Podcast Summary: ChooseFI Ep 581

“Are Roth Conversions Necessary?” with Cody Garrett & Sean Mullaney

Release Date: January 12, 2026
Host: Brad (ChooseFI)
Guests: Cody Garrett & Sean Mullaney
Theme: An in-depth, myth-busting exploration of taxable Roth conversions—when they make sense, when they don’t, common misconceptions, and how common FI wisdom holds up in today’s tax environment.

Overview

This episode digs into the confusing world of Roth conversions—specifically “taxable” Roth conversions, distinct from “backdoor” and “mega backdoor” Roths. Host Brad and guests Cody Garrett and Sean Mullaney (authors of “Tax Planning to and Through Early Retirement”) break down when Roth conversions can be beneficial, who actually needs them, and why the common advice to “always convert” is often oversold. The conversation is packed with real-life examples, behavioral insights, and guidance to help FI-minded listeners avoid unnecessary stress and focus on what really matters.

Key Discussion Points & Insights

1. Setting the Stage: What Are Taxable Roth Conversions? (02:39–05:24)

• Distinction:
  • Backdoor/Mega Backdoor Roth: Mechanisms for high earners to contribute to a Roth IRA despite income limits; generally not taxable events.
  • Taxable Roth Conversion: Moving pre-tax retirement funds (IRA/401k) into a Roth, triggering taxable income in the year of conversion—a tool for planning, not a necessity.
• Sean (05:24):
  • “We’re really talking about these taxable Roth conversions. The idea is, we’re going to pay tax… we’re allowed to, but not required to.”
• Mechanics:
  • If you have a traditional retirement account, you can do a conversion—no income limits, no “tricks,” just electing to pay tax now.

2. Why Do People Do Roth Conversions? Greed vs. Fear (07:15–09:07)

Cody:

• “There are two primary reasons people convert to Roth… Greed—the excitement about future tax-free growth… and fear—being crushed by taxes in the future.”
• Many feel urgency: “If I don’t convert now, I’ll be crushed by taxes later.”
• Some value the control of “choosing” when/what they pay in taxes, not just optimizing for the lowest possible amount.

3. Policy & Longevity of Roth Conversions (09:07–11:31)

Sean:

• “I think they’re going to be very hesitant to eliminate Roth conversions… [it’s] literally saying ‘Hey, IRS, please tax me.’ What government would say ‘No thanks’?”
• Roth conversions are broadly supported and are unlikely to disappear.
• US rules lift income limits on conversions—contrast to Canada, where “backdoor” workarounds aren’t needed.

4. When Do Roth Conversions Make Sense?

Accumulation (Working) vs. Drawdown (Retirement) (11:52–15:14)

Accumulation/Working Years:

• “If you have a job, that’s a pretty good indicator you should NOT be doing taxable Roth conversions.”
• Most people are in higher tax brackets while working; it makes little sense to voluntarily add taxable income unless there’s a disruption (career break, sabbatical, or grad school).

Cody’s Example (14:16):

• In a low-income “disruption year,” converted prior 403(b) money to Roth at 10–12% bracket—actual windows do exist, but are rare.

5. Retirement Taxation Realities (15:40–19:46)

Sean:

• Critical Insight: “Taxation in retirement tends to be light.”
• Most retirees, even affluent, pay low effective tax rates thanks to the standard deduction, tax-favored treatment of capital gains/dividends, and spread-out withdrawals.
• Roth Conversion Main Benefits:
  1. Enables using taxable accounts to fund taxes, reducing tax drag.
  2. Reduces future Required Minimum Distributions (RMDs).
• “Roth conversions do not improve… financial security in retirement.” —Mike Piper (referenced from Bogleheads 2024)

Notable quote:

“The tax drag on those taxable accounts in a low yield world… tends to be very small.” —Sean (16:44)

RMDs Not the “Monster” They’re Imagined To Be:

• RMDs mostly just mean you’re drawing money later, often at manageable rates.

6. Common Roth Misconceptions & Behavioral Biases (19:46–22:19)

• Myth: “You need to convert to Roth.”
• Reality: “Not a necessity, more a potential benefit. Most clients use conversions tactically, not aggressively.” —Cody
• Behavioral insight: Roth conversion urgency is fueled by emotion (fear, FOMO), not always cold analysis.

7. Who Really Benefits from Roth Conversions? (22:19–24:32)

Sean:

• Primary beneficiaries:
  1. “Your 75+ year-old future self”—already likely to be wealthy, may have little need for extra post-RMD money.
  2. “Your heirs”—inherit Roth vs. traditional, a tax break for those already receiving a windfall.
• “The primary job of a retirement account is to get us and our spouse to and through retirement—not to do tax planning for other people.” (24:32)

8. The Exception to the “No Need” Rule (24:50–29:58)

• Case Study:
  • 60-year-old with $5M IRA: Large RMDs in the future might nudge some money into higher brackets (32%), so prepaying tax at 24% bracket could be net-beneficial.
  • But, even then, it’s a benefit not a necessity—and there’s an argument that money used to prepay taxes could be better used for life experiences, charity, or family while you’re young and energetic.
• Cody: “Over-saving leads to over-worrying about RMDs; concern about this is a sign you’re already extremely financially successful.”

