Key takeaways
- The 2017 tax cuts were made permanent in 2025, so the old reason to rush a Roth conversion, beating a scheduled rate increase, is gone.
- Conversions still make sense for many retirees, for reasons that have nothing to do with rates: smaller future required withdrawals, the widow’s penalty, and tax-free money for your heirs.
- The sweet spot is the low-income window between when you retire and when required withdrawals start at age 73.
- A conversion is not free. You pay the tax now, so it only wins if your tax rate later would be as high or higher.
- Converting a little each year, enough to fill your current bracket but not spill into the next, usually beats one big conversion.
Yes, for many pre-retirees, Roth conversions are still worth it in 2026. The reason just changed. For years the pitch was “convert now before tax rates jump.” That deadline is gone. In July 2025, the One Big Beautiful Bill Act made the 2017 tax cuts permanent, so rates are not scheduled to rise.[1] The real case for converting is more durable anyway: it shrinks the tax bomb quietly building inside your traditional IRA.
What is a Roth conversion, in plain terms?
A Roth conversion moves money from a traditional IRA, where it grows tax-deferred, into a Roth IRA, where it grows tax-free. You pay ordinary income tax on the amount you convert this year. In exchange, that money is never taxed again, and you are never forced to withdraw it. Think of it like fixing a small problem while you are healthy and the price is known, instead of waiting for a bigger, less predictable bill later. That is the heart of a fiscal physical: a little preventive care now to avoid a painful surprise down the road.
Here is the part clients most often get wrong. The tax you pay on a conversion is not extra money you would otherwise keep. For most people, you will owe tax on that traditional IRA eventually. The only real questions are when you pay it, and how much. We walk through how a conversion works step by step in our podcast episode, Roth Conversions Explained.
Didn’t the reason to convert disappear when tax rates were made permanent?
The old reason did. The better reasons did not. Making the 2017 brackets permanent removed the “use it before you lose it” deadline, but it left untouched the three forces that make conversions valuable. If anything, permanent rates make conversions easier to plan, because you are no longer guessing whether a sunset will change the math.
There is also a reason most articles skip, and it applies even to higher earners. A conversion is a form of tax diversification. It also reduces one of the biggest unknowns in any retirement plan: what tax rates will do decades from now. Trading an unknown for a known is worth something on its own. It does not override the basic math, though. A higher earner converting at today’s top rate still needs future rates to be at least as high for the move to pay off.
How do Roth conversions lower your future RMDs and Medicare costs?
Once you turn 73, the IRS makes you pull money out of your traditional IRA every year, whether you need it or not. These required minimum distributions (RMDs) are taxed as ordinary income.[2] If your IRA is large, those forced withdrawals can push you into a higher bracket and even raise your Medicare premiums through a surcharge called IRMAA. Converting some of that money in your 60s, before RMDs begin, shrinks the balance that gets taxed later. And Roth IRAs have no required withdrawals during your lifetime, so the money you convert can keep growing untouched.[2] For a deeper look at how these work, see our episode Required Minimum Distributions Explained.
How does a Roth conversion help with the widow’s penalty?
When one spouse passes away, the survivor usually files as single the very next year. Same income, smaller brackets. That quietly raises the tax rate on the exact same pension, Social Security, and IRA withdrawals. Roth money softens this blow, because qualified Roth withdrawals are tax-free and are never forced. For many couples, this is one of the most overlooked reasons to convert.
Can a Roth conversion leave more to your heirs tax-free?
Most adult children who inherit a traditional IRA now have to empty it within 10 years, often during their highest-earning years and at their highest tax rates. A Roth IRA passes to them tax-free. If leaving more to your family matters to you, a conversion can be one of the most efficient gifts you ever make.
When does a Roth conversion not make sense?
A conversion is not free money. You are choosing to pay tax now instead of later, so it only wins if your tax rate in the future would be the same or higher than it is today. If you are still working at peak income, or you expect a much lower bracket in retirement, converting now can mean volunteering to overpay. It depends on your numbers, which is exactly why it is worth modeling before you act. As Judge Learned Hand once put it, there is no patriotic duty to pay more tax than the law requires.
How much should you convert to a Roth, and when?
The most tax-efficient window is the stretch between the day you retire and the day RMDs begin at 73. Your income is often at its lowest then, so there is room to convert at lower rates. A simple way to picture it is buckets, an idea I explain in my book, Your Fiscal Physical. Each tax bracket is a bucket that fills at its own rate before the next one starts. A common approach is to convert just enough each year to top off your current bucket without spilling into the next, higher-taxed one, rather than converting a large balance all at once. If you are already 73 or older, you must take your required withdrawal first, then convert. The RMD itself cannot be converted.
Here is a simple example. Say you are 66, retired, and married, and filling your current 12% bracket[3] leaves room for about $16,000 more of income this year. You could convert that $16,000 and still pay only 12% on it. Do that for several years, and you move a meaningful chunk of your IRA into tax-free territory while your future RMDs and Medicare surcharges shrink. Convert $100,000 in one shot instead, and a big piece of it spills into the next bracket up. Same goal, very different tax bill. Want to run your own numbers? Try our Roth vs Traditional IRA calculator.
One more local note. Nevada has no state income tax, so a conversion done as a Nevada resident avoids the state tax that a high-tax state like California would charge on that same conversion. For retirees who have made the move, that can be a meaningful head start, though residency rules are specific and your former state can still tax certain income.
Frequently asked questions
Do I have to convert my whole IRA at once?
No. You can convert any amount in any year. Spreading smaller conversions over several years usually keeps you in lower brackets.
Can I do a Roth conversion after age 73?
Yes, but you must take your required minimum distribution for the year first, then convert. The RMD itself cannot be converted.
Will Roth conversions raise my Medicare premiums?
It can in the year you convert, because the converted amount counts as income for the IRMAA surcharge, which generally uses your income from two years earlier. That is why the size and timing of a conversion matter.
Does Nevada tax a Roth conversion?
No. Nevada has no state income tax, so a conversion done as a Nevada resident avoids state tax on the converted amount.
Wondering if a Roth conversion fits your plan? The math is personal, and a good plan looks at your whole picture. Download our free guide, The Retirement Tax Bomb, to see how to defuse the taxes hiding in your IRA. Or book a free QuickFit call and we will take a look together.
This article is general education, not personalized tax, legal, or investment advice. Tax rules change and apply differently to each person. Please consult a qualified professional about your situation.
Footnotes
[1] IRS, “IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill.” https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
[2] IRS, “Retirement plan and IRA required minimum distributions FAQs.” https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
[3] Tax Foundation, “2026 Tax Brackets and Federal Income Tax Rates.” https://taxfoundation.org/data/all/federal/2026-tax-brackets/