Moving retirement money from a Traditional IRA, 401(k), 403(b), or other tax-deferred account to a Roth IRA is a bit like refinancing a home mortgage: you get long-term benefits, but only if you’re willing to bear short-term costs.

The long-term upside includes tax-free income in retirement and more time for your investments to grow (Roths, unlike Traditional accounts, don’t have required distributions starting at age 70). The short-term downside? A sizeable tax bill from the IRS.

Fortunately, the tax bite isn’t as bad as it once was. The tax law that took effect in January re-worked the federal tax brackets and lowered rates, thus reducing the tax bill on Roth conversions. Last year a married couple filing jointly who together earned $95,000 were in the 25% federal tax bracket. Now they’re in the 22% bracket.

Here’s an example, in dollar terms, of the difference that makes. In 2017, converting $30,000 from a Traditional IRA to a Roth would have cost the couple $7,500 in taxes. This year, they’ll pay $6,600, or $900 less. (Depending on your state of residence, state taxes may apply.)

The lower income-tax rates aren’t permanent, however. The rates are scheduled to expire at the end of 2025, and they could be raised even sooner if Republicans — who enacted the current law — lose control of Congress and the White House in 2020. That means the next two or three years are an optimal time to make Roth conversions.

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