converting too much (and incurring a higher tax bill today) and converting too little (where it didn’t make a big difference for his future tax bills). I told him he was wise to start thinking about this now because the clock is ticking and the window to take advantage of lower rates could be closing.
If you’re concerned about paying too much in taxes in retirement, I urge you to work with a financial adviser who can help you pinpoint if a Roth conversion is right for you and find your own sweet spot. You could end up saving hundreds of thousands of dollars over your retirement — and making sure you have the income you need to cover a retirement that spans 10, 20 or even 30 years.
The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As Founder and CEO of Peak Retirement Planning, Inc., Joe Schmitz Jr. has built a comprehensive retirement planning company focused on helping clients grow and preserve their wealth. Under Joe’s leadership, a team of experienced financial advisers use tax-efficient strategies, investment management, income planning and proactive health care planning to help clients feel confident in their financial future — and the legacy they leave behind. Joe has also written two books, I Hate Taxes (request a free copy) and Midwestern Millionaire (request a free copy). You can find Joe on YouTube by clicking here, where he creates educational videos for those in or near retirement with $1M or more saved. If you would like to talk to Joe’s team, you can schedule a call by clicking here.
-
Stock Market Today: Great Power Affairs Mesmerize Markets
The U.S. and China are at least talking about talking about tariffs, and investors, traders and speculators are showing a little less fear.
By David Dittman
-
Is Walmart Plus Worth It?
There are tons of exciting Walmart Plus benefits – but are they worth the $98 annual fee?
By Rachael Green
-
Stock Market Today: Great Power Affairs Mesmerize Markets
The U.S. and China are at least talking about talking about tariffs, and investors, traders and speculators are showing a little less fear.
By David Dittman
-
My Great Retirement Dream: Sell My House, Downsize, Live off the Proceeds and Dabble in Stocks. Can I Do It?
I ask an expert financial planner if my retirement dreams are realistic — or if my head is in the clouds.
By Donna Fuscaldo
-
Five Trusts You Need to Know About and the Best Time to Use Them
You can use trusts to cement your legacy, organize your estate and limit your exposure to estate and gift taxes.
By Donna LeValley
-
Americans Worry More About Going Broke in Retirement Than Dying, Study Shows
Inflation, taxes and Social Security are the three top concerns for retirees, according to the 2025 Allianz Annual Retirement Study
By Kathryn Pomroy
-
Doing This With Your 401(k) Could Cost You $18,000
Your old 401(k) accounts may be slowly bleeding money — because the power of compounding can work against you, too.
By Christy Bieber
-
Three Options for Retirees With Concentrated Stock Positions
If a significant chunk of your portfolio is tied up in a single stock, you'll need to make sure it won't disrupt your retirement and legacy goals. Here's how.
By Evan T. Beach, CFP®, AWMA®
-
Four Reasons It May Be Time to Shop for New Insurance
You may be unhappy with your insurance for any number of reasons, so once you've decided to shop, what is appropriate (or inappropriate) timing?
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS
-
Before You Remarry: 10 Important Things to Consider
Remarry carefully, because love gets complicated the second time around.
By Jennifer Waters