To Roth or not to Roth

As others have mentioned, it is important to figure out the Roth conversion and pro rata issue. It seems to me that there is some terminology mixup by saying Nonqualified and Qualified accounts are in different brokerages. Nonqualified generally would mean the same as some people call a Brokerage account. Qualified is anything with tax advantages: 401(k), 403(b), 457 and all IRAs (regular, SEP, SIMPLE), etc and all of the Roth/Traditional flavors of those. Where your nonqualified money is located is irrelevant to any Roth conversion discussion. It is important how much traditional IRA money you have and whether you can convert all of it at once or whether it would be a multi year process. But more to the original question, a huge consideration of whether you should convert Traditional tax advantaged money to Roth is what do you think/estimate your income to be in retirement? **Listen to the ChooseFI episodes with the tax guys (Cody Garrett and Sean Mullaney).** They do a great job of explaining things. If you are thinking your income is going to be somewhat lower (<~120,000 married filing joint) in retirement or at least early in retirement (40's, 50's, pre RMD) then you can take the qualified money out during those years with little taxes at all. Converting now when you are making more money than that likely only makes sense if you have Real Estate Professional Status and can protect the conversions from all Fed taxes with active real estate losses or if you think your income in retirement is going to be higher than your income now. I think a tax planner able to look at your specific situation would be best. Or read Cody and Sean's new book.

If you are already 65 or over, be careful with Roth conversion. It can affect your Medicare costs. Look into it. Ours both increased a lot.

Speaking to the Roth conversion of existing funds (not backdoor Roth), the BETR framework suggests that for many folks **if** you are using funds that are currently in taxable accounts to pay the taxes on the conversion it can make a lot of sense. I wrote about it for our specific situation here: [Our BETR Roth Conversion Decision Spreadsheet](https://fischfinancial.org/2026/01/12/our-betr-roth-conversion-decision-spreadsheet/)

Working with a financial planner might be valuable in cases like this.

The IRS views all non-Roth IRAs as one for the purposes of tax on a conversion. It doesn't matter whether you have the IRAs at different brokerages or at the same brokerage. The IRS considers ALL traditional, rollover, SEP and Simple IRAs as one when determining tax on a converted amount. Since you have pre-tax dollars in your traditional IRAs, you'll pay tax on a pro-rated ("pro rata") basis on any amount you convert to Roth regardless of what brokerage you do the conversion in. One detail, a **regular** Roth IRA conversion is different from a **backdoor** Roth IRA conversion. The backdoor conversion is a specific maneuver that assumes a $0 balance in all non-Roth IRAs on 12/31 of the conversion year. When you say you're thinking of converting your 401k to Roth, your employer would need to support in-service distributions in order to convert your current employer's 401k balance to Roth. Not many employers offer this feature but maybe yours does. If you're thinking of rolling over old 401ks into an IRA and converting that IRA to Roth, that will complicate your plans for future backdoor Roth IRA conversions. Del makes a good point about having money spread across accounts with different tax treatments. This is called tax diversification. Money in taxable, pre-tax and tax-sheltered accounts gives you flexibility when taking distributions. In years when income is low, you can pull from pre-tax and taxable accounts. In years when income is high, you can pull from tax-sheltered. You can combine these levers to control what tax bracket you land in for the year you're taking distributions.

One thing to consider here is not necessarily "maximal money / minimal tax for my projections", but rather "how much do I value flexibility in adapting to tax changes over time?" In that sense, having closer to equal portions in tax-deferred and post-tax retirement accounts can have its own value (or ratios closer to what you project will be useful). The value of that flexibility is truly qualitative to you, so that makes the analysis harder.

Regarding maybe your other question which I think is "should I change my future 401k contributions to Roth instead of traditional" and you mentioned in your other comments that you'd like to save the income tax if possible so it seems like for now, at your higher income tax bracket, you probably do want to take advantage of the traditional 401k for the tax break *today*. I have found comfort in listening to the Brad and other guests talk about how it is very likely / possible that many of us will be able to access even traditional retirement funds (tax deferred accounts like traditional 401k and IRAs) at relatively low tax rates since our withdrawals in the future will be based on spending which may very well be a lower volume of money than our income levels during working years. Obviously, no guarantees on tax laws in the future but just thinking through amount of 'income' we're likely to have in retirement it may be lower than during working years. I also really like a podcast by Money With Katie about Roth versus Traditional (and she did a part 2) and she broke down all the math and while in the end it's truly a personal decision based on your expected tax rates / income in the future which is unknowable… she found that if you *invest the savings* you get from contributing to 401k traditional (so the exact amount that you save on taxes by contributing to traditional accounts and deducting it from your taxable income), then you come out better off in the long run! [The Ultimate Traditional 401\(k\) vs. Roth 401\(k\) Debate: Traditional Wins - Money with Katie](https://moneywithkatie.com/the-final-traditional-vs-roth-debate-traditional-wins/) [A CFP Poked Holes in My Traditional vs. Roth Strategy—Does It Still Hold Up? - Money with Katie](https://moneywithkatie.com/the_mwk_show/cfp-ultimate-traditional-vs-roth-strategy/)

So, I am by no means a tax or investment expert. BUT I think your question has major implications for tax impacts when or if you decide to do any sort of Roth conversion (even the backdoor conversion you are planning). Specifically, my understanding is that for tax purposes, *any* balance that exists in a traditional IRA will be reported on your tax return the year you do a conversation. The pro-rata rule will come into play. Here is a snippet from a Vanguard article "Additionally, if you have existing traditional IRA balances from previous years, the pro rata rule comes into play. This rule requires that any conversion be treated as coming proportionally from both pre-tax and after-tax sources across all your traditional IRAs." But if you are thinking of moving all of your traditional IRA to Roth IRA then at time of conversion you'd have to pay taxes at your current marginal rate (or higher, if it moved you into a new bracket) on every single dollar. And given you are over the income threshold for a Roth contribution I'd guess your marginal bracket is not one you'd really want to pay taxes on for every dollar of traditional IRA you have. But it's great you have and contribute to your HSA - do you invest that balance?