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Roth Conversions

ArticleAdam M. Grossman  |  Nov 7, 2026

AMONG THE MOST COMMON debates in personal finance is whether Roth conversions are a wise strategy. Especially as the end of the year approaches, it’s worth looking at both sides of this question. If you aren’t familiar with it, the idea behind a Roth conversion is that individuals can choose, at any time, and at any income level, to move money out of a pre-tax traditional IRA into a Roth IRA. There’s a catch, though: In the year that you complete a conversion, you must pay income tax on the amount that you convert. So, the bet you are making with a conversion is that your tax rate today will be lower than it will be in the future, when you otherwise would have taken those dollars out of your IRA. For example, if you could pay a tax of just 22% today to convert dollars from your pre-tax IRA to your Roth IRA, you would happily do that if you expected your tax rate down the road to be much higher—say, 32%.  This seems straightforward, but not everyone agrees. For starters, Roth conversions’ detractors point to the uncertainty inherent in the exercise. Predicting future tax rates is an imperfect science, and if rates end up going lower in the future, that could turn the benefit of a conversion upside down. You could end up paying a higher rate today than you would’ve in the future. Given the state of federal finances, it might seem unlikely to expect tax rates to go down, but no one can say that with certainty. Congress often changes the rules, and as recently as the late-1980s, the highest ordinary income tax rate was nine percentage points lower than it is today (28% vs. 37%). In addition, it can be difficult to predict our own future income with precision. Consider required minimum distributions (RMDs) from retirement accounts. They’re a key component of most retirees’ income, but because they’re dependent on future investment returns, the best any of us can do is to estimate this figure. Roth conversions, in other words, involve uncertainty along multiple dimensions. This is a point even supporters acknowledge. That’s why, to help manage this uncertainty, I look at Roth conversion candidates as falling into one of three categories. The first category: When a taxpayer’s marginal tax rate is currently in one of the two lowest brackets, either 10% or 12%, I see it as an easy decision to complete a conversion. That’s because it’s hard to imagine that their future tax rate would be any lower. At worst, in that case, a Roth conversion in one of these two lowest brackets might just be a wash. The second category: When a taxpayer’s marginal rate is over 30%, I see that as an easy decision as well, but for the opposite reason. Roth conversions rarely make sense at that level because it’s hard to make the argument that a taxpayer in a very high bracket might end up in a bracket that’s even higher. To be sure, it can happen—and I’ll describe one clear case below—but it’s hard to have confidence in that expectation. For that reason, a conversion at a rate over 30% typically doesn’t make sense. The third category: If your marginal rate is in one of the middle brackets—either 22% or 24%—that’s when the conversion decision doesn’t have an easy “yes” or “no” answer, and it’s worth examining other factors. When would a conversion in this middle range make sense? If the composition of your assets is such that you have significant balances in pre-tax accounts and you haven’t yet hit RMD age (either age 73 or 75), that’s when you’d want to sharpen your pencil. If your RMD based on your current pre-tax balances would push your income into a much higher tax bracket, then it would be safe to assume that, with some additional investment growth, your tax bracket will almost certainly be higher down the road. That’s a clear case for a Roth conversion. Similarly, if you have other income sources, such as a pension, that are guaranteed, that too would make the conversion decision easier. What if the comparison between your current and projected future tax rates isn’t conclusive? Suppose, for example, your taxable ordinary income today is $210,000. For someone married and filing jointly, that would translate to the 22% marginal tax bracket. Even if your income rose sharply in future years with required minimum distributions, up to $300,000, for example, the tax impact would be modest. Income of $300,000 would translate to a marginal bracket of just 24%. So a Roth conversion might not seem like an urgent priority. In that case, there’s another factor that might be a tie-breaker. If one spouse passed away, the surviving spouse would be subject to the tax brackets for single taxpayers. Continuing with this same example, $300,000 of income would result in a substantially higher marginal bracket of 35%. If that were the case, then a conversion today at 22% might make good sense. The upshot: If you’re doing Roth conversion math, and the results look inconclusive, consider what might tip the scales. Another potential tie-breaking factor to consider, if the math isn’t conclusive, would be the estate tax. At the federal level, a tax of 40% applies to assets over $15 million, or $30 million for a married couple. For someone with a balance sheet at that level, Roth conversions can make a lot of sense because they have the result of reducing the size of an estate without reducing the after-tax value of the assets. Consider a simple example: If you complete a conversion of $200,000 that results in $40,000 in taxes, that $40,000 is no longer in your estate, and thus no longer subject to estate tax. This is the only case in which I see an argument for conversions at rates over 30%, because any tax below 40% would still be less costly than the future estate tax levy. Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

