What are the key takeaways from this ChooseFI episode?

Key insights include: **Working Years Rule:** Avoid taxable Roth conversions during employment years when W2 income already fills higher tax brackets. Conversions stack on top of existing income and face rates of 22% or higher, making them inefficient compared to retirement conversion opportunities.; **Retirement Tax Reality:** Married couples in 2026 can have $133,000 of income taxed only at 0%, 10%, or 12% brackets due to high standard deductions. This creates effective tax rates of 5-8%, contradicting fears about crushing retirement taxation and eliminating conversion urgency.; **RMD Tax Impact:** A widow with $3,680,000 traditional IRA taking $189,700 required minimum distribution at age 81 pays only 21.3% effective tax rate including Medicare surcharges. Only 6% of her RMD hits the 32% bracket, demonstrating even worst-case scenarios remain manageable.

What did Sean Mullaney and Cody Garrett discuss on ChooseFI?

Sean Mullaney and Cody Garrett explain why taxable Roth conversions are rarely necessary despite widespread promotion, examining when they provide benefits versus when traditional retirement accounts already deliver light taxation throughout retirement. Key topics include: **Working Years Rule:** Avoid taxable Roth conversions during employment years when W2 income already fills higher tax brackets. Conversions stack on top of existing income and face rates of 22% or higher, making them inefficient compared to retirement conversion opportunities.; **Retirement Tax Reality:** Married couples in 2026 can have $133,000 of income taxed only at 0%, 10%, or 12% brackets due to high standard deductions. This creates effective tax rates of 5-8%, contradicting fears about crushing retirement taxation and eliminating conversion urgency..

How long is this episode of ChooseFI?

This episode is 65 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

ChooseFI

Are Roth Conversions Necessary? | Cody Garrett and Sean Mullaney | Ep 581

January 12, 2026

65 min episode · 2 min read

Sean Mullaney,Cody Garrett

Episode

65 min

Read time

2 min

Topics

Career Growth, Personal Finance

AI-Generated Summary

Published Jan 13, 2026

Key Takeaways

✓Working Years Rule: Avoid taxable Roth conversions during employment years when W2 income already fills higher tax brackets. Conversions stack on top of existing income and face rates of 22% or higher, making them inefficient compared to retirement conversion opportunities.
✓Retirement Tax Reality: Married couples in 2026 can have $133,000 of income taxed only at 0%, 10%, or 12% brackets due to high standard deductions. This creates effective tax rates of 5-8%, contradicting fears about crushing retirement taxation and eliminating conversion urgency.
✓RMD Tax Impact: A widow with $3,680,000 traditional IRA taking $189,700 required minimum distribution at age 81 pays only 21.3% effective tax rate including Medicare surcharges. Only 6% of her RMD hits the 32% bracket, demonstrating even worst-case scenarios remain manageable.
✓Conversion Beneficiaries: Primary beneficiaries of Roth conversions are your 75-plus year old self who is already financially successful and cannot spend the money, or heirs receiving windfalls. Neither represents compelling financial planning priorities compared to current retirement security needs.
✓Backdoor Distinction: Backdoor Roth and mega backdoor Roth contributions differ fundamentally from taxable conversions. These mechanisms move money that would otherwise go to taxable accounts into Roth accounts with minimal tax impact, making them generally advantageous during high-income working years.

What It Covers

Sean Mullaney and Cody Garrett explain why taxable Roth conversions are rarely necessary despite widespread promotion, examining when they provide benefits versus when traditional retirement accounts already deliver light taxation throughout retirement.

Key Questions Answered

•Working Years Rule: Avoid taxable Roth conversions during employment years when W2 income already fills higher tax brackets. Conversions stack on top of existing income and face rates of 22% or higher, making them inefficient compared to retirement conversion opportunities.
•Retirement Tax Reality: Married couples in 2026 can have $133,000 of income taxed only at 0%, 10%, or 12% brackets due to high standard deductions. This creates effective tax rates of 5-8%, contradicting fears about crushing retirement taxation and eliminating conversion urgency.
•RMD Tax Impact: A widow with $3,680,000 traditional IRA taking $189,700 required minimum distribution at age 81 pays only 21.3% effective tax rate including Medicare surcharges. Only 6% of her RMD hits the 32% bracket, demonstrating even worst-case scenarios remain manageable.
•Conversion Beneficiaries: Primary beneficiaries of Roth conversions are your 75-plus year old self who is already financially successful and cannot spend the money, or heirs receiving windfalls. Neither represents compelling financial planning priorities compared to current retirement security needs.
•Backdoor Distinction: Backdoor Roth and mega backdoor Roth contributions differ fundamentally from taxable conversions. These mechanisms move money that would otherwise go to taxable accounts into Roth accounts with minimal tax impact, making them generally advantageous during high-income working years.

Notable Moment

Mullaney demonstrates that commentators have consistently predicted rising retiree taxes for years while Congress repeatedly cuts them instead. He argues the fundamental retirement account job is securing your retirement, not managing heir tax liabilities on their financial windfalls.

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Episode Transcript

Hello, and welcome to Chooseify. Today on the show, we have Sean Mullaney and Cody Garrett, two of my all time favorite guests, and we're going to be talking all things Roth conversions. So a lot of this is thrown around their backdoor Roths, mega backdoor Roths, Roth conversion ladders, But what are they all? And as these guys told me, there's a lot of interest in taxable Roth conversions, but are they really necessary? And we're gonna really try to talk through every aspect of this, and you're gonna leave here with a lot better understanding of all things Roth conversion. And with that, welcome to Choose Zephy. Before we get started, I keep this podcast entirely ad free for two reasons. First, this is a Fi podcast, and I don't want to promote products that I don't want you to buy in the first place. And second, I really like the clean listening experience of a show where you don't have to fast forward ads. To keep it ad free, all I ask of you as a listener is the next time you open a travel rewards credit card, go to choose fi.com/cards. And with that, onto the show. Cody and Sean. So I I neglected to say you guys are the authors of the incredible book, Tax Planning to and Through Early Retirement, and the book has been an immense success from what I've seen. Huge congrats, guys. Thank you, Brad. Yeah. I appreciate that. Yeah. We've been, excited. Like, it's funny. Nobody writes a book to make money, you know, but we've been excited probably by the time this podcast comes out, about 8,000 copies, which, you know, I think about, like, if we were to stack those books, like, how high would they go? Like, it's just really exciting. It's less about the number of books quantitatively, but just thinking, what's the long term impact of just educating people about the fundamentals of tax planning. Yeah. No. It's massive. And I mean, frankly, selling books is really, really difficult. Selling 8,000 books puts you in rarefied air. I mean, that's how hard it is to sell any kind of books. So huge congrats. I mean, this is not obviously, like, the murder mystery that's the summer hit. Right? But then to sell this many books right off the bat, I think and I I believe since the first second I read it when you guys gave me an early copy, that this book is gonna have legs for years and years and years. So again, thank you guys. And to anybody listening, if you haven't checked this book out, you can buy it on Amazon. A lot of libraries now, I'm seeing Facebook posts in the Choose a Buy group of, oh, wow. The book is now in my library. So they grabbed it, and it this is a book worth reading. So with that, guys, let's hop into this. I think you guys always …

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