Roth conversions in your 60s: a quiet way to keep more

A Roth conversion moves money from a pre-tax account, like a traditional IRA, into a Roth IRA, and you pay the tax now instead of later. Done in your 60s, in the low-income years between retirement and required withdrawals at 73, it can lower your lifetime tax bill and leave heirs a tax-free inheritance.

Why your 60s are the window

For many people, the years between when they retire and when required minimum distributions begin at 73 are the lowest-income years of their lives. Wages have stopped, but RMDs and, often, full Social Security haven't kicked in yet. That dip in income is a planning opportunity most people never use.

What a conversion actually does

• Moves money from pre-tax to Roth, where it grows and is later withdrawn tax-free
• Fills up your lower tax brackets now, at a rate you know
• Shrinks future RMDs, which can otherwise push you into higher brackets
• Leaves heirs a tax-free account instead of a taxable one

It isn't free, or automatic

You pay tax on every dollar you convert, in the year you convert it. Convert too much and you can push yourself into a higher bracket, raise your Medicare premiums, or trigger more taxation of your Social Security. The art is converting just enough, in the right years.

Frequently asked questions

Should I do a Roth conversion?

It depends on your tax brackets now versus later, your other income, and your goals for heirs. The low-income years in your 60s are often the best time, but the right amount varies year to year.