When a Roth conversion may not be worth it.

Roth is not a magic word

Tax-free growth is attractive. But a conversion also means paying tax now, accepting current assumptions, and giving up the future use of the tax-payment dollars.

Reasons to be cautious

• The conversion pushes income into a bracket you do not want to fill.
• The tax payment would weaken your cash reserve.
• You may need the converted funds soon.
• The conversion could trigger other income-based costs.
• Your future withdrawal tax rate may be lower than today’s conversion rate.

A better question

Instead of asking, “Is Roth good?” ask, “At this conversion amount, under these assumptions, what must be true for the conversion to beat doing nothing?”

That is exactly the kind of question a transparent calculator should help you explore.