When a Roth Conversion Is a Mistake
- 6 days ago
- 6 min read
By Kenneth M. Ford, AWMA®, AIF®
Last Updated: July 2026
Estimated Reading Time: 7–8 minutes
Quick Answer
A Roth conversion is a mistake in six common situations:
Pay the conversion tax from the IRA itself: This shrinks what reaches the Roth dollar for dollar and, before age 59½, can trigger a 10% penalty.
Have a future tax rate that's genuinely lower than today's: Often applies to high earners who expect to retire into a lower tax bracket.
Cross a Medicare IRMAA threshold: The additional Medicare premium may outweigh the benefit of the conversion.
Receive ACA marketplace subsidies before age 65: A conversion can reduce or eliminate premium tax credits.
Leave the IRA to charity: Charities generally pay no income tax on inherited traditional IRAs, making a conversion unnecessary.
Convert because someone else says you should: Roth conversions should follow your tax plan—not someone else's timeline.
Over-converting is a real error, and since 2018 it cannot be reversed. Recharacterization was eliminated.
When a Roth Conversion Is a Mistake
Roth conversions can be a powerful planning strategy—but they're not always the right one. In some situations, converting can increase taxes, reduce flexibility, or leave you worse off than doing nothing at all. Understanding when not to convert is just as important as knowing when a Roth conversion may make sense.
1. You’d Have to Pay the Tax From the IRA Itself
This is the most common way a good idea becomes a bad one.
A conversion works because the entire balance moves into the Roth and compounds there, tax-free, while the tax is settled from other money. Use IRA dollars to pay that tax and less money lands in the Roth — dollar for dollar.
Convert $200,000 and pull $48,000 from the IRA to cover the tax, and only $152,000 actually reaches the Roth. You’ve shrunk the tax-free engine by nearly a quarter before it starts running.
Before 59½, it’s worse: the withdrawal used to pay the tax is itself a taxable distribution and can trigger a 10% early-withdrawal penalty.
If you don’t have cash or taxable savings outside the retirement account, converting is usually the wrong move.
2. Your Future Rate Is Genuinely Lower Than Today’s
The entire strategy rests on one comparison: the rate you’d pay today versus the rate you’d pay later.
If you’re a high earner still working — in the 32% or 35% bracket — and you’ll retire into a 22% world, converting now volunteers to pay tax at the worst rate you will ever face.
The right answer may simply be: wait. Retire, let the income drop, and convert in the window between retirement and RMDs.
3. You’d Cross an IRMAA Cliff for Nothing
IRMAA is a cliff, not a ramp. One dollar over and the surcharge applies for the whole year.
In 2026, it begins at $109,000 (individual) / $218,000 (joint), and Part B runs from $202.90 to $689.90 a month. It looks back two years, so a conversion at 63 sets your premium at 65.
Converting a modest amount that happens to cross a threshold can cost more than it saves. The conversion isn’t wrong in principle — the size of it is.
4. You’re on an ACA Plan Before 65
If you’re retired but not yet on Medicare and you buy health insurance through the marketplace, conversion income can claw back your premium subsidies at an effective rate near 9% — stacked on top of your bracket.
For some early retirees, that combination makes conversions actively expensive until Medicare begins.
5. The Money Is Going to Charity Anyway
This one is missed constantly, and it’s expensive.
A charity pays no income tax on an inherited traditional IRA.
If you intend to leave the account — or a meaningful portion of it — to charity, converting first means paying tax on money that would have escaped taxation entirely.
The efficient structure is usually the reverse: leave the traditional IRA to the charity, leave the Roth to your children, and use Qualified Charitable Distributions — up to $111,000 in 2026 — to satisfy RMDs without the income ever appearing on your return.
6. You’d Be Converting on Someone Else’s Deadline
The 2025 tax “sunset” never happened. The One Big Beautiful Bill Act made the current brackets permanent. Anyone still selling urgency is selling.
This is a patient, multi-year decision. A rushed December conversion is precisely the one you cannot undo.
Advisor Insight
The conversations we’re proudest of are frequently the ones where we tell someone not to do this.
