Roth Conversions

A Roth conversion moves money from a Traditional (pre-tax) account into a Roth (after-tax) account. You pay ordinary income tax on the amount you convert this year — but from then on it grows and comes out tax-free, it’s never subject to Required Minimum Distributions, and your heirs inherit it tax-free. The art is converting enough to lighten future taxes without spiking this year’s bill. RetireRange lets you model it.

Setting up a conversion

On the Strategy tab you can add one or more conversion rules, each with:

Year range — the years conversions happen (e.g., 2026–2032).
Annual amount — how much to convert per year (in today’s dollars).
Inflation adjustment — whether that amount grows over time.
Source and destination — typically Traditional IRA/401(k) → Roth IRA. If a rule points at an account type you don’t actually have (no Traditional to convert from, or no Roth to convert into), the Strategy tab flags it in amber so it won’t silently do nothing.

The converted amount is added to your taxable income in each conversion year, and RetireRange flows that through your tax calculation.

Why people do it

The classic play is to convert during the lower-income window — often the years after you retire but before Social Security and Required Minimum Distributions push your income back up. Converting then can:

Fill up the low tax brackets while they’re cheap, instead of being forced into higher brackets later by RMDs.
Shrink future RMDs, since Roth balances aren’t subject to them — which can lower your taxes for the rest of your life.
Leave heirs a tax-free inheritance (Roth) instead of a taxable one (Traditional). See how this shows up in after-tax legacy under Understanding your results.
Add tax diversification — a mix of pre-tax, Roth, and taxable buckets gives you more control over your taxable income each year.

Costs and catches to watch

A higher tax bill in the conversion year. That’s the trade — pay now to save later. Watch the tax summary spike in those years.
The two-year IRMAA echo. A large conversion can push your income over an IRMAA threshold and raise your Medicare premiums two years later. Convert with the thresholds in mind, especially in the years right before and after 65.
Check that your plan actually allows it — and run the numbers past your accountant. Converting within a 401(k) (Traditional 401(k) → Roth 401(k)) is an "in-plan Roth conversion," which is legal but only works if your specific plan offers a Roth account and permits it — many do, but not all. The model lets you test the strategy regardless; whether you can execute it, and the exact tax consequences in your situation, are worth confirming with your plan administrator and a tax professional before you act.
The conversion tax comes out of your portfolio. RetireRange draws it from your accounts at year-end — Taxable first, then your normal allocation — so enter the full gross amount you’re converting; there’s no need to reduce it for the tax. (Paying the tax with cash you keep outside the plan would leave more invested, so the portfolio drain shown here is the conservative case.)

One modeling limitation

RetireRange treats all Roth withdrawals as tax-free and does not enforce the IRS 5-year rule or the age-59½ rule. If you’re working with very recently opened Roth accounts, the real-world tax treatment may be less favorable than the model shows.

Finding the right amount

There’s rarely one obvious number, so test it:

Save a few scenarios with different annual conversion amounts and compare them.
Or let the Roth conversion optimizer search the amount for you. Optimize for after-tax legacy or success rate — not for "lowest lifetime taxes" alone, since a plan can show lower lifetime taxes simply by depleting faster.