Should I Convert My Traditional IRAs to Roth?

Summary

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Jill on Money with Jill Schlesinger

Episode: Should I Convert My Traditional IRAs to Roth?
Date: September 23, 2025
Host: Jill Schlesinger, CFP®

Episode Overview

In this episode, Jill Schlesinger tackles a listener's nuanced question about whether to convert traditional IRAs to Roth IRAs, focusing on the interplay between tax planning, retirement timing, and overall personal finance strategy. The discussion highlights the real-world decisions facing pre-retirees and underscores Jill’s signature “no-nonsense, jargon-free” approach.

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Key Discussion Points & Insights

1. Listener Profile & Financial Overview (07:13–13:48)

• Caller Mark from Minnesota shares his snapshot:
  • He’s 61, wife is 64.
  • Retirement savings: $1.7 million in total, broken down as $650k in Roth accounts, $200k in traditional IRA, regular annual contributions ($31,500 into his Roth 401k; wife contributing ~$12,000/year to her traditional retirement plan).
  • Non-retirement assets: $70k in company stock, $10k brokerage, $20k cash.
  • Real estate: Owns three homes: a primary residence ($450k with $30k left on the mortgage), a $350k cabin, and a $60k Airbnb “hunting house”—all with no or minimal debt.
  • Income: $220k household income.
  • Retirement timeline: He plans to work 6 more years; his wife, 3 more. Both hope to start drawing Social Security at 67.
  • Social Security expectation: Combined $60k/year.
  • Lifestyle needs: ~$7,500–8,000/month spending.

2. Social Security Timing: 67 vs. 70 (11:24–15:18)

• Jill quickly addresses popular advice on Social Security claiming ages, emphasizing that waiting until 70 yields a guaranteed 8%/year increase in benefits after full retirement age.
• She pushes back on industry “trends” that argue it's smarter to take early and invest the difference. “That is comparing a guaranteed 8% increase with an at-risk 12 or 13% possibility. …I know the difference between a guarantee and assuming risk to get something.” (13:04)
• Jill acknowledges that Mark and his wife are financially secure and could claim at 67, but she reminds listeners the math strongly supports delaying if health and life expectancy allow.

3. Converting Traditional IRA to Roth – Strategy & Tax Considerations (16:08–21:16)

• Mark’s main question: Should he start converting his and his wife’s $200k traditional IRA balance to Roth now?
  • Jill’s assessment: Not necessary.
    • Their relatively limited after-tax (non-retirement) savings makes large conversions less appealing.
    • Instead, she suggests optimizing incoming contributions:
      • For Mark’s wife: Contribute only up to employer match in her traditional plan. Put any additional retirement savings into a taxable brokerage account to boost liquidity.
    • Recommended plan:
      • Once the wife retires, begin small, methodical distributions from the traditional IRA (“dribble it out”) to control and smooth out the tax liability before required minimum distributions (RMDs) kick in.
      • This essentially “pre-pays” taxes while keeping the couple in the more moderate (likely 22%) tax bracket.
    • Jill's perspective:
      “I would wait until she retired …pull some of the money out, pay the tax …stay in the same tax bracket that you're in.” (17:28)

4. Tax Bracket Realities & Liquidity Planning (21:16–23:19)

• Mark asks if, once retired and living mostly on Social Security, they’ll “magically fall into the 12% taxable income bracket.”
  • Jill’s answer: No “magic.” Because their RMDs from large pre-tax retirement balances will push total taxable income into the 22% bracket, even after Social Security.
    • “If we do nothing with those accounts …by the time you're starting RMDs …the government's going to say you have to take 80 grand out a year. 80 plus 60 is 140. You're in the 22% tax bracket. Got it.” (22:44)
  • The upshot: Proactively pulling money gradually out of traditional accounts gives them more control over timing and prevents getting pushed into higher brackets later due to IRS RMD rules.

5. Estate Planning & Listener Appreciation (23:19–End)

• Jill double-checks that Mark and his wife have estate documents in place—which they do.
• Warm appreciation for the listener community, a callback to earlier charity ride gratitude, and classic Jill encouragement to “lift someone up.”