Spending

The Decaying Curve vs. the Time Value of Money

Mark Crothers  |  Nov 13, 2026

"An experience, though, pays out twice. Don't forget the third (actually first) payment, which Jonathan has written about: the anticipation."
- 1PF
Read more »

Investing

Bond Lookalikes

Rick Connor  |  Nov 12, 2026

"Thanks for this, Rick. I always enjoy your great contributions. Bill Perry's mention below of a Charles Ellis article reminded me of another of his (Mr. Ellis's): No Bonds for Me - HumbleDollar wherein he made the interesting "confession" that "I am 84 and own no bonds today—and certainly not 84% in bonds. I have never owned bonds and never expect to.""
- Andrew Forsythe
Read more »

Investing

Financial literacy is not the problem nor the solution.

R Quinn  |  Nov 9, 2026

"I watched a video by Ben Felix related to this topic some time ago. I was surprised to learn about research that shows the independent impact of financial knowledge on wealth accumulation. This impact is above and beyond non-financial related education. I know this mirrors my own personal journey. I had lots of school knowledge (and the degrees to go with it) but knew woefully little about what to do (and not do) with money. Here's the Ben Felix video: https://www.youtube.com/watch?v=6RzO26Sxsug He helpfully defines financial literacy as "peoples’ ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions." Yes, what you do (behavior) matters a great deal. But it's hard to argue that knowing what to do (or not do) isn't also important, too. I would hazard that most HD readers (and contributors) have accumulated a lot of financial knowledge, which makes the behavioral aspects appear even more important. I don't think we need to set this up as an "either-or" duality. Both are important. It's clear, however, that at some point acquiring more knowledge is less likely to make more of an impact on financial outcomes. It's what you do (or don't do) what that knowledge that's determinative. "
- M Richardson
Read more »

From HumbleDollar Founder Jonathan Clements

Investing

Not Exactly True

THERE ARE FINANCIAL issues on which reasonable people can disagree. This article is not about those issues. Instead, it’s about issues where people disagree—because…
Read more »

Taxes

IRS Inflation Updates

Bogdan Sheremeta  |  Nov 12, 2026

"Thanks Bogdan. It's always interesting to see what is indexed to inflation, and what isn't."
- Rick Connor
Read more »

Investing

Does my bond strategy make sense?

R Quinn  |  Nov 11, 2026

"👍"
- R Quinn
Read more »

Insurance

Umbrella insurance

Donald Nix  |  Nov 11, 2026

"I'm not sure why it's hard to compare prices? The umbrella premium is separate from auto and homeowners premiums ( both separate ) when you buy them from one insurer . You could obtain a quote from an insurer for an umbrella even if you don't own a car or home (i.e. large financial assets) . Not all insurers will write the policy . Chubb used to write stand alone umbrella for high net worth without underlying policies . Not sure about that currently . Umbrella prices are not that high. I would look at their A.M.Best rating and not worry about price that much."
- Julie C
Read more »

Life Events

A Gift, Not A Given

Andrew Clements  |  Nov 11, 2026

"Dan, those Saturdays sound like a gift to all three generations: time with your parents, lunch with your dad, and those long conversations between your mom and daughter. I smiled at the thought of your dad being treated like royalty over a burger and a beer. Your parents’ generosity helped in so many practical ways, but I can see why those ordinary Saturdays are what you treasure most."
- Andrew Clements
Read more »

Investing

2026 Bogleheads Conference

William Perry  |  Nov 12, 2026

"Bill, Thanks for the reminder. I'm really happy Adam is getting the recognition and look forward to watching his presentation. Jim Dahle's appearance on Christine Benz's podcast last week was well worth a listen. best, Rick"
- Rick Connor
Read more »

Investing

Is Direct Indexing Useful?

