Roth conversion
Certified Financial Planner glossary · Certified Financial Planner
Definition
Moving pre-tax retirement dollars into a Roth account, generally recognizing ordinary income in the conversion year.
Roth conversion in plain English
A client in a temporarily low-income year wants to move traditional IRA dollars into a Roth while brackets are friendly. A Roth conversion moves pre-tax retirement dollars into a Roth account and generally recognizes ordinary income in the conversion year. Bracket management and pro-rata IRA aggregation often decide whether the move is wise. Do not treat the conversion itself as tax-free, and do not skip the income hit when comparing long-term Roth benefits.
Practice Roth conversion
Which year's Medicare premiums will be affected by the two-year lookback?
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