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Alvaro Gonzalez | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
If you’re eyeing a Roth conversion<\/a>, President Donald Trump<\/a>‘s “big beautiful bill<\/a>” could make the strategy more complicated, according to financial experts.<\/p>\n Roth conversions transfer pretax or\u00a0nondeductible individual retirement account\u00a0funds to a\u00a0Roth IRA<\/a>, which starts future tax-free growth<\/a>. The trade-off is paying regular income taxes on the converted balance.<\/p>\n Trump’s new tax cuts<\/a> could make Roth conversions more appealing for some investors, experts say. But incurring too much income could impact eligibility for certain tax breaks.<\/p>\n More from Personal Finance:<\/strong> When weighing Roth conversions, you need to know the multi-year state and federal tax impact, said Judy Brown, a certified financial planner who works at SC&H Group in the Washington, D.C., and Baltimore area.<\/p>\n For example, if you’re\u00a0nearing Medicare<\/a>\u00a0age or already enrolled, boosting your earnings could increase income-related monthly adjustment amounts, or IRMAA, for\u00a0Medicare Part B<\/a>\u00a0and Part D premiums.<\/p>\n The strategy is “looking at a lot of different pieces, and figuring out the optimal place for each client,” said Brown, who is also a certified public accountant.<\/p>\n<\/div>\n Roth conversions have always been about “tax bracket management,” said CFP Patrick Huey, owner of Victory Independent Planning in Portland, Oregon.\u00a0<\/p>\n When making Roth conversions, advisors typically incur enough regular income to “fill up the lowest brackets,” he said.\u00a0<\/p>\n Your federal brackets are based on each part of your “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income.<\/p>\n<\/div>\n Before Trump enacted the One Big Beautiful Bill Act, lower federal income tax brackets were scheduled to sunset after 2025, which would have made converted balances more expensive.<\/p>\n Trump’s legislation made the lower tax rates permanent, but several new tax breaks \u2014 deductions for older Americans<\/a>, tipped workers<\/a> and consumers with overtime pay and car loan interest<\/a> \u2014 are temporary with varying earnings limits.\u00a0<\/p>\n These tax breaks, which are available from 2025 through 2028, could offer more room for Roth conversions before hitting the next tax bracket, experts say.<\/p>\n Once these cuts expire, you could be “paying more for the exact same Roth conversion,” said CFP Ashton Lawrence at Mariner Wealth Advisors in Greenville, South Carolina.<\/p>\n<\/div>\n While Trump’s new tax cuts could make more space in the lower tax brackets, higher income from Roth conversions can impact eligibility, experts say.<\/p>\n For example, the additional $6,000 deduction<\/a> for older Americans starts to phase out, or get smaller, once modified adjusted gross income exceeds $75,000 for single filers or $150,000 for married couples filing jointly.<\/p>\n It probably still makes sense to convert funds at 22% or 24% tax rates now \u2014 and skip the $6,000 deduction \u2014 to avoid the 30% brackets for large pre-tax required withdrawals<\/a> later, Brown said.<\/p>\n Most retirees must take\u00a0required minimum distributions<\/a>, or RMDs, from pretax retirement accounts starting at age 73 or\u00a0face an IRS penalty<\/a>.<\/p>\n<\/div>\n<\/div>\n\n
What to do with RMDs when you don’t need the money<\/a>
Social Security COLA may be 2.7% in 2026: estimates<\/a>
Older student loan borrowers face high delinquency rates<\/a><\/p>\n‘Fill up the lowest brackets’<\/h2>\n
Trump’s temporary tax breaks<\/h2>\n
Comparing tax breaks<\/h2>\n
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