An in-plan Roth conversion lets you move pre-tax money in your workplace retirement account into the Roth side of that same account, without rolling it out to an IRA. You’ll also see it called a “Roth in-plan conversion” or, in IRS language, an in-plan Roth rollover. Whatever the name, the idea is the same: take traditional 401(k), 403(b), governmental 457(b), or TSP dollars, pay the tax now, and let them grow tax-free from here.
How an in-plan Roth conversion works
Inside many employer plans there are two buckets: a traditional (pre-tax) balance and a Roth (after-tax) balance. An in-plan conversion moves money from the first bucket to the second. The dollars never leave the plan or change custodians — they just switch tax treatment. After the conversion, that money and all its future growth come out tax-free in retirement, provided you meet the usual Roth rules.
The catch is that your plan has to offer it. In-plan Roth conversions are optional features, and not every employer enables them. If yours does, you can usually convert through your plan’s website or by calling the recordkeeper. The biggest recent addition is the federal government’s: the TSP only launched its version in January 2026, which you can read about in the TSP Roth conversion guide.
The tax bill is the whole point — and the whole risk
When you convert, the amount becomes ordinary taxable income for that year. Convert $50,000 and your taxable income goes up by $50,000. There’s no early-withdrawal penalty — a conversion isn’t a distribution — but the income tax is real and due that April.
Pay that tax from a separate savings or taxable account, not from the converted money. Paying with outside cash is what lets the entire balance keep compounding in the Roth, and it avoids the penalty trap that hits withheld dollars if you’re under 59½. It’s also worth remembering you can’t undo a conversion: recharacterizing a conversion was eliminated back in 2018, so once it’s done, the tax is locked in.
In-plan conversion vs. the mega backdoor Roth
These get confused constantly. A standard in-plan Roth conversion moves your existing pre-tax balance to Roth and is fully taxable. The “mega backdoor Roth” is a related but different move: you make extra after-tax (non-Roth) contributions and then convert those to Roth, where only the growth is taxable. Both use the in-plan conversion machinery, but one is about converting money you already have, and the other is about getting new money into Roth beyond the normal limits. This post is about the first.
When an in-plan conversion makes sense
The best time to convert is a year when your tax rate is unusually low and your low brackets are sitting empty — a gap year between jobs, a sabbatical, or the early-retirement stretch before Social Security and required minimum distributions begin. The strategy is the same bracket-filling logic behind the bigger question of how much to convert to a Roth each year: convert just enough to fill a target bracket, then stop. Converting in your low years also shrinks the traditional balance that will eventually drive RMDs at 73 or 75, smoothing out a future tax spike.
A market downturn is a bonus opportunity. If your balance is temporarily down, converting moves more shares into Roth for the same tax cost, and the rebound happens entirely tax-free.
In-plan conversion or roll out to a Roth IRA?
If you’re still employed, an in-plan conversion may be your only option, because many plans won’t let you roll money out while you’re working. The in-plan route is simple and keeps you in your plan’s institutional, low-cost funds. Rolling to a Roth IRA after you leave gives you far more investment choice and flexibility. Plenty of people do both: convert in-plan during their working low-income years, then consolidate to a Roth IRA later. Thanks to SECURE 2.0, Roth workplace balances no longer have required minimum distributions starting in 2024, so leaving money in the plan’s Roth bucket is no longer a drawback.
A quick example
Imagine you’re 45, in a lower-income year because you took several months off, with $200,000 of pre-tax money in your 401(k). You could convert, say, $30,000 to the Roth side — enough to fill the rest of the 12% bracket without spilling into 22% — and pay the tax from savings. That $30,000 now grows tax-free for the next 20-plus years and never faces a required distribution. Repeat in other low years and you steadily build a tax-free bucket while your rate is low. The point isn’t to convert the whole $200,000 at once, which would push you into much higher brackets — it’s to chip away at it in the cheap years and stop at the top of your target bracket.
How to tell if your plan offers it
Check your summary plan description, or log into your recordkeeper and look for “in-plan Roth conversion,” “Roth in-plan rollover,” or a “convert to Roth” option. If you don’t see it, ask HR or the plan administrator directly — some plans support the feature but bury it. And if your plan simply doesn’t allow it and you’ve already left that employer, rolling the money to a traditional IRA and converting there gets you to exactly the same place.
Before you click convert
- Have the tax money ready in a separate account, and size the conversion to a bracket, not a whim.
- Mind IRMAA if you’re 63+ — conversion income can raise Medicare premiums two years later.
- Mind ACA subsidies if you buy marketplace health insurance before Medicare.
- Each conversion starts its own 5-year clock for penalty-free access to the converted principal before 59½.
Used deliberately, an in-plan Roth conversion is one of the cleanest ways to shift money to the tax-free side while you’re in a low bracket. The IRS lays out the official rules in its FAQs on designated Roth accounts.
This is educational, not tax advice. A conversion is irreversible and the right amount depends on your own numbers — check with a tax professional first.
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