Money Archives - Page 2 of 10

Convert a Traditional IRA to Roth Without Paying Taxes?

People email me a version of the same hopeful question: how do I convert my traditional IRA to a Roth without paying taxes? I get why they ask. A Roth conversion lands a tax bill in the same year, and nobody enjoys writing the IRS a check for moving their own money from one pocket to another. So let me give you the honest answer first, and then the part that actually helps — the move that gets you as close to “tax-free” as the law allows.

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When Does a Roth Conversion Make Sense? What the Math Says

I spent the last stretch building a tool that answers one question I get asked constantly in the FIRE world: how much of my traditional IRA should I convert to a Roth each year? Put another way: when does a Roth conversion make sense, and how much should you do? The tool runs a real optimization model, not a rule of thumb, and the interesting part is that once I started feeding it realistic numbers, the math kept repeating the same handful of lessons. Here they are, in plain English.

Quick disclaimer up front: I’m an operations-research guy, not your accountant. This is what the model showed me, not advice for your situation. Talk to a tax professional before you act on any of it.

Free Roth Conversion Software (It’s Live)

A while back I wrote here that I was turning my Excel model into free Roth conversion software — and that post promised “coming soon.” It’s no longer coming; it’s live and free to use. No signup, no download, no spreadsheet skills required: enter your numbers in the browser, click optimize, and a real solver plans your conversion schedule year by year.

How Much Should I Convert to a Roth Each Year?

This post is about a question I keep circling back to as an early retiree: how much to convert to a Roth in any given year. Not whether to convert — I’m already sold on that — but the actual dollar amount, year by year. It turns out to be a surprisingly good little optimization problem, and this is how I think about it.

Hand-drawn sketch of the IRA to Roth conversion trade-off, tax versus time — This is how it started — the sketch in my notebook, long before any spreadsheet.

The Roth Conversion Ladder (and Its Blind Spot)

If you retire before 59½ with most of your money locked in a traditional IRA or 401(k), you run into an awkward problem: the money is there, but reaching it normally means a 10% early-withdrawal penalty on top of income tax. The Roth conversion ladder is the classic FIRE workaround, and it is the setup for everything else I want to write about in this series.