Wealth management
How to convert to a Roth—and when to do it
From backdoor conversions to timing strategies, learn how to convert tax-deferred savings to tax-free Roth accounts while avoiding costly surprises.
Summary:
- Strategic timing minimizes taxes—convert during optimal windows, spread out conversions to avoid bumping up to higher tax brackets, and manage your required minimum distributions.
- The pro-rata rule complicates backdoor Roth conversions by taxing a percentage based on all your IRAs combined—understanding how it works helps you minimize unexpected tax bills.
- Make a smart plan for paying the additional income tax that doesn’t involve withdrawing retirement funds.
The conversion opportunity
There are good reasons converting money to a Roth IRA may fit your finances—whether it’s because you anticipate higher income taxes down the road, want to diversify your income in retirement, or are thinking about your legacy and leaving tax-free money to your heirs. Pay taxes now and you’ll never pay income tax on that money again, provided you follow the rules.
Not everyone, however, can contribute to a Roth. For example, if your income doesn’t meet Roth contribution limits, conversion becomes your only path to Roth benefits. “Not everyone can contribute to a Roth IRA, but anyone can convert,” says Jonathan Fishburn, a director of wealth planning strategies at TIAA.
The rules of converting to a Roth are complicated, and the unwary DIYer might be surprised with a substantial tax bill. But the right strategy and timing will help you optimally convert tax-deferred funds to tax-free money to meet your retirement and estate planning goals.
Before considering conversions, many people can take advantage of simple ways to make Roth contributions: by making after-tax contributions to their employer’s retirement plan (as most plans have a Roth option), or by opening a Roth IRA and contributing to it if your income is less than $150,000 for a single filer (phasing out at $165,000) or $236,000 for a married joint filer (phasing out at $246,000).1 The IRS limits Roth IRA contributions to $7,000 per year (or $8,000 if 50 or older for catch-up contributions) for 2025. Roth 401(k) contributions, for 2025, are subject to the overall 401(k) annual limit of $23,500 (or $31,000 if 50+).2
If you can’t use one of those contribution methods, conversion of funds is your pathway to a Roth IRA. What do we mean when we talk about converting funds to a Roth IRA? We mean taking money from other sources, such as income tax-deferred traditional IRAs or 401(k)s and moving them into an after-tax Roth IRA by paying the deferred income tax up front—converting pretax savings to after-tax savings. Anyone can do this. The key thing to understand is that you’ll owe income tax on the amount you convert in the year you convert.3
Here are the four main ways to convert money to Roth savings.
1. In-plan conversions.
Many employer-sponsored retirement plans today allow you to convert money within the same plan from the traditional or pretax side to the Roth side without moving it to an IRA. You’ll still have to pay tax on the amount converted in the year you convert.
2. Rollover Roth IRA.
If you leave your job for any reason, you can
3. Traditional IRA to Roth IRA conversion.
This is the most common: You can convert all or part of a traditional IRA to a Roth IRA. This conversion is fairly simple to execute, though it does require some tax planning to ensure you don’t get hit with a higher-than-expected tax bill, and there are some strategies to consider that we’ll get to soon. If you are considering a traditional IRA to a Roth IRA conversion, visit
4. The backdoor Roth conversion.
Another way to convert to a Roth IRA is through a process called the “backdoor Roth.” It’s used by high earners who cannot contribute to a Roth IRA and don’t want to convert their existing IRAs. This type of conversion, however, usually comes with a trap door that catches people by surprise—the pro-rata rule.
You begin by contributing after-tax money to a traditional IRA, then immediately convert it to a Roth IRA that you’ve opened for this purpose. Because you didn’t take a tax deduction on the money you contributed, you won’t owe any tax on the conversion of the money you contributed. In theory, you’d owe tax on any gains, but if you convert quickly enough, there won’t be any gains. If you don’t have any other IRAs to which you made tax-deductible contributions, then the backdoor strategy is relatively straightforward.
