Roth conversions are up in 2024 — but it's not always a 'slam dunk,' accountant says

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Roth individual retirement account conversions are up in 2024 — but there are key things to know before converting funds, experts say. There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to data from Fidelity Investments. Roth conversions transfer pretax or nondeductible individual retirement account funds to a Roth IRA, which provides future tax-free growth. However, "it isn't a slam dunk for everyone" because it takes time for tax-free growth to exceed your upfront tax bill, said Marianela Collado, a certified financial planner and CEO of Tobias Financial Advisors in Plantation, Florida. More from Personal Finance: Here's why you may be saving more in your 401(k) — and not even know it You could score a tax break for hiring your own kids this summer — if you follow the rules Cash discounts, while still rare, are up over 60% from 2015. Here’s how much you can save Investors need "sufficient assets" outside of retirement accounts to cover the upfront tax bill, warned Collado, who is also a certified public accountant. You'll also need to weigh how the additional income during the year of the conversion impacts eligibility for certain tax breaks. Higher earnings can also trigger income-related monthly adjustment amounts, or IRMAA, for Medicare Part B and Part D premiums down the line. (IRMAAs for a given year are typically determined based on your tax return from two years prior.) Of course, the tax consequences hinge on how much you convert and your tax brackets for the year.