Should You Convert to Roth Before Retiring from Public Service?

Meet David, a 58-year-old city police officer with 30 years of service. Like many Law Enforcement Officers' and Fire Fighters' (LEOFF) 2 members, David has done an excellent job saving but worries about the tax bill waiting for him in retirement. With potentially higher federal tax brackets in the future, the timing of Roth conversions could significantly impact his retirement income.
David is wondering if he should convert to Roth before retiring from his law enforcement job.
He earns $115,000 annually and has $950,000 in his 457(b) plus $200,000 in a taxable brokerage account. David plans to retire at 58 and can delay his LEOFF 2 pension for one year by living off his brokerage funds, creating an even better conversion opportunity. His LEOFF 2 pension will provide about $6,230 monthly starting at age 59.
Core Principles
Before diving into David's strategy, let’s understand these fundamental principles:
1. Tax Rate Arbitrage Convert when your current tax rate is lower than your expected retirement tax rate. This is often the sweet spot for pre-retirees².
2. Time Horizon Matters Roth conversions work best when you have at least 5 years before needing the money, allowing tax-free growth to compound³.
3. Required Distribution Planning Traditional retirement accounts force distributions at age 73, but Roth IRAs never require withdrawals during your lifetime⁴.
4. Medicare Impact Awareness Large conversions can increase your income and potentially raise Medicare premiums two years later4.
David's Roth Conversion Blueprint
The Pre-Pension Window Strategy
David's optimal conversion period includes one year with no pension income (age 58) followed by eight years with pension income (ages 59-66) before claiming Social Security at 67. This creates both a perfect conversion year and an extended moderate-income period.
David's Income Timeline:

• Age 58: Minimal taxable income (living off taxable brokerage account)
• Ages 59-66: $74,750 annual LEOFF 2 pension ($6,230 × 12 months)
• Age 67+: Pension plus Social Security

Key considerations for David:

• At age 58, he can convert up to the full 12% bracket limit
• From ages 59-66, his income includes pension but leaves some 12% bracket space
• He has 9 years total before Social Security increases his tax bracket
• His taxable brokerage account provides bridge income without creating taxable events

Calculating the Sweet Spot
David should focus on maximizing the 12% tax bracket opportunity rather than moving into higher brackets. This approach ensures predictable tax costs while still achieving substantial conversion benefits.
The key to David's strategy is understanding how the standard deduction creates conversion space. For married filing jointly in 2025, the standard deduction is $30,000, and the 12% bracket extends to $96,950 of taxable income. This means David and his spouse can have total income of $126,950 ($30,000 + $96,950) before hitting the 22% bracket.
David's Tax Bracket Math:

• Age 58: No pension income, so he can convert up to $126,950 and stay entirely in the 12% bracket. This assumes he can draw from his taxable brokerage account for monthly living costs with virtually no tax impact.
• Ages 59-66: Pension income of $74,750 leaves $52,200 of available space ($126,950 - $74,750)
• Strategy: Fill the available space each year without exceeding the 12% bracket. In addition, the Medicare IRMAA (additional Medicare premiums) doesn’t begin until the MFJ adjusted gross income reaches $212,000.

David's Conservative Conversion Strategy:

• Age 58: Convert $126,950 (maximizing available 12% bracket space)
• Ages 59-66: Convert $52,200 annually for 8 years (using remaining space after pension)
• Total conversions: $544,550 over 9 years
• Tax Impact: Total tax on the conversions over 9 years is $61,269 (see breakout below).

 
Coordinating with Pension Benefits
As a LEOFF 2 member, David can retire and delay his pension start date, which creates a perfect conversion opportunity. His taxable brokerage account provides bridge income during his first year of retirement without creating additional taxable income.
David's LEOFF 2 Coordination:

• Delay pension start until age 59 to maximize conversion opportunity
• LEOFF 2 pension: $6,230 monthly starting at age 59
• The delayed start creates one year of minimal taxable income

Planning considerations specific to David:

• His brokerage account provides income stability during the first conversion year
• Delaying pension for one year creates maximum conversion flexibility
• LEOFF 2's pension delay option is often overlooked but extremely valuable for tax planning

Implementation and Tax Management
David will front-load his conversions to take advantage of the no-pension year, then maintain consistent conversions that maximize the 12% bracket thereafter.
David's Execution Timeline:

• Age 58: Execute $126,950 conversion in November, live off brokerage account
• Ages 59-66: Execute $52,200 conversion each November, start pension benefits
• Quarterly: Make estimated tax payments  on the estimated conversion tax  to avoid penalties
• November each year: Review actual income and confirm staying within 12% bracket before doing the conversion

David's Annual Tax Impact:

• Age 58: $126,950 conversion, $11,157 federal tax ($2,385 at 10% + $8,772 at 12%)
• Ages 59-66: $52,200 conversion, $6,264 federal tax annually on the conversion
• Total 9-year tax cost: $61,269
• Effective tax rate: 11.25% on taxable conversion amounts

Should You Do Roth Conversions Before Retiring?
For most LEOFF 2 members, the answer is no—Roth conversions before retirement generally don't make sense. While you're working and earning $115,000 like David, you're likely in the 22% tax bracket or higher. Converting during your peak earning years means paying higher tax rates on the conversion, which defeats the purpose of tax arbitrage.
The magic happens after retirement when your income drops significantly. David's case demonstrates why waiting makes sense: his taxable income drops from over $115,000 while working to just $44,750 from his pension (after the standard deduction). This dramatic income reduction creates the opportunity to convert at the much lower 12% tax rate.
The key insight is that "before retiring" means different things for different people. For LEOFF 2 members, the optimal conversion window typically begins immediately after retirement but before claiming Social Security—not while still working and earning a full salary.
Remember, Roth conversion decisions are permanent. Work with qualified professionals who understand both federal tax law and LEOFF 2 retirement systems to ensure these strategies align with your complete financial picture.

​Sources and Resources

1. Department of Retirement Systems - LEOFF 2 Information
2. IRS Publication 590-A - Contributions to Individual Retirement Arrangements
3. IRS - Retirement Plan and IRA Required Minimum Distributions FAQs
4. Social Security Administration - Medicare Costs

-Seth Deal