If you do have other IRAs, however, this is where the pro-rata rule complicates the calculation. The IRS doesn’t allow you to convert those brand-new contributions specifically: Each conversion from a traditional IRA to a Roth is taxed based on the percentage of pretax to after-tax money across all your IRAs—traditional, SEP, and SIMPLE IRAs combined. So, if 80% of your total IRA money is pretax, then 80% of any conversion is taxable.4
For example, imagine you have $95,000 in traditional or rollover IRAs and you want to do a backdoor Roth conversion by contributing $5,000 to a new traditional IRA and then converting it. You might think you’d only owe taxes on the growth of the $5,000, if any. But the IRS bases the pro-rata rule on all your IRAs, which now total $100,000, 95% of which has never been taxed. So, when you convert that $5,000, the pro-rata rule says 95% of it ($4,750) is taxable, and only 5% ($250) is nontaxable.
The pro-rata rule, however, doesn’t apply to 401(k)s or 403(b)s. If you have both a traditional IRA and a 401(k), only the IRA money is counted under the pro-rata rule.
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Considering a Roth conversion?
The rules are complex, but you don’t have to navigate them alone. Our wealth management advisors, along with your tax professional, can help guide you through the process to maximize your retirement benefits while minimizing your tax burdens.
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Make the most of your situation
After deciding to convert some of your money into a Roth IRA, how and when are the next questions to be answered. These strategies can help you minimize surprises and make the most of your decision.
- Know your limits. The amount you convert will be added to your taxable income, so you might want to limit the amount to whatever “fills out” your current bracket and doesn’t push you into a higher bracket, unless you’re prepared for that. “If you’re in the 22% bracket, maybe you’re okay moving into the 24% bracket, but you might not want to bump up to the 32% bracket, because that’s a big jump,” says Fishburn. For a quick refresh on tax brackets, take a look at TIAA’s
2025 tax guide . - Pay the income tax on your conversion with outside money. Don’t take any money from your IRA to pay the tax. If you do, you’ll not only owe income tax on that amount but probably a 10% early withdrawal penalty if you’re younger than 59½.
- Take advantage of lower-income years to convert. For instance: if you’re between jobs or taking a sabbatical, or if you’ve retired and your income has dropped, or if you know your income will spike in the next year or two. Most states have income tax as well: If you’re moving to a state with lower or no income taxes, you’ll save on that front.
- Turn a market loss into a tax advantage. If your $100,000 IRA falls to $85,000, you can convert and pay tax on the lower amount, and future gains will be tax-free.
- Reduce or eliminate RMDs. One of the most popular strategies that wealth managers huddle over with their clients is around required minimum distributions, or RMDs. RMDs are the minimum amounts you must withdraw from tax-deferred retirement accounts each year starting at age 73. Because they’re subject to ordinary income tax, those income distributions can inadvertently trigger higher
Medicare premiums , taxation of Social Security benefits, and moves into higher tax brackets.5 Converting tax-deferred funds to a Roth, however, reduces future RMDs—and future taxes on RMDs—because you’ve already paid income tax on the sums converted. In the end, this leaves you with more flexibility in spending in retirement and potentially more income-tax-free inheritance for your heirs. “Roth conversions may make sense while your income is lower in the years between retirement and when RMDs begin,” Fishburn says. “But the exact amount and timing of a conversion will be different for each person, depending on your specific situation.” - Keep other income-driven benefits in mind. Don’t miss out on other tax deductions due to ill-timed Roth conversions. Converting funds to a Roth could push your income above limits in key provisions of the new One Big Beautiful Bill Act (OBBBA), such as the ability to deduct up to $40,000 in state and local taxes and the $6,000 senior deduction. See our story on
tax changes in the OBBBA for more information.
We’re here to help
The complexity of Roth strategies, particularly conversion timing and tax optimization, typically requires coordination between wealth management advisors and tax professionals. TIAA Wealth Clients can access a Roth conversion tool to by logging into their account
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1TIAA, “IRA income requirements and contribution limits.”
2IRS, “Retirement topics - IRA contribution limits.”
3Greg Daugherty, “Roth IRA Conversion Rules,” Investopedia, September, 2025.
4IRS, “Rollovers of after-tax contributions in retirement plans.”
5IRS, “Retirement topics - Required minimum distributions (RMDs).”
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