Roth Conversions and Your Heirs: What’s Worth Considering
When people think about Roth conversions, the focus is usually on their own taxes.
But there’s another angle worth considering:
How your decisions today affect your heirs later.
Under current rules, most inherited retirement accounts must be withdrawn within 10 years.
And depending on how those withdrawals line up with your heir’s income, that can create a meaningful tax impact.
Why Roth Conversions Come Into the Conversation
Traditional retirement accounts are taxed when money is withdrawn.
So if your heirs inherit a large account and need to withdraw it within 10 years…
That income gets stacked on top of what they’re already earning.
That’s where taxes can add up quickly.
Roth accounts work differently.
Contributions are already taxed
Withdrawals are generally tax-free
Even though the 10-year rule still applies, the tax impact can be much lower.
When Conversions May Make Sense
This isn’t something to rush into—but there are situations where it’s worth exploring.
For example:
Years where your income is temporarily lower
The period before required minimum distributions begin
Before Social Security or pension income starts
When you have room in your current tax bracket
The idea is to be intentional—not reactive.
A Few Things to Be Aware Of
Roth conversions aren’t a one-size-fits-all decision.
A few things to keep in mind:
Larger conversions can increase your taxable income in the current year
Medicare premiums can be affected (there’s a two-year lookback)
Timing matters if you’re selling investments or realizing gains
It’s important to consider your overall income plan
This Isn’t Just About Taxes
It’s about flexibility.
Having a mix of account types can give both you—and your heirs—more options when it comes to timing withdrawals.
And that flexibility can make a meaningful difference over time.
Want Help Thinking This Through?
If you’d like help evaluating whether this is worth considering in your situation:
We’ll look at your current setup and talk through what makes sense for you and your family.
Educational purposes only. This is not legal or tax advice. Please coordinate with your attorney and CPA before making decisions.