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Notable Quotes & Memorable Moments

• On Social Security trends:
  “The only reason that I would just caution against thinking like that is that is comparing a guaranteed 8% increase with an at risk 12 or 13% possibility.” — Jill, (13:04)
• On Mark’s Airbnb house:
  “My wife refers to it as Baltic Avenue, the Monopoly.” — Mark, (09:46)
• Caller praise:
  “There's financial investors versus financial retirement splainers. And you're a good splainer.” — Mark, (14:01)
• Jill’s core Roth conversion advice:
  “For your initial question, should you convert that 200? I say no, but I would have your wife pull back on the amount of money she's adding to … just up to the match. Put the balance into the brokerage account. Live your life, have fun. Go Vikings.” — Jill, (20:32)
• Tax bracket warning:
  “All I’m suggesting is let’s get that 22% money out right now. Let’s control it. Let’s do it very methodically so … you’re not being controlled by it.” — Jill, (23:09)

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Important Timestamps

• Charity ride recap and gratitude: 02:00–07:13
• Listener Mark’s full financial picture: 07:13–13:48
• Discussing Social Security strategy & advisor mindsets: 11:24–15:18
• IRA/Roth conversion strategy: 16:08–21:16
• Tax bracket expectations & RMD discussion: 21:16–23:19
• Estate planning check & episode wrap-up: 23:19–End

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Final Takeaways

• No blanket ROTH conversions: For Mark and wife’s situation, skip lump-sum Roth conversion and instead prioritize higher after-tax liquidity and gentle, planned IRA distributions post-retirement.
• Stretch your tax planning: Gradual withdrawals before RMD age help keep taxes manageable.
• Think in real, not magical, tax brackets: Social Security and required IRA withdrawals combine to push many retirees above the lowest brackets.
• Enjoy your financial well-being: As Jill teased, “Live your life, have fun. Go Vikings.”

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For more personal finance questions or to be a caller, visit JillOnMoney.com.

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Transcript

[A]

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[B]

How you feeling?

[A]

I feel pretty good. You know what? I rode every one of the 275 miles as predicted by Mark Talercio, best Executive producer in the world. How did you know that? You've done it before and my guess is you'll probably do it again. I don't know. It was great. It was such an incredible experience. What like, you know, 260 riders doing, you know, sort of all riding for a cause. It was an incredible experience. A few observations. So it was from Boston to New York. There are a lot of hills in the state of Connecticut. We talked about this with some people from Connecticut. There are a lot of hills. The ride that I did three years ago was also 275 miles. But the route has changed. So to be clear, Mark, the second day was 122 miles, and I did all 122. And weirdly, I felt better on day two than on day one. Day one was, like, 40 miles was, like, so sweet. No problem. The first 40 miles, I was like, yeah, I got this. And then, like, the next 43 miles of day one, it was all hills. It was incredible. I literally was like, what is happening right now? It was beyond. I was exhausted. I was completely exhausted. And I did a lot of training. I did a better job of training. Thank you, Samantha. Best trainer in the world. Best coach in the world. She got me there. So when I woke up on day two, I was like, oh, brother. But it was okay. It was like, you know what? It's sort of like your financial life. The day was broken up into segments. Instead of thinking about, like, what did I need to do overall for the whole thing? I just did little pieces. I was like, okay, this is segment one. This is 14 and a half miles. This is segment two. This is 14 miles, you know, and it was much easier to do it that way. And the joy of coming into New York City in a route that was much, much easier was incredible. So how do you come into the city? Okay, so this is great. So we had stopped in Stamford, Connecticut. We sort of got to the western part of Westchester county, where there's a bike path, which was. It was very hilly getting there. But it's kind of like, once we got to that bike path, there's a bike path down through Westchester along the Sprain Brook Parkway, and it goes into Van Cortlandt park in the Bronx, and there's a great bike path there. Really awesome. People don't realize it's, like, beautiful parts of the Bronx. Incredible. So we go down there, and we ride through this, and then we had to do a little bit of, like, navigate through the Bronx, and then we keep going west. And you know what we did? This is wild. Mark. The Henry Hudson Bridge, which connects the Bronx to Manhattan, has a bike lane. I never noticed it when I'm driving it. And so we drove. We rode along the Henry Hudson Bridge. You go down into the Bronx, and there's another bike path there that leads you to, essentially, Washington Heights and the George Washington Bridge. We rode underneath the George Washington Bridge. Wild. And we just came down that bike path along the Hudson river all the way down to the center, to the LGBT center of New York City, which is on West 13th Street. I would say that we had, like, along the route 275 miles. We really didn't. We had mostly very nice people in cars who were like waving us through and were really very sweet. You people in Fairfield county, though, you're a little cranky because we're there. We are coming through Fairfield county early on a Sunday morning. Will you wait for late for your golf game, for your pickleball game. Couple people leaning on the horns not appreciated. But coming into the city was amazing. The best cheers that we got. Not the Bronx cheer, but cheers in the Bronx that were incredible. People literally like standing on their feet, hanging out on a Sunday morning early and just so into like cheering us on. That was so cool. Right? So is there a nice, a nice.

