Ramsey Solutions says people already retired or within five years of retirement should usually avoid Roth conversions. Here’s why experts disagree and what matters.<\/p>\n
Ramsey Solutions argues that people who are already retired or within five years of
\nretiring should generally skip a Roth conversion, pointing to the so-called
\nfive-year rule as its reasoning. While many investors follow that advice, a
\ngrowing number of tax and retirement experts disagree with its conclusion,
\nsaying the decision depends on several personal financial factors.\n<\/p>\n
\nHere’s why the debate continues and what it could mean for your retirement Find Out:<\/a> 14 moves seniors could benefit from but often forget about.<\/a><\/p>\n Why Ramsey Solutions says near-retirees should avoid Roth conversions<\/p>\n \nRamsey Solutions says a Roth conversion starts a five-year clock, leaving people who are Shopping for cheaper auto insurance?<\/a> Enter your zip code here to get started.<\/a><\/p>\n How a Roth conversion works<\/p>\n \nA Roth conversion moves money from a traditional IRA or 401(k), funded with \nIn return, future investment growth and qualified withdrawals become completely Why financial planners disagree with Ramsey Solutions<\/p>\n \nCertified Financial Planner Brandon Renfro argues that Ramsey Solutions misapplies the five-year rule. They note the rule primarily \nBecause of that, many financial planners believe carefully planned Roth Grow Your $$:<\/a> 9 things you must try when your savings reach $50,000<\/a><\/p>\n The real cost of following Ramsey Solutions’ advice blindly<\/p>\n \nCritics argue that if everyone followed Ramsey Solutions’ advice, only about 5% of people \nFor example, converting $50,000 from a $500,000 traditional IRA while in the 22% Your future tax rate is the real deciding factor<\/p>\n \nConverting makes financial sense when you expect future tax rates to be higher Retirement author David McKnight argues that today’s historically low tax rates may not last, Partial conversions could reduce the tax impact<\/p>\n \nA Roth conversion doesn’t have to happen all at once. Many retirees spread \nFor example, in 2026, taxable income above $105,700 moves a single filer from Dave Ramsey Urges Americans to Become Debt-Free:<\/a> Try these 7 clever ways to crush your debt<\/a><\/p>\n RMDs are a major reason conversions stay popular<\/p>\n \nTraditional retirement accounts generally require RMDs starting at age 73, even \nRoth IRAs don’t require RMDs for the original owner, which is why many financial The gap years are when conversions are most powerful<\/p>\n \nMany financial planners consider the years between retirement and the start of \nA retiree in the 12% tax bracket converting $50,000 pays $6,000 in tax. Waiting The Roth conversion proposal remains personal, not universal <\/p>\n \nRamsey Solutions’ advice offers a simple rule of thumb, but Roth conversions are rarely \nTwo retirees with identical $500,000 traditional IRAs could make opposite
\nplanning<\/a>.\n<\/p>\n
\nalready retired or close to retirement with less time to benefit from tax-free
\ngrowth. It also believes many near-retirees don’t have enough cash to pay the
\nupfront tax bill without dipping into money they’ll soon need.<\/p>\n
\npre-tax dollars, into a Roth IRA. You’ll pay ordinary income tax on the amount
\nconverted in the year you make the move.\n<\/p>\n
\ntax-free. Roth IRAs also have no required minimum distributions (RMDs) during
\nthe original owner’s lifetime, giving retirees greater flexibility over their
\nretirement income.\n<\/p>\n
\nexists to prevent the 10% early-withdrawal penalty, which generally no longer
\napplies once someone reaches age 59 1\/2.\n<\/p>\n
\nconversions can still benefit near-retirees, particularly when they expect
\nhigher tax rates later in retirement.\n<\/p>\n
\nwould realistically complete a Roth conversion. That’s because most don’t have
\nenough cash outside their retirement accounts to pay the upfront tax bill.\n<\/p>\n
\ntax bracket creates an $11,000 tax bill, an amount many retirees struggle to pay
\nfrom liquid savings.\n<\/p>\n
\nthan today’s on the conversion amount.\n<\/p>\n
\nnoting the U.S. national debt is projected to reach $63 trillion by 2035. If
\ntaxes rise as a result, paying them now could prove cheaper than waiting until
\nlater in retirement.\n<\/p>\n
\nconversions across several years to stay within lower federal tax brackets.\n<\/p>\n
\nthe 22% to the 24% bracket. Converting smaller amounts each year could also help
\nlimit Medicare IRMAA surcharges two years later and reduce lifetime taxes.\n<\/p>\n
\nif you don’t need the money. Those mandatory withdrawals increase taxable
\nincome, and failing to take them carries a 25% excise tax, which can drop to
\n10% if you rectify within two years.\n<\/p>\n
\nplanners recommend gradual Roth conversions to help reduce future taxable
\nwithdrawals.\n<\/p>\n
\nRMDs, typically ages 62 to 72, the best time for Roth conversions because
\ntaxable income is often lower.\n<\/p>\n
\nuntil RMDs push them into the 22% bracket raises the tax bill to $11,000, an
\nextra $5,000.\n<\/p>\n
\none-size-fits-all. Income needs, filing status, investment balances, future
\nRMDs, estate goals, and available cash all affect the outcome.\n<\/p>\n
\ndecisions if one expects to stay in the 12% tax bracket while the other
\nanticipates moving into the 22% bracket later.\n<\/p>\n