Roth conversions, in plain English — and where I fit in

Why people consider one

The tax on that money has not been paid yet. Every dollar in a traditional IRA or 401(k) carries a deferred tax bill. When you — or your heirs — take it out, it is taxed as ordinary income at whatever the rates are then. Congress has made today's 10%–37% federal brackets permanent, so there is no expiration date forcing anyone's hand. A conversion is partly a choice about which rates you would rather settle up at: the ones written into law today, or the ones a future Congress sets. Nobody knows the second number. That is the honest core of the decision — arithmetic plus uncertainty, not a countdown clock.

At 73, withdrawals stop being optional. Required minimum distributions begin at age 73. The IRS sets the amount, and it is taxed as ordinary income whether you need the money that year or not. For people with large tax-deferred balances, those forced withdrawals can stack on top of Social Security and pension income in ways that touch more than the tax bracket alone. The full picture: RMDs, explained: why age 73 changes your tax picture.

The 10-year rule changed what heirs keep. Since the SECURE Act, most non-spouse heirs — adult children especially — must empty an inherited IRA within 10 years. Withdrawals from an inherited traditional IRA are taxed as the heir's ordinary income, often during their own peak earning years. Money you meant as a gift can arrive with a tax schedule attached. The details: The SECURE Act 10-year rule.

What we do here — and what we don't

What I do. I explain how conversions work, in plain English, until it actually makes sense. I show you how a conversion interacts with any insurance-based option you are weighing — for example, an annuity held inside an IRA. I help you build the list of questions your CPA should answer before anyone moves a dollar, and I coordinate with your CPA directly if you want me in that conversation. Education and coordination. That is the job.

What I don't do. I don't give tax advice. I don't tell you to convert, how much, or when — those answers live in your tax return, and reading tax returns is your CPA's work, not mine. And I don't pretend otherwise: if anyone — me included — tells you to convert without knowing your full tax picture, they are guessing. You deserve arithmetic, not a guess.

Where annuities come into it

Some annuity contracts held inside an IRA can be converted in pieces — a partial conversion — where the contract supports it. Whether a specific contract does, and whether that sequencing helps you, is a contract-and-CPA conversation, not something a web page can answer.

One caution worth stating plainly: you may run into pitches that pair a conversion with a specific product feature and put a dollar figure on the combined benefit. I don't do that math on a web page, and I would be careful with anyone who does — those numbers depend on contract terms, on timing, and on your tax return. If you are new to how these contracts work at all, start with the basics: How fixed indexed annuities actually work.

Who typically looks at this

• People whose savings sit mostly in tax-deferred accounts, with several years of runway before RMDs begin at 73.
• People who expect their RMDs to be larger than what they actually plan to spend.
• People with money outside the IRA to pay the conversion tax — paying the tax out of the converted amount itself weakens the case, and your CPA can show you why.
• People who care what their heirs keep after the 10-year rule does its work.
• People in a lower-income window — retired, but not yet at 73 — when a conversion adds income at smaller rates than later forced withdrawals might.

And the honest other half: plenty of people are better off converting nothing, or nothing yet. Smaller balances often stay in low brackets even after RMDs start. If that is your situation, a conversion can be a tax bill with no job to do — and "leave it alone" is a real answer here, one you should expect to hear when it fits.

Fair questions, answered plainly