Roth Conversion

A Roth conversion moves money from a Traditional IRA or 401(k) into a Roth account — and you pay income tax on it now so that it, plus all future growth, comes out tax-free later. It stings today to help tomorrow, which is why low-income years (a sabbatical, early retirement) are the classic moment to do it.

Example: Convert $50,000 in a low-income year at 12% ($6,000 tax) instead of withdrawing it later at 24% ($12,000) — same money, half the tax.