[B]

Gathering at a local establishment at the end or what?

[A]

Well, they. They this as the. The center closed West 13th Street. It was a huge block party for us. It was, it was just so amazing. I did cry. You know, Jackie was there, like greeting me as I came in. And so as soon as I saw her, I started crying. And it's a great relief and it's a wonderful cause. And for all of you who donated to the cause, I can't thank you enough. It was just incredible to get the support. Also, I was the top fundraiser. I was. I got a little special gift. Wait till I show you what I got. Mark, I'm going to send you a picture. It was like my world's colliding. So it was amazing. We reached our fund, I reached my fundraising goal and then some. The center reached its goal. I'm so grateful. And you know, Mark and I always say this, like our listening audience is incredible. This community is amazing. And I am so grateful for all of you and for indulging me and so thank you for all of your great cheers. Thank you for your playlists, suggestions. I had great tunes that were amazing all along the way and, and I just, I'm. I'm just filled with gratitude today. So thank you, thank you, thank you. And let us now get onto this show. Right, Mark, it's enough already. Stop talking about yourself. Jill. Today we are talking to Mark from Minnesota. Hello, Mark from Minnesota. How are you? What can we do for you?

[B]

Fantastic. I was just calling to see if you can answer a question that I have in regards to my Roth or my current amount of Roth.

[A]

Okay, tell us about yourself.

[B]

I'm 61. My wife is 64. We have been squirreling away for quite a while and. And I woke up one day and I have 1.7 million in total 401k between my wife and I. And also Roth and traditional. And of that 1.7 million 650,000 is in Roth. And. And I. I squirrel away 315 every year in my 401k and Roth. And my wife sticks with just the traditional pre tax matching. So I have about 200,000 in traditional. And I was wondering at my age of 61, should I start gnawing away at that 200,000 in traditional or just let it alone and keep doing the 31 5?

[A]

So the 315 in your 401k is going to a Roth 401k. Right?

[B]

Correct.

[A]

Okay. And so. And you said between the two of you, it's 1.7 million. Right. Of which 650 is Roth. So where is the 200,000 coming from? Where to. Just explain that number to me.

[B]

That's a traditional ira.

[A]

Oh, just an ira. Okay, I got you. Okay. So that's in addition to the 401ks that you just.

[B]

Yeah. So the tradition. The question is, do I start converting the traditional to raw?

[A]

I got you. Okay, here's my question to you. Tell me about money you have outside of retirement assets.

[B]

Outside. About 70,000 in company stock, about 10,000 in a brokerage account, and 20,000 in cash.

[A]

Okay. Do you guys own your own home?

[B]

Yes, we actually have three houses.

[A]

Oh, my goodness. That's. That's two more than you need. But. Okay. Are all three of them fun for you, or are they. Are they also. Are they rental properties?

