Not too long ago, someone sent me a question through Instagram:

“What’s a good resource to understand how to convert a traditional 401(k) to a Roth 401(k)?”

I paused.

Not because I didn’t know the answer—but because I couldn’t think of a resource that broke it all down with enough clarity and compassion for first-gen wealth builders, especially those of us who are BIPOC, women, queer, trans, and navigating systemic barriers every day.

So I decided to create it.

This blog post is here to walk you through everything you need to know about converting a traditional 401(k) to a Roth 401(k). We’ll go over the basics of traditional vs. roth accounts, how conversions work, when it might make sense for you, and when it might not. And along the way, I’ll help you ground all this in strategy, not shame.

Let’s start with some foundational investing knowledge.

Understanding the Four Steps to Investing

Before diving into the differences between traditional and Roth accounts, it’s important to understand the four basic steps to investing in the stock market:

1. Choose a brokerage firm – This is where your money will live. Think of it like choosing a stove to cook on.
2. Open an account – This could be a retirement account, brokerage account, custodial account, HSA, or more. This is your pot.
3. Contribute money – These are your ingredients.
4. Choose your assets – This is the actual dish you’re preparing: stocks, ETFs, bonds, etc.

I like to use a kitchen analogy because while investing might seem complicated, it can be as intuitive as making your favorite meal. The hard part isn’t the steps—it’s the number of choices you have to make along the way. That’s what often leads to analysis paralysis.

In this post, we’re focusing on step two—opening and understanding retirement accounts. And more specifically, we’re exploring the difference between traditional and Roth retirement accounts.

Traditional vs. Roth Retirement Accounts

Let’s start with traditional accounts.

With a traditional retirement account—like a traditional 401(k), traditional IRA, or traditional 403(b)—you contribute money before taxes are taken out. This lowers your taxable income now, which can be especially helpful if you’re in a high tax bracket. The money in these accounts grows tax-deferred, meaning you don’t pay taxes as it grows. But when you retire and start withdrawing funds, that money gets taxed as ordinary income.

On the other hand, Roth retirement accounts—like Roth 401(k)s, Roth IRAs, and Roth 403(b)s—are funded with after-tax money. You don’t get a tax break today, but your money grows and can be withdrawn tax-free in retirement, as long as you follow certain rules. That’s a huge win for long-term tax planning.

Personally, I ride hard for Roth IRAs. That’s why I host free Roth IRA Office Hours every month. Because when you understand how to open, contribute to, and invest within a Roth IRA, you’re no longer waiting for someone else to create financial stability for you—you’re building it on your own terms.

But traditional and Roth accounts both have value. One isn’t better than the other—it all depends on your tax bracket now, your income expectations in retirement, and your goals for tax diversification.

Why Consider a Roth 401(k) Conversion?

This brings us to the original question: why might someone want to convert a traditional 401(k) to a Roth 401(k)?

A Roth 401(k) conversion (also called an in-plan Roth conversion) allows you to move money from your traditional 401(k) into a Roth 401(k) within the same plan, if your employer offers that option. This kind of conversion requires you to pay taxes on the amount converted now—since that money was never taxed—but after that, the funds grow tax-free for the rest of your life.

And let me tell you: tax-free growth is a beautiful thing.

But like all things related to financial planning, this decision should be strategic, not impulsive. Converting too much without considering your current tax bracket or without cash on hand to cover the tax bill can create more stress than stability.

How to Convert a Traditional 401(k) to a Roth 401(k)

If you’re thinking about making a conversion, here’s what the process typically looks like:

1. Confirm your plan allows it – Not all employers offer Roth 401(k)s or in-plan conversions. You’ll need to check with your HR department or 401(k) provider (like Fidelity, Vanguard, Empower).
2. Request the conversion paperwork – Some platforms let you do this online. Others require you to mail in a form.
3. Decide how much to convert – You don’t have to convert the entire account. You can convert in small chunks: $2,000 this year, $5,000 next year—whatever aligns with your financial situation.
4. Understand your tax liability – The amount you convert gets added to your taxable income for the year. For example, if you make $70,000 and convert $10,000, your taxable income becomes $80,000. That can push you into a higher tax bracket, which is why planning is essential.
5. Have cash ready for taxes – You don’t want to pay your tax bill from the retirement account itself. Doing so reduces your future growth and might incur penalties.
6. Submit your request and track your paperwork – You’ll get a tax form (a 1099-R) showing the amount you converted. Your tax preparer or software needs this info when you file.

When Does a Roth Conversion Make Sense?

You might benefit from converting if:

• You’re in a low-income year (starting a new career, between jobs, on sabbatical).
• You believe you’ll be in a higher tax bracket in retirement due to pensions, real estate income, or high Social Security benefits.
• You want to diversify your tax buckets, having a mix of taxable, tax-deferred, and tax-free retirement money.
• You have savings set aside to pay the tax bill from the conversion.

But there are also times when it might not be the best move.

You may want to hold off on converting if:

• You’re in a high tax bracket already (32%, 35%, or 37%) and want to avoid increasing your taxable income.
• You don’t have extra cash available to pay the tax bill.
• You’re close to retirement and won’t have enough time for the Roth money to grow significantly.

What About Rolling Over to a Roth IRA?

If you’ve left your employer, you might not be able to do an in-plan conversion. But you can still convert your traditional 401(k) into a Roth IRA.

Here’s how:

1. Open a Roth IRA if you don’t already have one.
2. Roll your old 401(k) into a traditional IRA.
3. Convert the traditional IRA to a Roth IRA.
4. Plan for the tax bill and pay it with savings.
5. Track your 1099-R form and include it when you file taxes.

Same concept. Different accounts.

Final Thoughts: Take It One Step at a Time

If there’s one thing I want you to take from all of this, it’s that your financial journey doesn’t need to be rushed.

You don’t have to convert everything at once. You don’t need to have all the answers today. And you don’t have to figure this out alone.

But you do deserve to understand your options. You deserve to feel confident managing your money. And you deserve a retirement plan that reflects the life you want—not one that’s dictated by employers, the IRS, or politicians making policy decisions that ignore your existence.

As you build wealth and financial security, remember:

• Your tax strategy matters.
• Roth conversions are powerful but should be personalized.
• Learning your numbers is a form of self-care.

If you want help creating a personalized retirement plan—one that supports your wellness and long-term goals—book a discovery call with me. I offer one-on-one coaching that helps you build wealth without burning out.

And if you’re not quite ready for coaching but want to keep learning, join me for my next Roth IRA Office Hours. Register here.

Here’s to your peace of mind—and your tax-free future.

You’ve got this.