Paul Ward  |  Nov 8, 2026

"A waste of time. Just read from Dalbar Study 4% of the stocks are responsible for all gains over last 100 years Your odds are slim if you are a LT stock picker"
- Kenneth Tobin
Read more »

Family

Pirates, Pieces of Eight, and the $ in Your Pocket

Mark Crothers  |  Nov 11, 2026

"David, I appreciate the positive feedback!"
- Mark Crothers
Read more »

Taxes

Roth Conversions

ArticleAdam M. Grossman  |  Nov 7, 2026

AMONG THE MOST COMMON debates in personal finance is whether Roth conversions are a wise strategy. Especially as the end of the year approaches, it’s worth looking at both sides of this question. If you aren’t familiar with it, the idea behind a Roth conversion is that individuals can choose, at any time, and at any income level, to move money out of a pre-tax traditional IRA into a Roth IRA. There’s a catch, though: In the year that you complete a conversion, you must pay income tax on the amount that you convert. So, the bet you are making with a conversion is that your tax rate today will be lower than it will be in the future, when you otherwise would have taken those dollars out of your IRA. For example, if you could pay a tax of just 22% today to convert dollars from your pre-tax IRA to your Roth IRA, you would happily do that if you expected your tax rate down the road to be much higher—say, 32%.  This seems straightforward, but not everyone agrees. For starters, Roth conversions’ detractors point to the uncertainty inherent in the exercise. Predicting future tax rates is an imperfect science, and if rates end up going lower in the future, that could turn the benefit of a conversion upside down. You could end up paying a higher rate today than you would’ve in the future. Given the state of federal finances, it might seem unlikely to expect tax rates to go down, but no one can say that with certainty. Congress often changes the rules, and as recently as the late-1980s, the highest ordinary income tax rate was nine percentage points lower than it is today (28% vs. 37%). In addition, it can be difficult to predict our own future income with precision. Consider required minimum distributions (RMDs) from retirement accounts. They’re a key component of most retirees’ income, but because they’re dependent on future investment returns, the best any of us can do is to estimate this figure. Roth conversions, in other words, involve uncertainty along multiple dimensions. This is a point even supporters acknowledge. That’s why, to help manage this uncertainty, I look at Roth conversion candidates as falling into one of three categories. The first category: When a taxpayer’s marginal tax rate is currently in one of the two lowest brackets, either 10% or 12%, I see it as an easy decision to complete a conversion. That’s because it’s hard to imagine that their future tax rate would be any lower. At worst, in that case, a Roth conversion in one of these two lowest brackets might just be a wash. The second category: When a taxpayer’s marginal rate is over 30%, I see that as an easy decision as well, but for the opposite reason. Roth conversions rarely make sense at that level because it’s hard to make the argument that a taxpayer in a very high bracket might end up in a bracket that’s even higher. To be sure, it can happen—and I’ll describe one clear case below—but it’s hard to have confidence in that expectation. For that reason, a conversion at a rate over 30% typically doesn’t make sense. The third category: If your marginal rate is in one of the middle brackets—either 22% or 24%—that’s when the conversion decision doesn’t have an easy “yes” or “no” answer, and it’s worth examining other factors. When would a conversion in this middle range make sense? If the composition of your assets is such that you have significant balances in pre-tax accounts and you haven’t yet hit RMD age (either age 73 or 75), that’s when you’d want to sharpen your pencil. If your RMD based on your current pre-tax balances would push your income into a much higher tax bracket, then it would be safe to assume that, with some additional investment growth, your tax bracket will almost certainly be higher down the road. That’s a clear case for a Roth conversion. Similarly, if you have other income sources, such as a pension, that are guaranteed, that too would make the conversion decision easier. What if the comparison between your current and projected future tax rates isn’t conclusive? Suppose, for example, your taxable ordinary income today is $210,000. For someone married and filing jointly, that would translate to the 22% marginal tax bracket. Even if your income rose sharply in future years with required minimum distributions, up to $300,000, for example, the tax impact would be modest. Income of $300,000 would translate to a marginal bracket of just 24%. So a Roth conversion might not seem like an urgent priority. In that case, there’s another factor that might be a tie-breaker. If one spouse passed away, the surviving spouse would be subject to the tax brackets for single taxpayers. Continuing with this same example, $300,000 of income would result in a substantially higher marginal bracket of 35%. If that were the case, then a conversion today at 22% might make good sense. The upshot: If you’re doing Roth conversion math, and the results look inconclusive, consider what might tip the scales. Another potential tie-breaking factor to consider, if the math isn’t conclusive, would be the estate tax. At the federal level, a tax of 40% applies to assets over $15 million, or $30 million for a married couple. For someone with a balance sheet at that level, Roth conversions can make a lot of sense because they have the result of reducing the size of an estate without reducing the after-tax value of the assets. Consider a simple example: If you complete a conversion of $200,000 that results in $40,000 in taxes, that $40,000 is no longer in your estate, and thus no longer subject to estate tax. This is the only case in which I see an argument for conversions at rates over 30%, because any tax below 40% would still be less costly than the future estate tax levy. Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

