Aug 28, 2026 · 19 min · 11 segments
Many retirees hesitate to do Roth conversions because they believe the savings are only a couple of percentage points. But is that really the full story? In this episode of Joe Knows Retirement, Joe…
this idea of Roth conversions, I first just want to give us a layout of what is a Roth conversion, who is a Roth conversion for, what does this all look like? So obviously, a Roth conversion is when you move your money from tax-deferred over to tax-free.
So it's a simple transaction that moves your money from one account to the other.
So it's almost like moving your money from your left pocket to your right pocket.
The only thing though is you have to worry about paying your taxes on that transition because you make it from being what you haven't paid taxes on yet to now you do have to pay taxes when you make this transition.
Does it make sense to pay that tax now? Should we defer it later on and pay that tax later? That is all going to depend on your situation.
And so that's what I want to talk about next is who is a Roth conversion right for? And I will make sure I'm very clear when I explain this because I always want to make sure I'm as clear as possible.
And so you're probably wondering, well, Joe, why are you do so much content on Roth conversions if it doesn't make sense for most people out there? And the reason why is because the content I specifically developed is not for everyone else out there.
And you may not consider yourself wealthy because you're probably that Midwestern millionaire that I talk about all the time, but you likely are in that 2% club where you have a pension, which only 20% of people have, which is gonna put you in a higher tax bracket for the rest of your retirement because that is gonna come in no matter what and you're gonna have to pay taxes on that.
And then the other consideration that we talk about on this crowd is those who have a million dollars or more saved.
And so if you combine those two things specifically, only 2% of the population has a million bucks and a pension at least.
And so if that is the case, this is a rare, rare crowd that you have a high income and a high net worth.
The way I explain this is, is if you have less than $500,000, a Roth conversion probably does not make as much sense for you.
If you have 500,000 to a million, it starts to make sense, but you may not have to do as aggressive Roth conversions or not as long as Roth conversions.
Whereas if you have a million dollars or more, that's when we would typically see it makes a lot of sense for people to look to do Roth conversions.
Most of them have a million dollars or more, so this is where it starts to make a lot of sense.
And then if you add a pension, so all those things I just talked about was without a pension, but if you add a pension to any of those, then I could argue that all three of those categories could look to do Roth conversions, even if you have 500,000 or less, because you'll likely always have your income above what's called that standard deduction.
this idea of Roth conversions, I first just want to give us a layout of what is a Roth conversion, who is a Roth conversion for, what does this all look like? So obviously, a Roth conversion is when you move your money from tax-deferred over to tax-free.
So it's a simple transaction that moves your money from one account to the other.
So it's almost like moving your money from your left pocket to your right pocket.
The only thing though is you have to worry about paying your taxes on that transition because you make it from being what you haven't paid taxes on yet to now you do have to pay taxes when you make this transition.
Does it make sense to pay that tax now? Should we defer it later on and pay that tax later? That is all going to depend on your situation.
And so that's what I want to talk about next is who is a Roth conversion right for? And I will make sure I'm very clear when I explain this because I always want to make sure I'm as clear as possible.
And so you're probably wondering, well, Joe, why are you do so much content on Roth conversions if it doesn't make sense for most people out there? And the reason why is because the content I specifically developed is not for everyone else out there.
And you may not consider yourself wealthy because you're probably that Midwestern millionaire that I talk about all the time, but you likely are in that 2% club where you have a pension, which only 20% of people have, which is gonna put you in a higher tax bracket for the rest of your retirement because that is gonna come in no matter what and you're gonna have to pay taxes on that.
And then the other consideration that we talk about on this crowd is those who have a million dollars or more saved.
And so if you combine those two things specifically, only 2% of the population has a million bucks and a pension at least.
And so if that is the case, this is a rare, rare crowd that you have a high income and a high net worth.
The way I explain this is, is if you have less than $500,000, a Roth conversion probably does not make as much sense for you.
If you have 500,000 to a million, it starts to make sense, but you may not have to do as aggressive Roth conversions or not as long as Roth conversions.
Whereas if you have a million dollars or more, that's when we would typically see it makes a lot of sense for people to look to do Roth conversions.
Most of them have a million dollars or more, so this is where it starts to make a lot of sense.
And then if you add a pension, so all those things I just talked about was without a pension, but if you add a pension to any of those, then I could argue that all three of those categories could look to do Roth conversions, even if you have 500,000 or less, because you'll likely always have your income above what's called that standard deduction.
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