When You Can Convert Money to a Roth Account

You can do a Roth conversion in any year, but the tax bill and your income determine whether it makes sense

A Roth conversion means moving money from a traditional IRA, SEP-IRA, SIMPLE IRA, or workplace plan (401(k), 403(b), or 457) into a Roth IRA. You pay income tax on the amount you convert in that tax year, then the money grows tax-free in the Roth. There is no age limit, no income limit, and no deadline within the year—you can convert at any time from January through December, or even into the following year if your plan allows it.

The real constraint is not timing but money: you need enough cash outside the account to pay the tax bill without tapping the conversion itself. If you convert $50,000 and owe $12,500 in tax, you need that $12,500 from somewhere else. Many people convert in years when their income is lower than usual, or when they have a one-time windfall, because the tax hit will be smaller.

Key Takeaways

• You can convert to a Roth in any calendar year, with no age requirement or income cap, but you must pay income tax on the full amount converted.
• The best conversion years are often those when your income is unusually low—between jobs, after retirement, or during a sabbatical.
• If you have a traditional IRA and other pre-tax IRAs, the IRS treats all of them as one pool for tax purposes, which can create an unexpected tax bill.
• Workplace plans (401(k), 403(b), 457) can usually convert directly to a Roth without going through a traditional IRA first, which avoids the pooling rule.
• You must have the cash to pay the tax from outside the account; converting to pay the tax itself defeats the purpose and triggers penalties.

Converting during a year when your income drops

The most common reason to convert is a year when your taxable income is lower than it will be in future years. This might be the year you leave a job, take unpaid leave, retire before Social Security starts, or sell a business at a loss. In that year, the same conversion amount triggers less tax because it is taxed at lower brackets.

Example: You earn $120,000 normally and are in the 22% federal bracket. You leave your job in March and have no income for the rest of the year. Your taxable income for that year might be $30,000. If you convert $40,000 in that year, much of it is taxed at 12% instead of 22%, saving you thousands. If you had converted in a normal $120,000 income year, the same $40,000 would have cost you more in tax.

This strategy works best if you know the low-income year in advance. You can plan the conversion timing and amount to stay within a specific tax bracket, or to avoid triggering higher Medicare premiums (which are based on income from two years prior).

Converting after you retire but before you claim Social Security

Many people have a window between retirement and the year they claim Social Security. During those years, their only income might be a small pension, part-time work, or investment gains—much less than their working years. This is often the lowest-income period of retirement.

If you retire at 62 and do not claim Social Security until 67, those five years are a conversion opportunity. You can convert a portion of your traditional IRA each year, paying tax at low rates, and by the time you claim Social Security (which will push your income higher), the converted money is already in the Roth and will not be taxed again.

The catch: if you claim Social Security early, the conversion might push you into a higher tax bracket that year. Run the numbers with a tax preparer before converting in a year you also claim benefits.

The pro-rata rule: why having multiple IRAs complicates conversion

If you have a traditional IRA with pre-tax money and you convert part of it to a Roth, the IRS does not let you pick which dollars to convert. Instead, it treats all your traditional, SEP, and SIMPLE IRAs as one pool. The conversion is taxed as if you converted a mix of pre-tax and after-tax money in the same proportion as your total accounts.

Example: You have a traditional IRA with $80,000 (all pre-tax) and a SEP-IRA with $20,000 (all pre-tax). You want to convert $10,000 from the traditional IRA to a Roth. The IRS says you are converting 10% of your total $100,000 pool, so 10% of the conversion ($1,000) is treated as after-tax and 90% ($9,000) is treated as pre-tax. You owe tax on the $9,000, not the $10,000 you thought you were converting.

This rule catches many people off guard. If you have a workplace plan with pre-tax money and a traditional IRA, the workplace plan is not included in the pro-rata calculation—only IRAs count. So one strategy is to roll your traditional IRA into your 401(k) or 403(b) (if the plan allows it), then convert from the workplace plan instead. This sidesteps the pooling rule.

Converting directly from a workplace plan

If your employer plan (401(k), 403(b), or 457) allows in-plan Roth conversions, you can convert directly from the plan to a Roth IRA without touching a traditional IRA. This avoids the pro-rata rule entirely. Not all plans offer this feature—check your plan documents or ask your benefits administrator whether in-plan conversions are available.

The timing is flexible: you can request a conversion as soon as the plan allows it, which is often any business day. Some plans process conversions within days; others take a week or two. There is no annual limit on how much you can convert from a workplace plan, though the total cannot exceed your account balance.

This route is especially useful if you have a large traditional IRA and want to convert only part of your workplace plan. By keeping the workplace money separate, you preserve the option to roll the traditional IRA into the plan later if you want to do a bigger conversion in a future low-income year.

Converting after you leave a job

When you leave an employer, you can usually convert your 401(k) or 403(b) to a Roth IRA. Some plans require you to wait until you actually separate from the company; others let you convert while you are still employed but no longer contributing. Check your plan's rules or call your benefits administrator.

The advantage of converting right after you leave is that you can do it before you roll the money into a traditional IRA. If you roll to a traditional IRA first and then convert later, the pro-rata rule kicks in if you have other IRAs. If you convert directly from the workplace plan to the Roth, you skip that problem.

Timing matters here: if you leave in December, you might be able to convert before year-end and spread the tax bill across two years (the year you leave and the following year), depending on when the plan processes the conversion. Ask your plan administrator for the deadline to request a conversion in the current year.

Converting in a year you have a large deduction or loss

Some years bring a tax deduction that lowers your overall income: a business loss, a large charitable donation, a casualty loss, or a net operating loss carryforward. In those years, your taxable income is lower than your gross income, which means a conversion is taxed at a lower effective rate.

Example: You have $100,000 in gross income but a $30,000 business loss. Your taxable income is $70,000. If you convert $20,000 that year, it is added to the $70,000, making your taxable income $90,000. The conversion is taxed as if it is part of a $90,000 income year, not a $100,000 year. If you had converted in a year with no loss, the same $20,000 would have been taxed at higher brackets.

This requires planning with a tax preparer, because you need to know your deduction before you decide on the conversion amount. But if you know in October that you will have a large loss that year, you can still convert before December 31.

Frequently Asked Questions

Can I convert after I turn 73?

Yes. There is no age limit on Roth conversions. However, if you are over 73 and subject to required minimum distributions (RMDs) from your traditional IRA, you must take your RMD before you convert. The RMD is taxed as ordinary income regardless; the conversion is taxed separately on top of that.

What if I convert and then my income is higher than I expected?

You can undo a conversion by doing a recharacterization, but only if your plan or IRA allows it and only within the tax-filing deadline (usually April 15 of the following year, plus extensions). After that deadline, the conversion is locked in. This is why some people convert early in the year—it gives them time to see how the year plays out before the deadline passes.

Do I have to convert the whole account?

No. You can convert any amount from $1 to your entire account balance. Many people convert a portion each year to spread the tax bill across multiple years and stay in a lower tax bracket.

Can I convert if I have no income that year?

Yes. You do not need earned income or any income to do a conversion. You only need the cash to pay the tax bill. However, if you have no income and convert a large amount, the conversion itself becomes your taxable income for the year, which might trigger taxes or affect other benefits.

What happens if I convert and then need the money back?

Once converted, the money is in the Roth and subject to Roth withdrawal rules. You can withdraw contributions (the amount you converted) anytime without penalty. You can withdraw earnings only after age 59½ and if the account has been open at least five years. If you need the money sooner, you will owe tax and a 10% penalty on the earnings portion.