Roth Conversion 9 Months Out From Retirement – Too Late To Make Sense?

I’m sure this has been addressed many times before so I’ll not expect lengthy responses or explanations, but do hope some of the experts out here can essentially give me a thumbs up or down type guidance. The specifics:

1. Spouse and I plan to work until Mar 2021, then plan to retire. I will be 63, she will be 55.
2. 2019 AGI = $423k; Taxable Income $399k. 2020 will come in the same.
3. No kids, so no plans for heirs to inherit
4. We’ve deferred most of spouses income in last four years to pay lower taxes when it distributes after retiring
5. We have the cash to pay taxes – but since our tax rate is probably the highest now it will ever be, this is the reason we have not done it. We would need to liquidate some ETF.mutual fund shares that quaify for long term gain rates
6. We have about $3.3m set aside in various accounts (taxable brokerage, 401k’s; nondeductible IRA’s; RSU stock; cash; deferred compensation)
7. Home is paid for – no mortgage

So, given the above and less than a year before retirement, is this no longer soemthing we should even consider and move on?
I am not an accountant or CPA, so overly techincal explanations may be tough to decipher. Explain it as if speaking to your Golden Retriever.



  • If you are planning on leaving a large amount to charity, you would be less inclined to convert and pay a high tax rate, since charities will not pay taxes on what you leave them.
  • Otherwise, you would generally convert when your current marginal rate is lower than or no higher than what you expect it to be in retirement. The case for converting when tax rates are estimated to be about the same will apply if you have very little in your Roths now. Converting will give you some tax diversification, and be aware that the surviving spouse will be paying higher rates for the years they must file as single.
  • If you have after tax amounts in your 401k accounts, you should do a split rollover with the after tax amounts going to your Roth IRA as a tax free rollover. Or if each spouse has IRA basis (Form 8606 from making prior non deductible contributions), convert for the spouse that has the higher basis %. 
  • If your current income includes high wage or self employment income, that will stop when you retire and your marginal rate will drop, but if it is mostly investment income, not so much.
  • Therefore, you might have some good conversion years after considering the above, possibly starting in 2021, but after 2021 and before you claim SS benefits or RMDs begin. 


I get a marginal tax rate for 2019 of 32.9% Certainly our tax rate in retirement would be less wouldn’t it?



Your taxable income in 2021 will have to drop by about 70k to get your top rate down to 24%, so the first 70k of reduction roughly saves you 32% of the reduction in taxes. The next dollars over 70k fall in the 24% bracket. As for long term tax rates, it depends on the amount of future taxable income. SS will add to income to the extent of 85% of your combined benefits and you might be adding a pension instead of current earnings. Your RMDs do not start until you are 72. Tax rates are also scheduled to increase in 2026 when the current rates sunset. Politicians may well not even wait that long to make changes. Therefore, you should develop a general strategy for conversions, but will have to revisit it each year and certainly when any major taxable income changes occur or Congress changes the rates, most likely upward.



Given our ages and retirement planning, I do not intend to take SS until age 70.5 (2028) and spouse not until 2036, RMD’s as required. No pension or other sources of income.



Good idea, as that gives you more lower income years to convert amounts you choose to. Note- SS delayed credits stop at 70, not 70.5, so you should claim no later than age 70.



  • I’m not an accountant either, but I don’t think that’s relevant.
  • If you’re planning to leave your IRA to charity, Roth conversions won’t make sense.
  • If you’re not planning to leave your IRA to charity, you would probably want to convert each year the amount you can convert without it putting you into too high a tax bracket.
  • Bruce Steiner


Let me see if I can summarize your responses:

  • [YOUR BOTTOM LINE] It still makes sense to convert, despite our approaching retirement, if we observe the following….
  • If leaving money to charities, convert less since charities don’t pay taxes on contributions
  • Delaying SS until 70 keeps income lower over next 7 yrs (up to age 70), so this benefits converting over next 7 yrs, but not after turning 70
  • We have very little in Roths presently, and have not qualified to contribute for many years up to retirement
  • We both have non deductible contribution basis in our IRAs – I would convert mine first (I have the higher %)
  • Marginal rate of 32.9% is very likely to drop when we retire (we rely solely on work income, not any investment income)
  • The “sweet spot” for timing conversions for us starts in 2021 through 2028 (when I turn 70 and start SS)
  • Since spouse is 8 yrs behind me in age, do we wait to convert her assets until much later? 


Basically correct, but will add some comments.  You might convert in your age 70 year, but less depending on when in that year you turn 70. If later in the year, you could convert almost as much as in prior years. Determine where you fall in your joint tax brackets, so you will know how much you can convert before spilling over into the next bracket, particularly if there is a large difference (eg 24% to 32% bracket. Since you have little in Roths now, you should consider converting into the bracket that is about the same as what you expect your average marginal rate to be after you both hit 70. Generally, since you hit 70 first, you would convert your IRA first to reduce your RMDs since your RMDs will start first, and you also have the higher basis %. You might be able to convert until age 72, since your RMDs do not start until then, but convert less because you will have SS income included in your taxable income.  The general goal starting next year is to determine how much you should convert with the goal of keeping your taxable income about equal for life since this avoids more years with higher brackets coming into play.  You will have to deal with the pain of paying higher taxes up front to avoid even higher taxes once both of you receive SS and RMDs, so as each of those begin you will have less “tax space” available for higher conversions.  This should get you into a position when she finally has to take RMDs, conversions would be done. So you might be looking at 16 years of doing some conversions, but less in the latter years. Adjustments will be needed to fine tune this since these factors may change somewhat.



Also be aware that in 2026 the tax brackets are scheduled to revert to the brackets in effect prior to the changes made by the Tax Cuts and Jobs Act of 2017.  Changes could happen sooner if changes are made to the law.



So the conversion timeframe might be better as 2021-2025? And I was reading about the “tax torpedo.” Will making these conversions help lessen the chance of that as well?



So the conversion timeframe might be better as 2021-2025?



Tax rate changes can happen anytime, although increases are usually not retroactive. The upcoming election will affect the direction of tax bills, and increases could well come prior to 2026. This is why you will probably have to adjust your plans almost annually. General rate changes are usually not going to affect you as much as major chances to your personal financial situation such as major health issues, natural disasters, divorce, or death of a spouse.



Add new comment

Log in or register to post comments