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.