We recently modeled a household where the “obvious” answer was a large multi-year conversion. The analysis said otherwise: nearly all of the IRA was earmarked for charity, and the client had no meaningful taxable savings to pay the tax with.
Converting would have meant paying six figures of tax on money that was going to pass to charity tax-free anyway — funded by shrinking the account itself.
The right recommendation was to convert nothing, name the charity as beneficiary of the traditional IRA, and begin QCDs at 70½.
Good planning isn't about recommending more Roth conversions. It's about recommending the right strategy—even when that means recommending none at all.
Example
Thomas is 58, still working, and earning $340,000. He has $900,000 in a traditional 401(k) and reads that conversions are a good idea.
At his income, a conversion would be taxed at 32% — and would likely trigger the 3.8% net investment income surtax on his portfolio income.
He plans to retire at 63. Once he does, his taxable income will fall to roughly $60,000 before Social Security begins at 70.
For Thomas, converting now would mean paying 32%+ on dollars he could convert at 22–24% five years from now. The recommendation is straightforward: wait, build the taxable savings he’ll need to pay the tax with, and convert aggressively during the window between 63 and 73.
Hypothetical illustration. Not a prediction, recommendation, or guarantee. Individual circumstances vary.
Common Mistakes
Converting without the outside cash to pay the tax. The single most damaging error.
Converting while still in peak earning years. Paying the highest rate you’ll ever face.
Ignoring charitable intent. Converting money that would have passed to charity tax-free.
Reacting to urgency. The deadline is gone; the decision is not time-pressured.
Assuming irreversibility doesn’t matter. It does. There is no undo button after 2018.
Frequently Asked Questions
If I can’t pay the tax from outside the IRA, should I just skip conversions entirely? Often, yes — at least until you’ve built taxable savings. There are exceptions, but this is the most common disqualifier we see.
I’m still working. Should I convert now or wait? It depends entirely on your rate now versus your expected rate later. For most high earners with a retirement date in sight, waiting is better.
Does converting make sense if I’m leaving everything to charity? Generally no. A charity pays no income tax on an inherited traditional IRA. Converting first is usually pure waste.
Can I undo a conversion if I convert too much? No. Recharacterization was eliminated in 2018.
Is it ever a mistake to convert too little? Yes. Under-converting is also an error — it leaves the balance to compound and hands larger RMDs (and a larger tax bill) to you and your heirs later. Both directions are mistakes.
Key Takeaways
Converting isn't always the right move: The case against Roth conversions is often overlooked.
The most common disqualifier: No outside cash to pay the conversion tax.
High earners may benefit from waiting: The post-retirement years often create better conversion opportunities.
Charitable beneficiaries change the equation: Converting first may create unnecessary taxes.
Roth conversions are permanent: Since 2018, conversions generally cannot be undone.
Continue Learning
Final Thoughts
A meaningful share of the analyses we run conclude with “less than you think,” “not yet,” or “not at all.”
That isn’t caution. That’s the job. If you want a straight answer about your own situation — including the possibility that the answer is don’t — that’s what an analysis is for.
Know Whether It Makes Sense Before You Convert
A Roth conversion can be a valuable strategy—but not every retirement plan benefits from one. The right decision depends on your income, tax situation, retirement timeline, and long-term goals.
A Roth Conversion Analysis can help determine whether converting makes sense for your specific circumstances—and just as importantly, when it may be better to wait or not convert at all.
Disclaimer
This article is for educational purposes only and should not be considered tax, legal, or investment advice. Roth conversions, Medicare premiums, IRMAA surcharges, required minimum distributions, and retirement income strategies should be evaluated based on your individual circumstances, including your income sources, tax situation, retirement goals, and broader financial plan. All examples are hypothetical, are provided for illustration only, and are not a guarantee or prediction of any particular result; individual results will vary. Figures reflect 2026 federal parameters and are subject to change. Tax laws, Medicare rules, premium amounts, and IRMAA thresholds change over time. Consult qualified tax and financial professionals before making financial decisions.
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