Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

401k to Roth?

15 Jul 2025 · 1 min

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Craig Wear, CFP® explains whether you should convert a 401(k) to a Roth IRA. He warns that conversions trigger immediate taxation on the full converted amount, and argues the decision should not hinge solely on current vs. future tax rates. Instead, Wear emphasizes the larger practical impact of required minimum distributions (RMDs) — the extra taxes and complications they can cause if money remains in tax-deferred accounts. He advises knowing your numbers before deciding and cautions against one-dimensional advice that ignores RMD-related costs.

Chapters

Should you really convert your 401k? Thinking about converting your old 401k to a Roth IRA? Hold up. Here's the math. You're going to pay taxes now on the whole amount that you convert. And if you pay a tax rate that stays the same in retirement, you maybe don't have a whole lot of gain if the taxes go down and you lose money. And if taxes go up, then yeah, it can help. That's what a lot of people think. But actually your decision to do conversions has very little to do with tax rate now versus tax rate later. It has more to do with the massive amount of tax taxes that those required minimum distributions are going to throw into your life if you don't get the conversion. So don't listen to the naysayers. Don't listen to the people tell you that the math says the only reason you should convert is if taxes are going to be lower in the future. That's a one dimensional approach and they have totally missed the point of looking at all the other costs that are going to accrue because you left the money in for too long. So bottom line, know your numbers before you make the switch.