24 Apr I’m retiring soon. Should I convert my 401(k) to a Roth?

Q. My wife and I are longtime New Jersey residents. I will turn 65 in two weeks, but plan to retire at 66, in one year, and move to South Carolina. I have about $400,000 in my traditional 401(k). Is it possible to roll some of that account over to a Roth IRA to reduce taxes I will need to pay? I have heard you are limited to $100,000 per year, so I need to start doing a trustee-to-trustee rollover soon.
— Looking ahead

A. Congrats on your coming retirement.

We’re glad you’re asking because if you make a mistake, it could cost you a lot.

First, let’s clear a few things up.

The $100,000 limit I believe you are referring to applies to Qualified Charitable Distributions (QCDs) — direct IRA-to-charity transfers. This is a completely different strategy, said Matt Rembish, a certified financial planner with OneDigital in Boonton.

There is no annual limit on Roth conversions, he said. You can convert any amount you choose in a single year.

“The only constraint is that you owe ordinary income tax on whatever amount you convert,” Rembish said. “When you are converting, pay the taxes from funds outside the IRA, not from the converted amount itself. Paying tax from IRA funds reduces the actual amount converted, which impacts the benefit.”

Rembish said there is no need to rush. Your question isn’t, “Can I?” You should be asking, “Should I, and how much?”

The first step is to look at your tax rate this year, and what you project it’s going to be in retirement, Rembish said

“If you are in a higher tax bracket in 2026 than you will be in retirement, then it probably doesn’t make sense to do a Roth conversion while you are working,” he said.

The other factor is where you are located.

Ask yourself how New Jersey’s taxes compare to South Carolina. Could it make more sense to convert as a South Carolina resident?

A certified public accountant can help you figure that out, Rembish said.

Also keep in mind that Roth conversions can also affect your Medicare costs, he said.

“Medicare Part B/D premiums include IRMAA (Income-Related Monthly Adjustment Amount) surcharges based on your income from two years prior,” he said. “Large conversions can potentially add additional cost to premiums.”

So while Roth conversions can make sense in the right situation, there are a lot of factors you need to consider in your situation before making the decision, he said.

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This story was originally published in April 2026. 

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.