9. Tax Planning in Retirement: Myths & “Garbage Time Touchdowns” (32:42–54:54)

• Brad: “We control much of our retirement tax outcome; fear-mongering about rising taxes is mostly unsupported.”
• Cody: “Return on Hassle”—don’t spend precious energy stress-optimizing small gains; focus on what’s actually meaningful to you.
• Sean:
  • “Predictions that taxes on retirees will go up keep being wrong—reality has been repeated cuts.”
  • “We had to make a ‘litany of tax cuts for retirees’ table for the book; there have been so many.”

“Garbage Time Touchdowns” Analogy (49:39):

• Even very affluent retirees (e.g., single 81-year-old with $3.68M IRA, $200k RMD) face only a 21% effective rate.
• “Yes, the IRS scores a few touchdowns late in the fourth quarter, but you win all game long.” [53:33]
• For most, retirement tax rates are low (~5-8% effective rates for $133k income is "astonishingly good"). Fear of high future taxes is usually unfounded.

10. Estate and Inheritance Considerations (57:32–64:26)

• “What about the kids’ taxes?” — Not the primary purpose of your retirement account.
• Heirs might pay some tax if they’re high income, but they’re typically getting an enormous windfall.
• Estate tax is very rarely relevant for most—due to high thresholds.
• For those worried, there are strategies like charitable bequests.

Sean: (re heirs complaining about taxes)

“If you got a $3.7 million IRA and you’re worried about your heirs paying taxes on it, you can just name me as the primary beneficiary and I’ll take care of those taxes!”

Notable Quotes & Timestamps

• Sean: “There’s no debate—you create taxable income in a Roth conversion. The only thing you need is a traditional retirement account.” (04:00)
• Cody: “There’s a big assumption that we’ll have more income in retirement than while working… I’d love for us to step back and ask the question.” (19:46)
• Sean: “The primary job of a retirement account is to get us and our spouse to and through retirement, period, full stop—not to manage someone else’s tax liability.” (59:20)
• Brad: “Any time you hear a drumbeat of ‘You have to’ for anything, really, really need to take a step back and ask—what’s the incentive? What’s the motivation of why this person is saying it?” (42:15)
• Cody: “Optimization can be a form of procrastination…at some point, you need to do living while there's living to be done.” (34:10 & 28:34)

Memorable Moments

• Garbage Time Touchdowns:
  • Sean’s analogy to the NY Jets: Late-life, higher tax rates on RMDs are usually insignificant compared to the lifetime benefits extracted from the tax system. (49:39–54:54)
• “Return on Hassle”:
  • Cody on the cost/benefit of endless optimization (32:42)
• Expert Humor:
  • Sean: “I never use the term expert. But if there’s one thing Sean Mullaney’s an expert at, it’s garbage time touchdowns—because I’m a Jets fan.” (49:39)
• Practical Example:
  • Surviving spouse with multi-million IRA paying a ~21% effective rate—a “worst case” that’s still an exceptionally comfortable outcome. (47:00–54:54)

Timestamps for Key Segments

• 02:39 – Intro to taxable vs. backdoor Roth conversions
• 07:15 – Why people convert to Roth: greed vs. fear
• 09:07 – Historical context for Roth conversion rules
• 11:52 – Accumulation (working) years: Should you convert?
• 15:40 – Retirement years: Shape of typical retiree tax rates
• 19:46 – Roth conversions as not a “need”, but a tactical benefit
• 22:19 – Who really benefits from Roth conversions
• 24:50 – Extreme example: Large IRA, high RMDs—are conversions “needed”?
• 28:34 – Return on Hassle, optimization as procrastination
• 32:42 – Fears about future tax hikes on retirees debunked
• 42:15 – How to think about conversion advice, incentives, and clickbait
• 49:39 – “Garbage Time Touchdowns”: Real-life RMD/retirement income example
• 57:32 – Roth conversion, estate planning, and heirs
• 64:26 – Where to find Cody & Sean’s work, conclusion

Summing Up

Key Messages:

• Roth conversions can be beneficial, but are rarely a necessity for FI folks—especially in a system that continues to be favorable to retirees.
• Most retirees pay low effective tax rates due to high standard deductions, low RMD requirements, and control over how/when they generate income.
• The main beneficiaries of Roth conversions are people who are already winning the financial game (ultra-wealthy elderly, heirs).
• Beware universal advice, especially urgent or “all-or-nothing” takes—circumstances, goals, and tax law all matter.
• Focus on what you can control, avoid unnecessary fear or optimization, and remember: “The purpose of your retirement savings is to get you and your spouse to and through retirement.”

Final Thought from Brad:

“There’s no imperative…there are a range of options and your life is going to be different than mine. Don’t let fear guide you—or the influencer who says you ‘have to’ do something.”

Find out more:

• Cody Garrett: measuretwicemoney.com, Measure Twice Money (YouTube)
• Sean Mullaney: fitaxguide.com, mullaneyfinancial.com
• Book: “Tax Planning to and Through Early Retirement” (available widely)

(Summary prepared for ChooseFI Ep 581, focusing exclusively on content and actionable insights. All timestamps MM:SS reference the episode transcript.)