Spending

The Decaying Curve vs. the Time Value of Money

Mark Crothers  |  Nov 13, 2026

"An experience, though, pays out twice. Don't forget the third (actually first) payment, which Jonathan has written about: the anticipation."
- 1PF
Read more »

Investing

Bond Lookalikes

Rick Connor  |  Nov 12, 2026

"Thanks for this, Rick. I always enjoy your great contributions. Bill Perry's mention below of a Charles Ellis article reminded me of another of his (Mr. Ellis's): No Bonds for Me - HumbleDollar wherein he made the interesting "confession" that "I am 84 and own no bonds today—and certainly not 84% in bonds. I have never owned bonds and never expect to.""
- Andrew Forsythe
Read more »

Investing

Financial literacy is not the problem nor the solution.

R Quinn  |  Nov 9, 2026

"I watched a video by Ben Felix related to this topic some time ago. I was surprised to learn about research that shows the independent impact of financial knowledge on wealth accumulation. This impact is above and beyond non-financial related education. I know this mirrors my own personal journey. I had lots of school knowledge (and the degrees to go with it) but knew woefully little about what to do (and not do) with money. Here's the Ben Felix video: https://www.youtube.com/watch?v=6RzO26Sxsug He helpfully defines financial literacy as "peoples’ ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions." Yes, what you do (behavior) matters a great deal. But it's hard to argue that knowing what to do (or not do) isn't also important, too. I would hazard that most HD readers (and contributors) have accumulated a lot of financial knowledge, which makes the behavioral aspects appear even more important. I don't think we need to set this up as an "either-or" duality. Both are important. It's clear, however, that at some point acquiring more knowledge is less likely to make more of an impact on financial outcomes. It's what you do (or don't do) what that knowledge that's determinative. "
- M Richardson
Read more »

From HumbleDollar Founder Jonathan Clements

Investing

Not Exactly True

THERE ARE FINANCIAL issues on which reasonable people can disagree. This article is not about those issues. Instead, it’s about issues where people disagree—because…
Read more »

Taxes

IRS Inflation Updates

Bogdan Sheremeta  |  Nov 12, 2026

"Thanks Bogdan. It's always interesting to see what is indexed to inflation, and what isn't."
- Rick Connor
Read more »

Investing

Does my bond strategy make sense?

R Quinn  |  Nov 11, 2026

"👍"
- R Quinn
Read more »

Insurance

Umbrella insurance

Donald Nix  |  Nov 11, 2026

"I'm not sure why it's hard to compare prices? The umbrella premium is separate from auto and homeowners premiums ( both separate ) when you buy them from one insurer . You could obtain a quote from an insurer for an umbrella even if you don't own a car or home (i.e. large financial assets) . Not all insurers will write the policy . Chubb used to write stand alone umbrella for high net worth without underlying policies . Not sure about that currently . Umbrella prices are not that high. I would look at their A.M.Best rating and not worry about price that much."
- Julie C
Read more »

Life Events

A Gift, Not A Given

Andrew Clements  |  Nov 11, 2026

"Dan, those Saturdays sound like a gift to all three generations: time with your parents, lunch with your dad, and those long conversations between your mom and daughter. I smiled at the thought of your dad being treated like royalty over a burger and a beer. Your parents’ generosity helped in so many practical ways, but I can see why those ordinary Saturdays are what you treasure most."
- Andrew Clements
Read more »

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Manifesto

Nov 13, 2026

NO. 74: WHATEVER the nightmare scenario—recession, inflation, deflation—the answer’s the same: We need stocks to notch long-run gains, with enough bonds and cash to survive the rough spell.

Truths

Nov 13, 2026

NO. 23: WE’LL NEVER be satisfied. Bigger homes, new cars, pay raises and promotions almost always disappoint—thanks to hedonic adaptation. We quickly become dissatisfied with what we have and what we’ve achieved, and we start craving something new. To counter hedonic adaptation, pause every so often and ponder your good fortune.

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Nov 12, 2026

NO. 48: WE MAY believe an investment is an obvious buy or sell, but never forget somebody’s on the other side of the trade. Investing isn’t like playing tennis against a wall. Rather, you’re up against champion players—perhaps company insiders, or a hedge fund, or a Wall Street trading desk. What are the chances you know something they don’t?

think

Nov 12, 2026

MENTAL ACCOUNTING. Rationally, we should view our finances as a single pot of money. But often, we mentally categorize money depending on how we got it or plan to use it. For instance, we’re happy to spend dividends, but not capital gains. We’ll also happily pull from bank accounts, but hate to touch the mutual funds we’ve earmarked for the kids’ college.

