Between the lightning and the heat index, I don’t know if being in water is safe right now! And before you ask, no, I have not had a chance to go fishing yet…but my neighbor did and caught a cooler full!
In the last issue, we took a closer look at the Roth IRA and discussed income limits, who might benefit most, and a side-by-side scenario. This week, we wrap up this multi-part series with a discussion of Roth conversions, a framework for your situation, and a full summary of the Traditional IRA vs. Roth IRA.
A Note on Roth Conversions
Even if you have been contributing to a Traditional IRA for years, the conversation is not necessarily closed. It is possible to convert some or all of your Traditional IRA balance to a Roth IRA – a strategy known as a Roth conversion.
Here is how it works in plain terms: when you convert, the amount you move is treated as taxable income in the year of the conversion. You pay the taxes now, in exchange for the converted funds growing and eventually being withdrawn tax-free.
Roth conversions can be a meaningful planning tool in certain situations. For example, in a year when your income is unusually low, or during the period between retirement and when required minimum distributions begin. However, the tax implications can be substantial, particularly for larger balances. This is not a decision to make without the guidance of a qualified tax professional.
A Framework for Thinking About Your Own Situation
Rather than a recommendation, here is a set of questions worth bringing to a conversation with a financial advisor:
Where do you expect your tax rate to land in retirement compared to today? If you expect to be in a lower bracket, deferring taxes via a Traditional IRA may make sense. If you expect taxes to be higher – whether because of your income trajectory or potential changes in tax law – a Roth may be worth prioritizing.
How important is flexibility? The Roth IRA’s lack of required minimum distributions and the ability to withdraw contributions at any time make it a more flexible instrument for some people. If you value having options in retirement, that flexibility has real worth.
Are you eligible for both? If your income exceeds Roth IRA contribution limits, your options may be more constrained. On the other hand, if you are not covered by a workplace retirement plan, a fully deductible Traditional IRA may be particularly valuable.
How far are you from retirement? The longer your time horizon, the more years tax-free growth in a Roth has to compound. For those earlier in their careers, the Roth’s long-term potential can be especially compelling – though again, that depends on individual circumstances.
Could you benefit from diversifying your tax exposure? Some people find value in having assets in both account types – contributing to a Traditional IRA while also building a Roth. This creates flexibility to draw from different “tax buckets” in retirement depending on the situation.
The Full Summary: Traditional IRA vs. Roth IRA
| Traditional IRA | Roth IRA | |
|---|---|---|
| Tax benefit | Now (potential deduction) | Later (tax-free withdrawals) |
| Best if you expect taxes to be… | Lower in retirement | Higher in retirement |
| Contributions taxed? | Pre-tax (may be deductible) | After-tax (no deduction) |
| Withdrawals taxed? | Yes – as ordinary income | No – qualified withdrawals are tax-free |
| RMDs required? | Yes, beginning at age 73 | No |
| Income limits to contribute? | No limit; deductibility may be limited | Yes – phase-out applies |
| Early withdrawal of contributions | Subject to penalty (exceptions apply) | Anytime, without penalty |
| Flexibility for heirs | Subject to RMD rules for beneficiaries | Greater flexibility in many cases |
Source: IRS Publication 590-A, IRS Publication 590-B, IRS.gov. Reflects 2025 tax year.
Closing Thoughts
We hope this six-part series has given you a clearer picture of two of the most valuable retirement savings tools available. Understanding how they work – and how they differ – puts you in a better position to ask the right questions and make the most of your conversations with a financial or tax professional.
Neither account is inherently better than the other. The right choice is the one that fits your situation, your timeline, and your goals.
If you have questions or would like to discuss any of this further, I would be glad to connect.
(This article is intended for general educational purposes only and reflects tax rules for the 2026 tax year. Tax laws are subject to change. This content does not constitute personalized investment, tax, or legal advice. Individual results will vary. Please consult a qualified financial advisor, tax professional, or attorney before making retirement planning decisions.)
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Thought for the Week:
“If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffett
Frederick Hogsett, Jr., is a licensed financial coach with almost 30 years of experience helping individuals, families, small businesses, and nonprofit organizations. His office is located in the Savannah, Georgia, area and can be reached at (803) 463-2773 or by website at www.livemore.net/fhogsettjrclient.