When NOT to Do a Roth Conversion: 5 Scenarios to Watch Out For
Roth conversions get a lot of attention—and for good reason. They can offer powerful tax-free growth, reduce future Required Minimum Distributions (RMDs), and help create a more flexible income stream in retirement. But just because a Roth conversion can be a great tool doesn’t mean it’s always the right tool.
In my experience working with retirees and high-net-worth families, I've found that the most successful retirement plans aren't built on just strategies—they're built on the right strategies for the right people at the right time.
So today, let’s talk about when NOT to do a Roth conversion. Because in some situations, the tax hit just isn’t worth it. Knowing these scenarios can help you avoid overpaying taxes today just to get tax-free dollars you may not even need tomorrow.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
Key Takeaways
- Roth conversions are not always the tax-smart move.
- Timing, income levels, health, and estate goals matter.
- In some cases, it’s better to wait, slow down, or avoid conversions entirely.
Scenario #1: You’re in a High Tax Bracket This Year
Why it matters
If you're in a higher-than-usual tax bracket—say, because of a business sale, bonus, or required RMDs—a Roth conversion may trigger more taxes than you'd normally pay.
What I’ve seen:
Many investors think they need to "fill up the bracket" every year, but if your income is temporarily high, you're converting at a premium. That defeats the purpose.
When to pause
- Your current marginal tax rate is 32% or higher.
- You're already in or near IRMAA surcharges (higher Medicare premiums).
- You expect your income to be lower in future years (e.g., post-retirement).
Better option: Wait until you're in a lower tax year to convert more.
Scenario #2: You're Close to Needing the Money Anyway
Why it matters
Roth conversions only pay off if the money stays invested for a long time. If you convert now but need to withdraw in a few years, you're paying a tax premium without reaping the full benefit.
What I’ve seen:
Investors in their early 60s sometimes convert large sums thinking it's a must-do, only to need the funds at 65 for healthcare or travel. If you're using the money soon, why take a tax hit now?
When to pause
You’ll need the funds within 3–5 years.
You're converting and then using the Roth to spend in early retirement.
Better option: Stick to taxable or traditional withdrawals for near-term needs.
Scenario #3: You're Already in a Low Tax Bracket in Retirement
Why it matters
If you’re already in the 10% or 12% bracket, you may not benefit enough from converting.
What I’ve seen:
People convert just to "do something" without realizing they’re already in one of the most favorable tax positions they’ll ever be in. There may be no reason to accelerate tax payments.
When to pause
You're withdrawing modestly and paying very little in taxes.
You don’t expect RMDs to push you into a much higher bracket.
Better option: Let your IRA ride. Take small, required distributions. Manage taxes through qualified dividends and capital gains in a brokerage account.
Scenario #4: You Plan to Leave Your IRA to Charities
Why it matters
Traditional IRAs are taxed as income when inherited by individuals—but not by charities. So if your long-term estate plan includes gifting to nonprofits, Roth conversions can be a waste.
What I’ve seen:
Philanthropically-minded retirees pay big taxes to convert, only to have the Roth go unused or gifted to an organization that would have received the IRA tax-free anyway.
When to pause
You’re charitably inclined.
Your heirs don't need the IRA funds.
Your IRA is a key part of your giving plan.
Better option: Use Qualified Charitable Distributions (QCDs) from your IRA once you're 70 ½.
Scenario #5: You're Doing It All at Once
Why it matters
Massive Roth conversions in a single year can spike your income and push you into higher tax brackets, higher Medicare premiums, and even taxation on Social Security.
What I’ve seen:
Well-meaning investors take the "rip off the Band-Aid" approach and regret it come tax season.
When to pause
You're converting six figures in one tax year.
You didn't run a multi-year conversion plan.
Better option: Use a staged conversion plan across multiple years. Coordinate with tax projections.
Conclusion: Roth Conversions Are Powerful—But Not Always
Roth conversions are a powerful tax-planning tool, but they aren’t always the best move. In my experience, the people who win in retirement don’t chase financial fads. They plan. They work with professionals. They understand when to say "yes," and more importantly, when to say "not yet."
If you want a second opinion on whether a Roth conversion fits your plan this year—reach out. Better to check than to pay more in taxes than necessary.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
FAQs
Should I always do Roth conversions in early retirement?
Not always. You need to factor in current vs. future tax rates, withdrawal needs, and how long the Roth will stay untouched.
What if I regret a Roth conversion?
There’s no longer a "do-over" (recharacterization was eliminated). That’s why it’s crucial to plan before converting.
Are Roth conversions right for everyone?
No. They're best suited for those with a long time horizon, low current tax rates, and estate planning flexibility.
Disclaimer: Case studies are hypothetical and do not relate to an actual client of Lock Wealth Management. Clients or potential clients should not interpret any part of the content as a guarantee of achieving similar results or satisfaction if they engage Lock Wealth Management for investment advisory services.