Are Roth Conversions for Retirees Dead in 2026 Because of the New Tax Law?

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For eight years now, you've been hearing about taxes going up in 2026 and that the solution was to do Roth conversions before that happened.

Now that the One Big Beautiful Bill Act (OBBBA) has made the prior tax rates permanent, does that mean the Roth conversion party is over?

I'm hearing from a lot of retirees who think so.

They're choosing to skip out on the Roth conversion calculations, and they just might be choosing to skip out on a lower lifetime tax bill.

Other retirees are making similar assumptions, but on the other side of the same coin. They think that, since they've been doing big Roth conversions for the past few years, they need to keep doing that.

What both sets of retirees get wrong is that it's assumptions, not tax law changes, that cause retirees to make the biggest mistakes.

One thing the OBBBA did not change is the need each year to evaluate your own personal income and tax situation so that you can make the best conversion decision for you, each year.

Which is why I created, even before the OBBBA, the Golden Rule of Roth Conversions (which I share in my book, Retire Today): Choose the right year and the right amount of Roth conversions.

Roth conversions are not a "yes" or "no." Roth conversions are "how much?" and "when?"

The goal of Roth conversions

Despite OBBBA making the prior tax rates permanent, the goals of Roth conversions haven't changed:

• Pay taxes when you expect your tax rates to be low
• Make some of your money available tax-free for when your rates are higher

To accomplish these two goals, you need to be on the lookout for your Roth conversion opportunity years, which are often (but not always):

• Between your retirement date and the year you start receiving Social Security
• Before you start taking your required minimum distributions (RMDs)
• When you file taxes as married filing jointly, before the surviving spouse must file as single

Before the OBBBA became law, it felt like the Roth conversion decision was easier — just convert as much as you could at the 12%, 22% and 24% tax brackets before they went up to the 15%, 25% and 28% tax rates.

But even then, you faced the same hidden obstacles as now. Here are three issues that could get in the way of your Roth conversion strategy:

1. The Medicare IRMAA surcharge

When you convert money from your traditional IRA to your Roth IRA, you know that the extra income will be taxable on your tax return. What often surprises you (and even your tax preparer): That income could cause your Medicare premiums to go up.

What many people do, when it comes to Roth conversions, is say, "I'm in this tax bracket. I'll convert to the top of this bracket, but I won't go into the next one."

This sounds quite reasonable, but near the top of the 22% tax bracket is the first IRMAA threshold ($218,000 for joint filers and $109,000 for singles).

The main confusion lies in that IRMAA is based on modified adjusted gross income (MAGI) before deductions, but the tax brackets are based on taxable income after deductions.

If focusing on the taxable income, you would think you're in the clear going to the top of the 22% bracket because it maxes out at $211,400 for joint filers and $105,700 for singles.

Of course, these numbers change each year, which is why you need to evaluate Roth conversions every year, based on up-to-date numbers, not old assumptions.

Before converting to a Roth, make sure to check both the current MAGI level for IRMAA and not just the tax bracket. That way, you can avoid the IRMAA surprise if you unknowingly went over those MAGI limits.

2. The assumption that once you start RMDs, it's too late

I hear it quite often: "I'm too old for Roth conversions." My response is always, "There is no age limit for conversions. No matter what your age, you should do conversions if you think the taxes you pay today are lower than the taxes you will pay later."

And if you are into the RMD ages, it's time to start considering not just the taxes you pay, but the tax rates your kids pay. When your kids inherit your traditional IRA, they will be forced to take it out over 10 years, which will very likely kick them into the next tax bracket, if not even higher.

If they inherit your Roth IRA, then they'll still have the same 10-year rule, but the money will be tax-free for them.

As I tell my clients, "Your kids will like that you left them money, but they'll love it if you leave them tax-free money."

Just remember that Roth conversions don't count as RMDs. You'll have to send out your RMDs as qualified charitable distributions (QCDs) or personal payouts, and then you can convert additional funds to a Roth IRA afterward.

Roth conversions aren't dead in 2026 — Roth assumptions are

It's not Roth conversions that died off with the new tax laws — it's assumptions about Roth conversions that died, although assumptions were always a problem even before the new tax law.

• Don't assume that your taxes in retirement will always be lower
• Don't assume that the new tax law makes Roth conversions obsolete
• Don't assume that you're too old for Roth conversions

Never assume. Always project.

Project out your tax situation, preferably with a financial adviser who uses forward-projecting tax software.

But if you're doing this on your own, consider your tax situation in the following before-and-after situations. Then try to convert and pay taxes intentionally in your own personal lower projected tax years.

• Before and after retirement
• Before and after starting Social Security
• Before and after RMDs start

Yes, the urgency of the December 31, 2025, low-tax conversion deadline is gone, but the need to project out your future tax situation so that you intentionally pay taxes when you expect your rates to be lower will never go away.

The OBBBA changes might mean fewer conversions in 2026 than you expected, or it might mean more.

What didn't change is that those who evaluate their Roth conversion each year, based on math and their personal situation, will give themselves better control of their tax situation so they won't be held hostage by future tax rates.

As I say in my book, "Control what you can control," and in retirement, your tax situation is one of the most impactful things you can control.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.