A Guide to Roth Conversions

RMDs can trigger big taxes—Roth conversions may cut the hit.

If you convert money from traditional IRAs and 401(k)s to Roth IRAs, you can control the tax consequences and the timing. Dreamstime/TCA

By Kimberly Lankford From Kiplinger’s Personal Finance

​​You could have a tax time bomb in your retirement savings. If you’re like many people in their 50s and 60s, you have diligently set aside pretax money in a 401(k) or a traditional individual retirement account (IRA), and that money has been growing tax-deferred through the years. But when you start taking it out, your withdrawals will be taxable. And you can’t let it keep growing forever. Eventually, you’ll need to take required minimum distributions (RMDs)—currently starting at age 73—based on your life expectancy, and those mandatory withdrawals could come with a big tax hit.