[B]

Okay. One is an Airbnb that I own in another state in the.

[A]

Okay, in an. Wait a second. In another state. How much is it worth?

[B]

It's worth 60,000. It is a hunting house that I rent out to duck hunters.

[A]

Oh, my God. Okay. Is there any mortgage on that little hunting.

[B]

No, it's completely paid for. My wife refers to it as Baltic Avenue, the monopoly.

[A]

I love it. That is such a great reference. I'm, of course, now a very big expert in hunting because I watch Hunting Wives on Netflix, so I know everything about that. I'm just kidding. I know nothing. So it's a little shack, it brings in money. Easy peasy, right? No. No problems with this. No reason to sell it, Is that. That's really what I'm saying.

[B]

No reason to sell it. It covers itself. And the extra that it makes Baltic Avenue. It pays for the expenses of the cabin that we own. Because I'm from Minnesota, you're supposed to own a cabin.

[A]

Okay, how much is the cabin worth?

[B]

$350,000.

[A]

That's just for your use. It's Just fun, right?

[B]

Yes.

[A]

No rental. Got it. Okay, next, your primary residence.

[B]

Yes. That's 450,000.

[A]

Okay.

[B]

Also paid off, we owe 30,000. 3.875. And we'll be done in two and a half years.

[A]

Okay. I love it. Okay. You guys have grown kids?

[B]

Yes, Launched one launched.

[A]

Perfect. Oh, thank gosh. Okay, so kids launched. Oh, I forgot to ask you. How much do you guys earn together?

[B]

Together we earn about 220.

[A]

And that's good money. You're putting a lot of money away, right?

[B]

Yeah, yeah. As much as we can. Yes.

[A]

Okay. And when you think about retirement, what is the game plan like? When do you think. I'm saying you have to. I'm just giving you, like a. When do you think? Think you'll want to call it quits?

[B]

Yeah. So I want to work for six more years. My wife, I'm 61, she's 64. She wants to work three more years. We want to start drawing at 67. And I know you're a big fan of 70, but it just seems there's a lot of trends in the industry that are talking about, you know, 65 versus 67 versus 70. So right now we're thinking.

[A]

Wait a minute, wait a minute. What. What trends are we talking about? Are you talking about. Tell me more about what you're thinking, because I'm not saying you should. I'm just saying that, you know, obviously if your wife is in three more years and she stops and you want to draw it full retirement age, that's okay. But if you could wait, you will. The trend is that people are saying, well, if I had that money. Right. Presuming you're both in good health. Right? You're in good health. You sound healthy. I don't know. Cabin. Okay, so let's presume you're in good health. You're going to live a long life. The math around claiming at between 67 and 70 is about this guaranteed 8% increase annually to the benefit. Okay. Now, I think that when you talk about trends, I think what you hear about is a lot of people who are in the investment management business saying, oh, you're so stupid to do that. Just claim at 67 and you take your money and you'll invest because you know you can earn 12% or 13% a year. That's what we've had for the last 10 years or 12 years. Right. That's what I think is like the. In the ether right now. And the only reason that I would just caution against thinking like that is that is comparing a guaranteed 8% increase with an at risk 12 or 13% possibility. So I'm not saying you have to do it. I think that at your full retirement age, you'll probably have a nice income from your Social Security. I do want to just. I only. I'm not saying this to you, Mark, because I think you have a plenty of money and everything's good. But I put that to other people out there listening, because I think when you have buoyant markets, what usually will happen is people say, oh, why would you want 8% return when you can get 12 or 13% return? Of course, this assumes you're 100% in stocks and you're on the. On the ride. So. Okay, now I'm done giving you my soapbox. You can claim at 67 if you want. What is your benefit at 67, each of you?

[B]

Well, can I just say that I thought that was fantastic. Financial planners are like E.F. hutton. Everybody my age is say, my financial planner says, yes. And I really believe that there's financial investors versus financial retirement splainers. And you're a good splainer.

