Advisors' Corner

Planning for retirement involves making a lot of decisions — and one of the most common questions members ask is:
“Should I convert my Traditional IRA to a Roth IRA?”

A Roth conversion simply means moving money from a Traditional IRA into a Roth IRA. When you do this, you’ll pay taxes on the amount you convert now, but your future withdrawals in retirement are tax-free.

For many people, this strategy can be a powerful way to manage taxes and create flexibility for the future — but it isn’t the right move for everyone. To help you decide if it’s worth exploring, here are three signs a Roth conversion might make sense for you:

1. You Expect to Be in a Higher Tax Bracket Later

If you think your tax rate will go up in the future — whether because of changes to tax laws, higher income, or additional retirement savings — paying taxes today could save you money over time.

With a Roth IRA, you pay taxes at the time of conversion, but your withdrawals in retirement are completely tax-free. That can give you more flexibility and help you keep more of your money in the long run.

2. You Want Tax-Free Income in Retirement

Having a mix of taxable and tax-free income sources can make a big difference when you’re living on a fixed income. A Roth conversion lets you lock in your tax payment today and build a source of tax-free withdrawals for the future.

This strategy can also help reduce your required minimum distributions (RMDs) later, giving you more control over how and when you use your retirement savings.

3. You Have Time to Let Your Money Grow

If you’re still years — or even decades — away from retirement, a Roth conversion may make sense because you’ll have more time to benefit from compounding.

For example, converting even a small amount now could result in significant tax-free growth over time. The earlier you start, the greater the potential benefit.

Where to Start

A Roth conversion can be an effective strategy, but it’s not the right fit for everyone. Before making a decision, consider:

• Your current and expected future tax rates
• How long you plan to keep the money invested
• Whether you have cash on hand to pay the taxes owed at conversion

Explore Helpful Tools in Retirement Central

Not sure if a Roth conversion makes sense for you? USSFCU members have access to Retirement Central, an online resource filled with calculators and planning tools to help you make informed decisions.

Here are three tools you may find helpful:

• Basic Conversion Calculator – Quantify the potential benefits of a Roth conversion based on your projected after-tax retirement income.
• Breakeven Analysis Calculator – Compare different future tax rate scenarios to see when a Roth conversion might pay off.
• Legacy Planning Calculator – Explore how a Roth conversion could impact wealth accumulation for you and your beneficiaries.

Access Roth IRA Conversion Tools Directly:
Retirement Central

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We’re Here to Help

USSFCU members have access to personalized guidance through our partnership with Fellows Financial Group. Our financial advisor, Michael Schimmel, can walk you through your options and help you decide if a Roth conversion fits your retirement strategy.

Schedule a consultation today: ussfcu.org/fas