How much should I convert to a Roth, and how do I know when to stop?

Most people ask this question expecting a dollar amount. The honest starting point is that there is no rule setting one.

Anything in a traditional account, whether it is an IRA or a 401(k), can be converted, and there is really no limit on that. We just self-impose limits. You could technically convert all of it if you wanted to. Obviously you would not do that, but it is worth knowing that the ceiling is a choice rather than a rule.

So the question is not really "how much." It is "which ceiling am I filling this year."

It is not about the dollar amount, it is about the bracket

This is the part that changes how the decision feels. We are not trying to hit a number. We are locking in a tax rate on those dollars, permanently, and then never paying tax on that money again.

That is why you do not convert $500,000 in one year. You would just be voluntarily bumping yourself into a higher bracket to do it. Instead we do it a little at a time, over several years, staying under whatever ceiling we picked.

The ceilings we usually choose between:

The Medicare surcharge threshold. There is an income level where your Medicare premiums increase, and it moves every year. For a lot of households the plan is to fill up to that limit and not go past it.

The top of the 22% bracket. Sometimes we decide to go just past the Medicare surcharge and fill the 22% bracket anyway, because the long-run math is worth the short-run cost.

The 24% bracket. For some people we go there, usually when the tax-deferred balance is large enough that filling smaller brackets will never get through it in the years available.

None of those is automatically right. It depends on what else is happening in your income that year.

Two things that push the answer higher than people expect

The widow's bracket. Say one spouse passes away and the survivor lives another twenty years. She still has to take the same required distributions out, but she is now filing single, so her brackets are roughly half as wide. That forces income into much higher rates. It is a strange wrinkle of the tax system, and it is one of the strongest arguments for converting more while both of you are alive and filing jointly.

What your kids inherit. Money they inherit in a Roth is completely tax-free, and they get ten more years of tax-free growth after that. If some amount of your money is going to end up as legacy anyway, and for a lot of households it will, then getting as much as possible into a Roth is enormously advantageous.

What limits how much you can actually do

Capacity is the constraint nobody expects. If you are living on distributions from your tax-deferred accounts, those withdrawals are already using up your bracket space. There may not be enough room left to convert as aggressively as I would want to.

That is why this decision does not sit by itself. It runs into which account you spend from, when Social Security starts, and what your income looks like in each specific year.

What this looks like in practice

For one household it means converting into the high $140,000s each year and expecting to do that for the next several years. For another it is a much smaller number, done in December once the year's actual income is known. The shape is the same either way: pick the ceiling, fill up to it, do it again next year, and re-check the ceiling each time because the thresholds move.

If you want, I am happy to walk through what your specific ceiling looks like this year and roughly how many years it would take to work through the traditional balance. That conversation is usually more useful than any general rule, because the answer really does depend on the rest of your income.