[A]

I'm so happy I could do that for you. I mean, look, I also am very amused by this because I lived through a big. As a financial advisor, I lived through the 90s, okay? And those 90s. That was a terrible period for someone like me. I'm a wimpy advisor. I would be like, well, we believe in a diversified portfolio. People would be like, well, I'm investing in the NASDAQ and I'm making, you know, 70% last year. You're fired. So I got fired a lot during the late 90s, and then the. Everything came crashing down. And I'm not suggesting I know when a crash is going to come, but I know the difference between a guarantee and assuming risk to get something. So that's the only reason that I put it out there. Okay. I really don't want to make. Like I said, I really want to be clear that it sounds to me like you're in very good shape. Okay. Really good shape. But I also want to try to remind everyone else. Okay. So that's kind of where I am. Let me get back to your Social Security. What's the amount of money that you will receive?

[B]

We will receive right around 60,000 a year.

[A]

Okay.

[B]

What do you think you spend at 67? We spend about 7,500 to 8,000 a year.

[A]

Yeah. A month. But I'll. I caught that.

[B]

I caught that lifeline. Thank you.

[A]

And you Guys, you have the launch kids, but do you have anyone else that you have to worry about? Do you have parents who are still alive?

[B]

No.

[A]

Okay, so we need to come up with an extra 40 grand a year, right? And that's a no big deal because you've got the money that is available to you. Now when you, let's say your wife retires in three years, okay, she's putting money into a retirement account up to her match. Is that what's happening?

[B]

No, she. She makes about 80,000 and she's doing 15%, which comes to about 12,000 a year.

[A]

Does she have a Roth option or only a traditional?

[B]

Only traditional.

[A]

Does she have a match or not?

[B]

She does. And I don't know, I think it's run around 3 or 4%. She's in a TIAA.

[A]

So here's what I think is gonna happen for you guys, okay? So she, three years from now, she calls it quits. You live on your salary basically for three more years, right? Cause you can, which is great. Now the question is, you called in to talk about the converting of this money, this 200 grand in the traditional. I'm not sure you need to do that. You don't have a ton of money in non retirement assets. And so what I would actually suggest is, is for the next few years while your wife is still working, I don't think I'd have her put any more money into traditional. I think I would have her just put her money into up to the match and then I would have her take the rest of the money she was putting into the 401k and just putting it into your brokerage account, leaving it be. Let that build up a little bit. She retires, it's 6, she's 67. And now what you would like in the traditional IRA, is it in your name or her name?

[B]

Both.

[A]

Okay, then what I would do is probably at her when she is retired, we can start pulling the money. Let's start pulling some of the money, that traditional money out and just paying the tax on it a little bit at a time. You can both do it. But I would wait till she retired because that'll give you a chance to pull out a little bit of extra money, pay the tax that's due, stay in the same tax, like your tax position will be the same. And I would just, I would get the money out that way from that traditional account and start to just, you know, dribble it out. She's again, she is not going to. You're losing that 80 grand but she's going to have some money from Social Security, just whatever that differential is, pull that money out of the retirement account, stay in the same tax bracket that you're in. You don't have to like make any big major moves. And then when you retire at your age 67 or whenever you do decide to do it, you can start doing the same thing with some of your traditional money, just pulling it out in the time before you need to take those required minimum distributions. And I think that if you do that, you're staying pretty much in the 22, maybe I don't think you'll even go up to the 24. You go into the 22% tax bracket, you pay the tax it's due, you have some of that liquidity building up because your wife's no longer putting money into her 401k. She's putting it into a brokerage. And we're going to start pulling money out of this traditional account. We're going to build up that amount of money that's already been taxed. And you guys are smooth sailing. You get to be your age 67 and now you're going to start pulling money out of these traditional accounts and living on it to supplement your, your Social Security. So you'll end up when you are 67, between the two of you, you'll start taking out, let's call it 120 grand between the two of you. Not even would probably be 100 grand a year that you pull out between the two of you. And you pay the tax that's due and then you live on that in addition to your Social Security. You're sweet. You're done, you're good, all's well. And chances are I don't know how much you're going to end up spending over overtime. Your kids will inherit some money. You keep your your keep the primary, you keep the cabin, your Airbnb for as long as you need contract help for those workload peaks and backlog projects. You're not alone. Robert half found that 67% of companies surveyed said they will increase their use of contract talent. That's why their recruiters leverage their experience and use award winning AI to quickly find the skilled candidates you want. Learn about their specialized talent in finance, accounting, technology, marketing, legal and administrative support at Robert Half. They know talent. Visit roberthal.com talent today. Hi, I'm Nancy Cartwright. You may know me better as the voice of Bart Simpson on Simpsons Declassified. We're diving into the mysteries that keep the Simpsons forever young. Have you Ever wondered how the Simpsons regularly predicts future events? Who better to ask than the show's creators, performers and writers, the celebrity guests? Be sure to follow and listen to Simpsons declassified. Wherever you get your podcasts, you think it makes sense for you? No. No necessary moves. In terms of real estate, I think it's all great, but I wouldn't. So for your initial question, should you convert that 200? I say no, but I would have your wife pull back on the amount of money she's adding to your retirement to her traditional account, just up to the match. Put the balance into the brokerage account. Live your life, have fun. Go Vikings. How do we do?

