The Coffee Shop Conversation: Roth Conversions and Finding the Right Ride

I was sitting at my favorite local coffee spot this morning when I ran into Joe, a smart, thoughtful gentleman I’ve gotten to know over the years. Joe’s a Penn grad who spent his career in corporate tax, so I wasn’t too surprised when he threw a question my way that cut straight to the point.

“Why don’t more people talk about growth and its impact on Roth conversions? It seems like everyone just focuses on tax rates,” he said. Then, he followed with an even bigger question: “From a tax perspective, isn’t it a no-brainer to do a Roth conversion, especially if your IRA keeps growing over time? Why don’t more people do it?”

His question was one that many finance professionals love to dive into, but the answer isn’t as simple as the math would suggest. I smiled and told him, “Because they’re people.”

The Academic Answer vs. Real Life

When it comes to Roth conversions, the conversation tends to center around tax rates—whether you'll pay more now or later. The math often points to making the conversion if you believe taxes will be higher in the future, or if you’re expecting significant growth in your traditional IRA. The academic, quantitative approach to this question is pretty straightforward: Convert to a Roth, pay the taxes now, and let your money grow tax-free for the rest of your life.

Joe, with his background in corporate tax, went straight to the heart of the matter. He argued that if you live long enough, the continued growth in the traditional IRA makes the Roth conversion a clear winner. I agreed with him—on paper, it often is. But people aren’t spreadsheets.

In our business, we blend quantitative answers with qualitative insights. The academic answer assumes a world of certainty, but life isn’t like that. It assumes clients will stay on the ride until the end, letting their investments grow untouched. But in real life, things change—emotions come into play, markets fluctuate, and clients’ circumstances evolve.

You Have to Stay on the Ride

I explained to Joe that while the numbers may make Roth conversions seem like a “no-brainer,” the reality is that human behavior plays a big role in these decisions. If you want to double your money from $100 to $200, you have to stay on the ride the whole time. But if you get off halfway through—whether it’s because of market jitters, a life event, or some other reason—you may only end up with half that growth.

Our job is to help our clients not only get on the right ride but also stay on it. And the right ride isn’t the same for everyone. It’s like traveling from Philly to NYC—you could walk, drive, take the subway, hop on NJ Transit, ride Amtrak, take the Acela, or even fly. They’ll all get you there, but the cost, time, risk, and comfort vary widely. Investing, and decisions like Roth conversions, are no different.

Roth Conversions: A Human Decision

For someone like Joe, with his tax background, paying taxes now for potential future gains seems logical. But for many people, the idea of paying taxes today—regardless of future outcomes—feels like a hard “no.” And for everyone else, there’s a middle ground. Some might be willing to pay taxes on a portion of their IRA, while others will opt for a more cautious approach.

At the end of the day, the decision to do a Roth conversion isn’t just about tax rates or growth potential. It’s about finding the balance between what’s mathematically optimal and what feels right for the individual. Our job is to help clients find that sweet spot—the place where they can stay on the ride and feel comfortable enough to reach their goals.

So, while the numbers may say one thing, life’s complexities often lead to a different answer. And that’s perfectly okay.

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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