I Just Retired. Should I Convert My Traditional 401(k) to a Roth IRA?

Roths offer a lot of benefits, but a conversion could have unintended consequences

Sandra Block,

AARP

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Published December 12, 2025

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Many financial advisers recommend Roth individual retirement accounts (IRAs) because they allow for tax-free withdrawals. That’s certainly an attractive feature. But if you’ve been stockpiling money for decades in a traditional 401(k), consider carefully before converting the funds to a Roth IRA — the price for those tax savings later is a potentially large tax hit now.

That doesn’t necessarily mean you should abandon a Roth conversion. Just be sure you understand the pitfalls and can navigate around them.

With a Roth IRA, contributions are made with after-tax dollars. That means withdrawals are tax- and penalty-free, as long as you’re 59½ or older and the account has been open for at least five years. Unlike traditional IRAs, Roths don’t require you to start taking required minimum distributions when you turn 73, so you can allow your account to continue to grow uninhibited by taxes. And if you leave the asset to your children, they can take tax-free withdrawals as long as they deplete the account in 10 years.

The drawbacks

These benefits come at a cost. You must pay taxes on the amount of pretax contributions you convert. Ideally, you want to pay those taxes with money outside of your 401(k). If you withdraw money from your plan to pay the tax bill, you’ll shrink the account, reducing the amount available for tax-free growth.

Even if you can afford the tax bill, a large conversion could push you into a higher tax bracket, resulting in a higher tax rate on other income. Plus, a Roth conversion will increase your adjusted gross income (AGI), which could lead to higher Medicare Part B premiums.

In 2026, the standard monthly Medicare Part B premium is $202.90, but if your AGI exceeds certain thresholds, you could end up paying much more than that. People with modified adjusted gross incomes over $109,000 for an individual taxpayer or $218,000 for a married couple filing jointly will pay anywhere from $284.10 to $689.90 a month.

In most cases, the high-income surcharge is based on your tax return from two years ago. For example, the 2026 surcharge will be based on your AGI for 2024, so the notice that you’ll have to pay a higher premium may come as an unpleasant surprise.

The increase in your AGI from a Roth conversion will also increase the likelihood that a portion of your Social Security payments will be taxed.

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Here’s why: To determine if you owe taxes on your Social Security benefits, the IRS considers what it calls “provisional income”: your adjusted gross income plus any tax-exempt interest you earned during the year, plus half of your Social Security benefits.

If that figure is between $25,000 and $34,000 for an individual or between $32,000 and $44,000 for a couple, up to 50 percent of Social Security is taxable. If your provisional income exceeds $34,000 (single) or $44,000 (couple), up to 85 percent of your benefits may be taxable. 401(k) withdrawals you make as part of a Roth conversion count toward those thresholds.

Time it right

There are ways to mitigate these potential pitfalls, such as putting off your Social Security claim until you’ve completed the conversion. And even some up-front tax pain might pay off in the long run. For example, if tax rates rise in the years ahead, the money you’ve sequestered in a Roth won’t be affected.

And while you may be hit with a Medicare high-income surcharge two years after you convert, that could be a one-time event. Withdrawals from a Roth aren’t added to your AGI, so you may not have to worry about the surcharge in future years.

You can lessen the tax hit by converting to a Roth over several years. A certified financial planner can help you figure out how much to convert each year without moving into a higher tax bracket or triggering other taxable events.

While many large 401(k) plans allow retirees to take partial withdrawals, some plans require you to take the entire distribution at once. If your plan doesn’t allow partial distributions, you can get around that problem by rolling your 401(k) into a traditional IRA. Once your funds are in an IRA, there’s no restriction on the amount or frequency of withdrawals.

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Sandra Block has covered personal finance for more than two decades. She was a senior editor at Kiplinger Personal Finance and a reporter for USA TODAY. She is the coauthor of The Busy Family’s Guide to Money and Easy Ways to Lower Your Taxes: Simple Strategies Every Taxpayer Should Know.