[B]

Great. Can I ask one quick question?

[A]

Sure.

[B]

My wife thinks once we stop working, we will magically fall into the 12% taxable income bracket because our combined Social Security will be 60,000.

[A]

Yeah. But we have to pull money out of your retirement account because that's what's going to keep you in the 22% later in life. That's the issue that you have. So like you said, you have right now, just think of it this way. You got 1.1. You got $1.3 million that hasn't been taxed yet, right? Between your traditional and the 401ks, right? The traditional IRAs and the 401s. If we do nothing with those accounts, okay, they're going to grow so that by the age of. Let's say you're 75. So she turns 75 in 11 years. So we have all this money. If we don't pull it out now. It grows. It grows. It grows. Let's just pretend I'm going to just, you know, for fun, say that by the time it'll be. This is a low number, but I want to illustrate the point. Let's say you have $2 million by the time you are starting your required minimum distributions, right? That means the government's going to say you have to take 80 grand a year out of your account. 80 plus 60 is 140. You're in the 22% tax bracket. Got it. 80 grand from the required minimum distribution, plus your Social Security doesn't include any of your rental income from Baltic Avenue, and you are automatically in the 22%. All I'm suggesting is let's get. Get that 22% money out right now. Let's control it. Let's do it very methodically so that you know, for all I know, if you have a run in assets or the stock of your company stock does well or you're putting more money in and things go really well, which is all wonderful. You'll have even more money that's forced out. But I like controlling the tax situation rather than having it be you being controlled by it.

[B]

Oh, thank you so much.

[A]

All right, now listen. Last thing. Estate documents. Done.

[B]

Done.

[A]

Oh, man, I love you. I wish you very best of luck with your Vikings. It's early in the season and we love Minnesota. We love our friends at WCCO radio. So thank you so much for getting in touch with us, and we look forward to hearing. I want to see a picture, by the way, of Baltic Avenue. I really do. So anyone who wants to rent a hunting sh from Mark, let us know. We'll pass along your information. If you have a question about converting a retirement account, if one person in the couple has a slightly different feeling about where you stand and what the strategy should be, come on the air with us. Let us be the heavy. Let's let us be the splainers. That's what Mark says. We're the splainers. And if you would like to join us, all you need to do is go to Jill on money dot com, click the contact us button, write us a note. If you want to come on the air live, check the box. Mark will do everything else while you're on the website. Don't forget, you can subscribe to our service, Jill on Money Live. That's where you have access to quarterly live webinars. We just had one about estate planning. So great. You get the entire back catalog of those webinars, bonus audio and video content, all for 45 bucks. For the next 12 months, you can subscribe to us on the Auditor app or wherever you find your favorite podcast. Do me a favor and lift someone up. Change your work, change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow.