My wife and I are 70 years old. We’ve paid off everything, including the house. Between my pension of $29,000 and Social Security, we’re getting a gross of $99,000 a year in income, which is more than enough. Our current savings in our brokerage account are $700,000. Our individual retirement account (IRA) totals $1.4 million. Our Roth is worth $400,000. We both anticipate living to age 90. At our age, is it too late to do a Roth conversation?
-Anonymous
The short answer is no. There is no age cap on your ability to convert to a Roth.
There is also no earned income requirement to convert to a Roth. As long as you have a balance in an IRA, in theory, you can keep converting to a Roth as long as you like.
The bigger question is this: Does converting to a Roth further your goals for the legacy of your wealth?
This should be the starting place before beginning a Roth conversion strategy regardless of your age. But it becomes particularly important when you are considering Roth conversions as you approach and start taking required minimum distributions (RMDs).
Most articles and conversations around converting to a Roth will focus on the years between retirement and taking RMDs. Those years can present a fantastic opportunity to convert IRA dollars to a Roth. But they are not your only opportunity. Answer this question: What do I want to happen to my wealth when I die? The answer is in the details. Here’s how to think through this strategy.
A financial advisor may help you understand how to manage the tax repercussions of a Roth conversion.
An Argument Against a Roth Conversion
Ask an Advisor: Is It Too Late to Convert to a Roth?
On one end of the spectrum, let’s assume that all of your wealth will be given to your favorite charity when you die. If a qualified charity receives your IRA when you pass away, there will be no taxes due, and you should strongly consider not converting any of your IRA balance to a Roth during your lifetime.
In that case, converting to a Roth would be choosing to pay taxes that you could otherwise never have to pay.
A Case for a Roth Conversion
The opposite extreme would be if your goal is to leave all of your wealth to your children, grandchildren or other loved ones – and to make sure that they never have to worry about paying taxes on those dollars.
In this case, an argument could be made for attempting to convert every last dollar of your IRA balance to a Roth before you die. That way, your beneficiaries will receive an enormous tax-free pie, and the IRS doesn’t get to share a single slice. This may not result in the most tax savings, but it would be the best way to make sure your beneficiaries don’t worry about taxes.
The Middle Ground on Roth Conversions
Ask an Advisor: We Are 70 Years Old, Have $99K in Retirement Income, a $1.4M IRA and Other Investments. Is It Ever Too Late to Convert to a Roth?
Most people are going to end up somewhere in between, where converting to a Roth can make a lot of sense but only up to a certain point.
Roth conversions make the most sense when you can choose to pay the income tax on your IRA balance and move it to a Roth in a relatively low-income tax year. “Relative” is an important word here because it is going to be unique to each taxpayer’s situation.
The question to ask yourself here is this: Am I concerned that, at some point in the future, I could be in a higher tax bracket than I am now?
Consider using this free tool to match with a financial advisor for professional guidance of your Roth conversion.
Roth Conversion Factors to Understand
If you decide a Roth conversion helps accomplish your wealth goals, there are several factors to keep in mind when deciding how much to convert in a particular year. They are:
How Much Income Tax Will Be Due
Generally speaking, the more we can spread out taxable income, the lower the federal income tax we will pay. That is an oversimplification. But it provides a starting point for thinking about how to put together a Roth conversion strategy.
In the example presented in this question, generally speaking, converting the full $1.4 million from an IRA to a Roth in a single year would result in more taxes paid than spreading those conversions over the remaining life expectancy of the taxpayers.
Other Tax Implications
Federal income tax gets all the attention when Roth conversions come up. But your marginal tax rate (the amount of tax you’ll pay on the next dollar of income) is hardly the only consideration.
In this example, 85% of the taxpayer’s Social Security (the highest amount possible) is already included in taxable income. But for taxpayers with lower taxable income, Roth conversions have the potential to change how much Social Security is taxable.
Increasing taxable income can also change a taxpayer’s eligibility for tax credits and deductions. For taxpayers who have not started claiming Medicare, the premium tax credit can be particularly impactful.
Medicare Premiums
For taxpayers approaching age 65 or already on Medicare, it is crucial to remember that the amount you pay for your Medicare is impacted by your taxable income (specifically through modified adjusted gross income) and can crank up the true cost of doing a Roth conversion.
This can be particularly dangerous because each income bracket for Medicare premiums is treated as a cliff. So once you are a single dollar over the threshold, your premiums take the full jump to the next level. In other words, in for a penny, in for a pound.
What If Tax Rules Change in the Future?
I often get asked whether I am concerned Congress will change Roth rules in the future and having large Roth balances could turn out to be a liability.
My answer is always the same: The tax code is written in pencil, and Congress can change anything it wants. We have to do the best we can with the information we have and the laws that are currently in place.
A financial advisor can help you navigate changes to legislation, including scheduled sunsetting of Tax Cuts and Jobs Act provisions in 2026.
What to Do Next
My crystal ball is still broken, so anything I say about future rule changes would just be a guess. What I do know is that holding an IRA is like having a variable-rate mortgage with the IRS where they have the ability to change the interest rate to whatever they’d like, whenever they’d like. An opportunity to take the IRS out of the picture by converting IRA dollars to Roth dollars is always worth considering.
Steven Jarvis, CPA, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Please note that Steven is not a participant in the SmartAdvisor Match platform, and he has been compensated for this article. Taxpayer resources from the author can be found at retirementtaxpodcast.com. Financial Advisor resources from the author are available at retirementtaxservices.com.
Find a Financial Advisor
If you have questions specific to your investing and retirement situation, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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