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Manifesto

Nov 13, 2026

NO. 74: WHATEVER the nightmare scenario—recession, inflation, deflation—the answer’s the same: We need stocks to notch long-run gains, with enough bonds and cash to survive the rough spell.

Spotlight: Spending

Scent of a Cheapskate: Frugality Gone Wrong

Mark Crothers   |  Apr 17, 2026

I thought I would seek solace in the Humble Dollar community for my latest self inflicted wound: an own goal of reasonably epic proportions. It started innocently enough. I noticed a split developing on our twenty year old, 600 gallon plastic oil storage tank. Visions…
Read more »

Penny Wise, Pound Foolish

DAN SMITH   |  Apr 12, 2026

"We lament the grocery-store coupon left at home, and yet we’ll raise our bid for a house by $10,000 without a second thought." This was one of Jonathan’s quips that appeared at the top of the blog a few months back. I immediately was reminded…
Read more »

Live a little

greg_j_tomamichel   |  Apr 25, 2026

My Youtube feed lately seems to be filled up with a lot of "10 things that are no longer worth your money" videos. Sometimes the number varies ..... 5, 12, whatever. But the message is always similar - avoid expenses that will hurt your financial…
Read more »

Behind The Finery

Mark Crothers   |  Sep 3, 2026

My wife Suzie has been organising a hen party for our daughter, nothing spectacular, just a group of girls heading into the big smoke for a candle-making course, followed by dinner and a cocktail bar. Because there were quite a few people attending, all three…
Read more »

My Recent Fill-up

Michael01670723   |  May 13, 2026

I filled up the gas tank this morning and the total was over $81. I drive a 4-Cylinder Chevy Camaro. Chevy recommends premium fuel - I use the mid-grade. Still, that's a record for me. So, I started to reflect... When I turned 16 in…
Read more »

Shopping around – you versus the grocery store

R Quinn   |  Apr 30, 2026

I do the grocery shopping. I just returned from such an adventure. It’s one way I get exercise as a walk up and down the aisles, intentionally - .75 miles today. Shopping is not easy. First, you need to locate things, which, eventually after shopping…
Read more »

Spotlight: Ferris

2025 Retirement Countdown

DrLefty   |  Jan 1, 2025

It’s January 1, and my retirement countdown app says “5 months and 29 days”! Now that it’s 2025, it really seems close. I have a bunch of financial tasks of my winter quarter sabbatical/pre-retirement list and have already taken care of the first two: Increase (double) contributions to my tax-deferred accounts (403B/457). With over-50 catch-up contributions, in 2025, I can…
Read more »

Family Dynamics, Part 3: What Do Adult Children Owe Their Aging Parents?

DrLefty   |  Jul 29, 2025

If you thought my posts on family estrangement and supporting adult children were doozies, wait until you dig into this one. My musings on all three of these topics are specifically related to how complicated the interaction between family dynamics (especially if it's a "difficult" family) and our finances can be. This one focuses on how caring for parents as…
Read more »

Improving My Habits

Dana Ferris   |  Jun 13, 2023

THE PROLIFIC MR. QUINN recently wrote that people who were irresponsible in one area of their life, such as failing to return shopping carts, also tend to be irresponsible in other areas, like managing their finances. He’s probably right. Still, I’ve had times when, even though I’m a “responsible person”—I’ve had a successful career, my kids lived to grow up,…
Read more »

Another IRMAA Question

DrLefty   |  Nov 5, 2025

Jerry’s post reminded me of something I’ve been wondering about. We both hit 65 this year and started Medicare. We pay a hefty IRMAA up charge because it’s based on our 2023 income, when we were both working. I retired in July. Though I’m drawing pension income, my gross income has obviously dropped. However, between my pensions, my husband’s pension,…
Read more »

Oops!

DrLefty   |  Oct 25, 2025

I received an email from my previous employer a few weeks ago. I’ll paraphrase: “Ooops. When we processed your last paycheck in June, we failed to deduct your elected contributions to your 403B and 457 accounts.” Now, I knew this because my final paycheck was quite a bit larger than I’d expected, but I thought I’d just misunderstood how the…
Read more »

Thank you, Jonathan

DrLefty   |  Sep 23, 2025

I hope I’m not overstepping here, but since I read the news yesterday, I’ve been thinking that it would be nice to have a thread in which we thank Jonathan for the various ways he touched our lives, whether it be as a writer or just a manager of our finances. I’m hoping it’s something his family might enjoy reading…
Read more »
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