Should I Do a Roth IRA Conversion?
Short Answer
A Roth IRA conversion may make sense if you expect higher future tax rates, want tax-free retirement income, or aim to reduce required minimum distributions. The decision depends on your current tax bracket, time horizon, and how the conversion coordinates with Social Security, Medicare premiums, and California taxes.
Who a Roth Conversion Is Often Best For
High earners expecting lower income years ahead
Retirees before Social Security or RMDs begin
Investors concerned about future tax increases
Those wanting tax-free income flexibility in retirement
Families focused on tax-efficient wealth transfer
When a Roth Conversion May Not Make Sense
You’re currently in a very high tax bracket
You need the IRA funds soon
Paying conversion taxes would require selling investments
Medicare IRMAA or ACA subsidies would be negatively impacted
How Roth Conversions Are Taxed in California
California taxes Roth conversions as ordinary income in the year of conversion. There is no preferential state treatment, which makes timing and partial conversions critical.
Common Roth Conversion Mistakes
Converting too much in one year
Ignoring Medicare premium thresholds
Triggering Social Security taxation unnecessarily
Failing to coordinate with long-term cash flow planning
How Sentient Financial Evaluates Roth Conversions
We model conversions across multiple years, coordinate them with retirement income planning, and evaluate tax impact before action is taken—always acting as a fee-only fiduciary.
Disclosure: Sentient Financial, LLC is a California-registered investment adviser. Educational purposes only.