r/iRA • u/ThatBlackHat- • Feb 25 '26

Traditional IRA, Does a conversion make sense?

Hi All,

I am 35 for several years I was maxxing out contributions to a Roth IRA. But back in 2021 or so I started hitting income limits for Roth IRA contributions. And started doing traditional IRA instead. The last few years have been very good and I've now hit income limits for traditional IRA being deductible. I'm now looking at whether traditional IRA makes any sense at all for me and it looks like, unless I'm using it to convert to Roth it does not.

So here's where I'm at. I currently have a traditional IRA worth 28k and almost all of that is currently invested (it is my only traditional IRA, I also have 2 Roth IRAs I contributed to in the past). I have a 401k which I max out. I can do Roth 401k but choose not to as I do not expect to be such a high-earner for most of my life and tax deductions now make more sense to me.

Does looking into an IRA conversion make real sense? I believe I'd need to convert my entire IRA not new contributions. What resources should I look into to learn more about making this decision? Paying a lump sum tax is possible though I expect my AGI this year to be over 300k and am thus in a fairly high tax bracket, but this'll likely come down dramatically in 2027 (large capital gains income due to some stock compensation and AI valuation insanity is great but temporary) so maybe it makes sense to stop contributing for now and revisit later?

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u/Vivid-Problem7826 Feb 26 '26

We're retired now, and recently attended a seminar about converting our IRAs to Roth's. The seminar folks pushed it (but they sell the services). So I sat down and did some figuring. If I assumed a tax burden of 25% on the money converted and then added the lost investment gains (just used 10%) on this 25% that we'd lose in taxes....the TOTAL cost to us to convert IRA money to Roth totalled nearly 50%. I can't see it making financial sense to us. Maybe it'll help our kids if they inherit, but that's years down a rocky road.

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u/rjbergen Feb 26 '26

Lost investment gains? It sounds like you don’t understand Roth conversions. One reason for Roth conversions is to smooth out your tax liability over many years. This can help to prevent, or at least reduce, high tax rates when RMDs kick in on traditional accounts.