Roth 401(k) Conversion vs. Tax Bracket

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Roth conversion

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Ask an Advisor: Does It Make Sense to Start Converting Our 401(k) to a Roth When We're in the 35% Tax Bracket?

Summary

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79% Informative

At what tax bracket does it makes sense to start converting your 401(k) into a Roth 401(K) Roth conversions make sense if you are currently in a lower bracket than you expect to be in retirement.

As of today , the Tax Cuts and Jobs Act is in effect, but relevant portions are scheduled to sunset in 2025 .

If you plan to move in retirement, consider that state income tax rate when estimating your future rate.

Roth conversions provide you with more control and flexibility in retirement.

Roth conversions make the most sense when your current marginal tax rate is lower than what you expect it to be.

Roth accounts have estate planning benefits, because they pass to heirs tax-free.

Converting assets during a market downturn is one of the ways to reduce your tax liability on a Roth conversion.

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