Roth conversions in the gap years before required distributions

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the amount converted in the year you convert it. After that, the money grows and comes out tax-free, and a Roth IRA has no required distributions during your lifetime.

Why the gap years matter

Once the paychecks stop, taxable income often drops sharply until Social Security and required minimum distributions begin. Those years are a window: income can be added at a 10% or 12% rate that would otherwise come out later at 22% or 24%, once distributions and benefits stack on top of each other.

How we size a conversion

Each fall we project the full year: pensions, interest, dividends, capital gains and any part-time income. Then we convert up to the top of a chosen bracket, not a dollar more. We pay the tax from a taxable account where possible, so the whole converted amount keeps growing.

Watch Medicare two years out

Medicare premiums are based on your income from two years earlier. A large conversion at 63 can raise your Part B and Part D premiums at 65. We check that threshold before every conversion and stop short of it when the extra premium would cost more than the conversion saves.

The five-year rules

Each conversion has its own five-year clock for penalty-free withdrawals of the converted amount if you are under 59½. Above that age the main question is the tax rate now versus later, which is why we only convert when the numbers clearly favor it.