What is an in-plan Roth conversion inside my 401(k) and why would I use one?

An in-plan Roth conversion (also called an in-plan Roth rollover) moves pre-tax or after-tax money already in your 401(k) into the Roth portion of the same plan, if your plan permits it. You pay ordinary income tax on any pre-tax amount converted in that year, and the money then grows tax-free.

The most common use is the in-plan mega backdoor Roth: you make after-tax contributions and immediately convert them to Roth inside the plan, minimizing taxable growth before conversion. Converting long-standing pre-tax balances can also make sense in a low-income year. Have outside cash to pay the tax, since withholding from the conversion shrinks your Roth balance. Confirm your plan offers in-plan conversions and whether they can be done automatically after each after-tax contribution.