I’ve heard this exact conversation more times than I can count. Someone hits their late 60s, looks at a healthy traditional IRA, and then realizes something uncomfortable. The IRS is about to become a silent partner in their retirement.

That’s usually when the question comes up.

“I don’t need this money right now. Should I start moving it into a Roth before required withdrawals begin?”

If that sounds like you, you are asking the right question at the right time. The five-year window between age 68 and 73 is one of the most valuable planning opportunities you will ever get. It is also one of the most underused.

Hypothetical Situation for a Conversion

Let’s walk through a real-world scenario. You have about 200,000 dollars sitting in a traditional IRA. You do not need the money for at least five years. At 73, required minimum distributions will kick in whether you like it or not.

So the real decision is simple. Do you take control now, or do you wait and let the IRS dictate the outcome later?

I prefer control.

Right now, you have flexibility. Your income might be lower than it was during your working years. You are now living off a mix of Social Security, some savings, maybe a small pension. That puts you in a position where you can choose how much taxable income to create each year.

That is powerful.

Roth Conversion Facts

A Roth conversion is simply moving money from your traditional IRA into a Roth IRA. You pay taxes on the amount you convert today. From that point forward, the money grows tax free. When you withdraw it later, you owe nothing. No taxes. No required minimum distributions. No forced timing.

On the surface, it sounds like a trade. Pay taxes now to avoid taxes later. The key is deciding when that trade works in your favor.

This is where your current situation shines.

You have five years before required distributions kick in. That means you can spread out conversions over time. Instead of taking one big tax hit, you can create a controlled, predictable tax plan.

I like to think of it as filling up your tax bracket each year. Not overflowing it.

It’s all in the tax bracket

Let’s say you are in a relatively low tax bracket right now. Instead of leaving that space unused, you can convert just enough each year to stay within that bracket. You are essentially locking in a known tax rate instead of gambling on future rates.

If you convert 30,000 to 40,000 dollars per year over five years, you could move most or all of that 200,000 into a Roth before age 73. That reduces or even eliminates your future required distributions. It also shrinks the tax burden tied to your retirement accounts.

Now here’s where things get interesting. The market.

When people see the market heading down, their instinct is to freeze – that’s what I thought at first too. It feels wrong to act when balances are dropping. But this is one of those situations where instinct points you in the wrong direction.

A down market can actually be the perfect time to do a Roth conversion.

How a Down Market Can Be Your Friend

Think about what you are really doing. You are converting shares, not just dollar amounts. When the market drops, those shares are temporarily cheaper. That means you can move more of them into a Roth while reporting a lower taxable value.

Let’s put some numbers on it.

If your IRA is worth 200,000 and the market drops 15 percent, your balance falls to 170,000. If you convert 40,000 at that lower valuation, you pay taxes on 40,000. But the underlying investments that make up that 40,000 may recover back to higher levels inside the Roth.

All of that recovery becomes tax free, and doesn’t need to be a part of the RMD’s like a traditional IRA.

Now flip the scenario. You wait for the market to bounce back. Your IRA returns to 200,000. You convert the same 40,000. You now pay taxes on a higher valuation, and you have shifted less upside into the Roth.

Same action. Different timing, different tax outcome.

That is why I say this clearly. A market dip is not a warning sign for Roth conversions. It is often an opportunity.

Now, that does not mean you should rush in and convert everything at once. That is another common mistake.

How Much is Too Much?

The smarter approach is to break the process into smaller steps. Instead of trying to pick the perfect moment, you spread your conversions over time. You might convert a portion now, then another portion in a few months, and continue that pattern throughout the year. This does two things.

First, it smooths out market volatility. If the market drops further, you still have money left to convert at lower levels. If it rises, you have already captured some of the benefit.

Second, it reduces regret. Large, one time decisions tend to create second guessing. Smaller, consistent moves are easier to manage both financially and emotionally.

Now let’s talk about the part that trips people up. Taxes.

A Roth conversion increases your taxable income in the year you do it. That can have ripple effects.

Your Social Security benefits can become more taxable. Your Medicare premiums can increase due to income related adjustments. You can even push yourself into a higher tax bracket if you convert too much at once.

And don’t forget about the Medicare IRMAA threshold! That could spoil your plan to save money if your income is too high.

This is why strategy matters more than the idea itself.

Control Your Taxes for Maximum Benefit

You are not trying to eliminate taxes. You are trying to control them.

Each year, you want to look at your current income. Then determine how much room you have before hitting the next tax bracket. That gap is your opportunity. You fill it with a Roth conversion, then stop.

You repeat that process each year.

This keeps your tax rate predictable. It avoids unpleasant surprises. It also allows you to adjust as your situation changes.

Another important point. If possible, pay the taxes from cash outside the IRA. Do not withhold taxes from the conversion itself.

When you use outside funds, you allow the full converted amount to move into the Roth and continue growing tax free. If you pull taxes out of the IRA, you reduce the amount that benefits from the conversion.

Once you Reach RMD Age

Now let’s look ahead to age 73, only without the conversion.

If you do nothing, your IRA continues to grow. On paper, that sounds good. In reality, it can create a tax problem. Your required minimum distributions are based on your account balance. The larger the balance, the larger the forced withdrawal.

That withdrawal counts as taxable income whether you need it or not.

It can push you into higher tax brackets. It can increase the taxation of your Social Security. It can raise your Medicare premiums. And it removes your ability to control timing.

Once those distributions begin, the window for proactive planning starts to close.

By converting gradually over the next five years, you shrink that future problem. You reduce the size of your IRA. You reduce future required withdrawals. You create a pool of tax free money in your Roth that you can use when it makes the most sense.

There is also an estate angle that many people overlook

Traditional IRAs can create a tax burden for your heirs. Under current rules, most non spouse beneficiaries must withdraw the entire account within ten years. Those withdrawals are taxable.

A Roth IRA works differently. Your heirs still have to withdraw the money within ten years, but those withdrawals are generally tax free. You are essentially prepaying the tax at your rate, which may be lower than theirs.

That can make a meaningful difference.

So where does this leave you?

Planning Ahead Means More Flexibility in the Future

You are in a strong position. You have time. You have flexibility. You have a clear window before required distributions begin.

The market being down does not change the strategy. If anything, it strengthens the case for starting now.

The real goal is not to find the perfect moment. The real goal is to build a plan you can execute consistently over the next five years.

Start by estimating your income for this year. Identify your current tax bracket. Determine how much room you have before moving into the next bracket. That number becomes your initial conversion target.

Convert a portion now. Consider spreading the rest over the coming months. Revisit the plan each year and adjust as needed.

This is not about making a single brilliant move. It is about making a series of disciplined decisions that add up over time.

Pat Yourself on the Back – You Did it

Five years from now, you want to look back and see that you used this window well. You reduced future taxes. You avoided unnecessary surprises. You created flexibility in your retirement income.

That is the outcome you are aiming for.

And it starts with a simple shift in mindset. Stop thinking about whether the market feels safe. Start thinking about whether your tax strategy is working in your favor.

That is the lever you can actually control.

Don’t wait until it’s too late, get your financial house in order today!

Happy retirement planning!