Ask an Advisor: Is It a Good Idea to Convert 10% of My 401(k) Each Year to Lower Taxes and Avoid RMDs?

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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat($n)),notifLabel:document.querySelector(".".concat(Xn))};t.notifDropdown&&so(e,t)}))}()}};]]>Matt Becker, CFPMon, November 3, 2025 at 10:00 AM GMT+1 5 min read SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Is it wise to start converting my 401(k) into an IRA (and then Roth) by 10% per year in order to avoid having to claim too much income each year when converting and also avoid RMDs as much as I can?-CathyIt’s definitely smart to be thinking about this, Cathy. Systematic Roth conversions like the ones you’re describing have the potential to reduce your lifetime tax liability, increase your odds of a successful retirement, boost your flexibility by reducing future RMDs and even leave more money for your heirs.There’s a lot to like, but there are some potential pitfalls as well. It’s not always easy to figure out when Roth conversions make sense or how much to convert. Converting 10% of your 401(k) per year may not be the best strategy but here’s what you should be thinking about. (And if you need more help with important financial decisions in retirement, consider working with a financial advisor.)When considering whether to convert pre-tax money to a Roth account, you need to compare tax rates. If your tax rates are lower now than you expect them to be in the future, then a Roth conversion makes sense. If your tax rates are higher than you expect them to be in the future, you shouldn’t convert.The conventional wisdom then is to look at your federal and state income tax rates now and compare them to what you think they’ll be in the future. And while that’s a good start, it doesn’t always tell the whole story.As Ben Henry-Moreland explains well here, your marginal income tax rate is only part of the story. Because our tax code includes a multitude of credits, deductions, phase-outs and other variables that are dependent upon taxable income, adding or subtracting income can have a bigger impact than what you’d calculate if you were only comparing income tax brackets.For example, a Roth conversion could:Increase the amount of Social Security income that’s taxedPush your capital gains into a higher tax bracketDecrease the amount of medical expenses you can deductIncrease Medicare premiumsReduce the health insurance subsidy you’re eligible forOf course, the reverse of all of those things could also be true. By converting some of your money to a Roth IRA now, you could lower your taxable income in future years and therefore reduce the amount of Social Security income that’s taxed in the future or increase the amount of medical expenses you’re eligible to deduct.In other words, the impact of a Roth conversion could be bigger than expected in either direction.(A financial advisor can help you determine the relevant tax rates so you can make a wise decision on whether or not to convert a 401(k) into an IRA or Roth IRA.)Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,777.07 -74.90 (-1.09%)Dow 3047,056.99 -279.69 (-0.59%)Nasdaq23,424.72 -410.01 (-1.72%)Russell 20002,440.17 -31.07 (-1.26%)VIX18.88 +1.71 (+9.95%)Gold3,965.30 -48.70 (-1.21%)PortfolioSign in to access your portfolioSign inTop gainersHTZ Hertz Global Holdings, Inc. 6.97 +2.03 (+41.19%)XMTR Xometry, Inc. 60.00 +11.42 (+23.52%)PAY Paymentus Holdings, Inc. 35.11 +6.50 (+22.71%)MTSR Metsera, Inc. 73.00 +12.27 (+20.21%)INSP Inspire Medical Systems, Inc. 86.69 +12.97 (+17.60%)Top losersDGNX Diginex Limited 18.68 -4.95 (-20.95%)NCLH Norwegian Cruise Line Holdings Ltd. 18.80 -3.38 (-15.24%)WRD WeRide Inc. 9.45 -1.45 (-13.32%)ZTS Zoetis Inc. 125.99 -18.37 (-12.72%)NVTS Navitas Semiconductor Corporation 10.69 -1.56 (-12.70%)Most activePFE Pfizer Inc. 24.32 -0.34 (-1.39%)NVDA NVIDIA Corporation 200.35 -6.54 (-3.16%)HTZ Hertz Global Holdings, Inc. 6.97 +2.03 (+41.19%)PLTR Palantir Technologies Inc. 191.62 -15.56 (-7.51%)GRAB Grab Holdings Limited 5.65 -0.43 (-7.00%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersBTC-USD Bitcoin USD 100,852.84 -6,561.46 (-6.11%)HTZ Hertz Global Holdings, Inc. 6.97 +2.03 (+41.19%)PLTR Palantir Technologies Inc. 191.66 -15.52 (-7.49%)UBER Uber Technologies, Inc. 93.84 -5.88 (-5.90%)MTSR Metsera, Inc. 73.00 +12.27 (+20.21%)Top economic events