You’ve probably heard this suggestion — converting your traditional individual retirement account (IRA) to a Roth IRA can help your money go further. It’s one of the most common conversations we have with clients.

Nevertheless, many clients hesitate to take the step. Sometimes that’s due to what can be a steep up-front tax cost; other times, people may be following a rule of thumb that doesn’t really apply to high net worth investors.

Needless to say, every situation is unique and in some cases conversions aren’t called for. But in my experience, it’s usually wise to convert from a traditional account to a Roth, and I urge you to talk to your Private Wealth Advisor and outside tax professionals about it.

There are three broad topics to consider when mulling a conversion: the direct benefits, the tax cost and the question of who will ultimately use the assets. Here’s a look at each:

There are compelling advantages to a Roth.

Traditional IRAs and Roths are both are tax-advantaged but in markedly different ways. A major distinction is when taxes are paid.

In a traditional IRA, initial contributions are typically tax-deductible in the year they are made, which can reduce taxable income in that year. Subsequent gains on those investments are tax-deferred, meaning the IRA holder doesn’t pay taxes until the money is withdrawn.

However, the eventual withdrawals are taxed as ordinary income. The growth compounds on a tax-deferred basis, but that means the associated tax liability also grows proportionally. And unlike capital gains, the taxes apply to every dollar withdrawn, whether they’re from gains or the deposits. So while you might not pay taxes on traditional accounts today, you’re delaying a tax bill that you or your beneficiaries will incur eventually.

Roths, by contrast, are tax-free once certain requirements have been met. Initial contributions are funded with after-tax dollars. However, the earnings on the underlying investments — and, thus, the eventual withdrawals — are tax-free. That’s a powerful feature that can add up over the long term.

In traditional accounts, federal income tax alone can eat up 37% of assets — and even more if state and local income taxes apply. Some clients can forfeit nearly half of the assets in such accounts to taxes.

There’s another appeal to Roths. With traditional retirement accounts, IRA holders must begin taking annual distributions — known as required minimum distributions, or RMDs — starting at age 73. That forces investors to annually liquidate a portion of their accounts, which erodes their balances and triggers tax bills. Roths don’t have distribution requirements during the account owner’s lifetime, thus lengthening the potential number of years for returns to compound. This benefit alone gives you a lot of control over how your retirement account will interact with your estate and how it can benefit your heirs.

And for clients who view these accounts as assets to pass on to their heirs, Roths offer additional planning benefits. With traditional accounts, the heirs inherit the assets and the tax liability. However, the conversion forces an owner to pay the tax liability up front. Thus, heirs receive a tax-free asset while owners may be able to decrease their estate size by the amount of the taxes paid with no gift tax implications.

There are many ways to handle the costs of conversion.

Not surprisingly, a primary deterrent to conversions is the upfront tax burden, which is added to that year’s taxable ordinary income. This can be made a little more palatable by the fact that you don’t have to switch to a Roth all at once. Conversions can be spread across multiple years, dividing the tax bite into smaller chunks that are easier to manage and plan for. This approach is certainly applicable to cases where converting the entire traditional account would push an investor into a higher tax bracket.

A critical element is how taxes are paid. It’s usually inadvisable to take assets from the retirement account itself. That would reduce the amount available to transfer, and the point is to put as much as possible into the Roth. To make the most of this process, consider earmarking available cash from another source to cover the tax liability.

The question of how much to convert — and when — should be weighed in conjunction with the possibility that a federal income tax overhaul is on the horizon. Current rates, which were reduced in 2017 under the Tax Cuts and Jobs Act (TCJA), are set to expire at the start of 2026. That’s likely to make tax policy a big focal point in Washington regardless of the outcome of the November election, and there could very well be legislative action ahead of the deadline.

Nevertheless, the two parties have sharply differing tax plans and there is significant uncertainty about what comes next. If Congress and the next president take no action by the end of next year, the top income tax rate would revert to the pre-TCJA level of 39.6%. Thus, a timely conversion could prevent a higher tax bill.

Consider the ultimate beneficiaries before undertaking a conversion.

All of this said, as you make the decision whether to convert, you should  consider the intended recipient of the assets. For example, if you plan to leave your retirement account to your favorite charity, it makes no sense to pay conversion taxes to ultimately donate them to a tax-exempt entity. In this case, keeping the assets in traditional accounts has merit.

Likewise, a conversion might not be right if you or your beneficiary would be subject to dramatically lower income tax rates when the time comes to make withdrawals. Our research shows, however, that rates would need to be much lower — perhaps lower than you might anticipate — to not consider a Roth based on this premise. Your Private Wealth Advisor can help you evaluate potential scenarios.

While there are several factors to consider, it boils down to this: While you might not pay taxes on traditional accounts today, you or your beneficiaries will pay them eventually — and, critically, those taxes will apply to your asset growth. A Roth conversion will effectively limit income taxes to your existing principal, giving you the full benefit of any future gains.

Add in the other benefits such as the elimination of lifetime required distributions, and a Roth conversion can be well worth it.