A Roth conversion moves money from a tax-deferred account (like a traditional IRA) into a Roth, you pay ordinary income tax on the amount converted now, and it grows tax-free forever after. The question is never "is it good?", it is "is it good for you, this year?"
When it usually makes sense
- You expect your future tax rate to be equal to or higher than today's
- You are in a low-income "gap" year between retiring and starting RMDs or Social Security
- You can pay the conversion tax from outside the account (not from the IRA itself)
- You want to shrink future RMDs and leave tax-free money to heirs
The math in one sentence
If your tax rate at conversion is lower than the rate you would pay at withdrawal, converting wins; if it is higher, waiting wins. That is why the low-income years early in retirement are so valuable, you can "fill up" the 12% or 22% bracket with conversions at a discount.
Watch the ripple effects
A conversion raises your MAGI, which can increase IRMAA (two years later), the taxation of Social Security, and capital-gains rates in that year. Convert in measured amounts to the top of a target bracket rather than all at once. Also remember the five-year rule: each conversion has its own five-year clock before earnings can be withdrawn penalty-free.
Done deliberately over several years, a conversion strategy can save six figures in lifetime taxes. Done blindly in one lump, it can backfire. The difference is a plan.