Is this a good time to convert to Roth?
Posted on March 21, 2025

The best time to convert traditional IRA shares to Roth is when stocks stink. You get more shares for the dollars you convert. I would not judge that stocks stink right now, but my FSKAX hit a high of about $170 per share in early December and was darn close to that four weeks ago. Now it’s about $155 per share – down about 9%. It’s on sale. I’d convert ~10% more shares now – converting a greater percentage of my traditional IRA – than if I had converted then. That’s a good deal.

== Simple if you are not taking RMD ==

You can do this easily if you are over age 59½ and not taking RMD. You follow the steps I outline in this post; you start with the pre-tax amount in your traditional IRA and wind up with the net amount after paying taxes in your Roth. If you convert now, you could wait months to withdraw to withhold for 2025 taxes if you think the  price per share will be greater; you’d spend fewer shares to pay the taxes. (You can also convert if you are younger than age 59½, but you need to take an extra step to painlessly pay the taxes)

== Not timely if you take RMD ==

Conversion isn’t so timely if you are already taking RMD. The rules on converting to Roth for folks required to take RMD were finalized this past fall. You must take your full RMD for the year before you can convert any traditional to Roth.

My pattern is to take RMD in the first week of December. Averaging over many years, I’m gaining in return by waiting to the end of the year before I sell – my stocks have  gained in seven of the last ten years. I really don’t want to take my full RMD now: I want my shares to be at a high price when I sell for spending (or transfer shares to my taxable account). I want to keep the benefit of tax-free growth: I want to remove the fewest number of shares from retirement accounts for our spending. Nothing tells me to second-guess the general odds that the market will be better nine or so months from now.

Conclusion. This is actually a good time to consider converting traditional IRA to Roth. Shares of your US stocks are on sale – about 10% lower than they were a few months ago. You get more shares by converting now – converting a greater percentage of your traditional IRA – than if you had converted then. That’s good deal.

Converting is simple if you are over age 59 ½ and not taking RMD. I’ve outlined steps in a this post. Rules issued this last fall constrain the folks who already take RMD. You must take your full RMD before you convert shares to Roth. You most likely don’t want to do that now, since the general odds are the stocks will be higher in price/share later in the year.