5 Reasons Not to Convert to a Roth

Jun 30, 2025 | 6 min read

Roth conversions aren't always ideal. They could lead to having less money in your retirement account, not more.

They can be a powerful tax minimization strategy in retirement, but there are some instances when a conversion could do more harm than good.

Let’s review some reasons you shouldn't do a Roth conversion.

A quick sidenote: if you are new to conversions, a Roth conversion is the process of transferring money from a pre-tax retirement account into an after-tax Roth IRA. An example of a pre-tax retirement account would be a traditional IRA, a traditional 401k, SEP IRA, SIMPLE IRA, etc. The big exception: inherited IRAs (by non-spouse beneficiaries), while technically pre-tax, cannot be converted into Roth IRAs.

There are no limits on Roth conversions. If you have $1 million in a pre-tax traditional IRA, you can technically convert the entire amount into a Roth IRA if you want to. The benefit is that the converted dollars will grow tax free in your Roth IRA. You won't have to worry about required minimum distributions (RMDs) at age 73 or 75, and for most people, your kids and grandkids will inherit a pot of money that will be tax free. Doing a Roth conversion can save you a million dollars in a tax adjusted portfolio over your lifetime.

So what's not to love? Here are a few reasons you might not want to do a Roth conversion.

#1 You Just Don't Want To

Roth conversions aren't for everyone and that's fine. Some people simply cannot stomach paying a large tax bill upfront. They would rather spread their withdrawals over 30 years and pay taxes gradually rather than have a large tax bill over five years.

If you have run your own conversion numbers, you know you will often have a large tax bill upfront, which reduces your cash on hand and may make you feel less secure. Even if the numbers say it is the best decision for your long-term security, taking $200,000 or $300,000 out of retirement savings upfront to pay for the conversion can feel like too much to handle.

Will skipping a Roth conversion potentially cost you a million dollars over your life? Maybe. But finances are personal decisions. You get to decide, and you don't have to explain your decision to anyone.

#2 You Don't Have Cash Outside Your Retirement Account

If you don't have cash outside your retirement account to pay the taxes, this can hurt the long-term success of your Roth conversion. Paying the taxes from your IRA or tax deferred account can reduce the value of your portfolio over time, even on a tax adjusted basis. A clear case study illustrates this point: An investor with a $100,000 IRA and $25,000 in brokerage cash converts their IRA to a Roth. If they use the brokerage cash to pay the taxes, the full $100,000 remains invested in the Roth, compounding tax free, and after 30 years grows to over $1.7 million. If they use funds from the IRA to pay the taxes instead, only $75,000 remains to grow in the Roth, which grows to about $1.3 million, even when the brokerage account remains intact. The investor ends up with over $200,000 less at retirement just because they didn’t have cash outside the IRA to cover taxes. This shows why having liquid funds outside your retirement accounts can make your Roth conversions significantly more effective.

#3 You Plan to Leave a Large Portion to Charity

Most charities are tax exempt, so it doesn’t make sense to convert a traditional IRA, pay the taxes, and then leave the Roth IRA to charity. Since the charity will not pay taxes when selling or withdrawing the assets, prepaying taxes through a Roth conversion means the charity receives less, not more.

Once you turn 70 and 72, you can begin taking qualified charitable distributions (QCDs) from your account, up to $100,000 a year. Once you are required to take RMDs, these QCDs can count as your RMDs. If you are charitably inclined, it might make sense to leave a portion of your IRA intact and use QCDs for your future RMDs.

If you plan to leave a portion of your tax deferred accounts to charity, it doesn't make sense to convert those dollars.

#4 Your Income and Tax Rate Will Drop Later in Retirement

If you live in a high-tax state and plan to retire in a low-tax state, a Roth conversion may not make sense right now. For example, if you live in California but plan to retire in Florida, you may want to delay the conversion until you become a Florida resident. Florida has no state income tax, while California does.

There are 13 states that either have no state income tax or do not tax distributions from retirement accounts. It may make sense to wait to convert until you have moved.

#5 Shorter Than Average Life Expectancy

If you expect fewer years of large RMDs, a Roth conversion may not make sense. This is especially true if your kids or grandkids are in a lower tax bracket (around 12 percent). You would pay a higher tax rate (around 24 percent) now to convert so they can inherit the funds tax free, but the pot of money will be smaller due to paying higher taxes upfront. It can make more sense for your heirs to inherit a larger account and pay lower taxes themselves. Either way, you need to analyze your unique situation and choose the path that won’t keep you up at night.

Some Final Thoughts

If you are unsure whether a Roth conversion makes sense over your lifetime, consider consulting with a financial planner. The fee you pay might be worth it to save hundreds of thousands in the future.

Roth conversion calculations should consider your entire life timeline and address when to start conversions and how long to continue them. Tools like RightCapital are helpful to visualize the impact, but you may also want to run manual calculations for extra clarity.

You need to weigh the pros and cons of your situation before committing to a Roth conversion. Once you initiate a Roth conversion, it is irreversible, and the tax event is triggered. If you work with a financial advisor, they can help you tackle Roth conversions, and if your advisor doesn’t do tax planning, find an advisor who will.

Roth conversions can offer huge tax savings when implemented strategically, but they also have the potential to backfire if done without proper planning.

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