Roth Conversions: Is 2026 the Right Time?

A Roth conversion involves transferring funds from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount in the year of conversion, but all future growth and qualified withdrawals are tax-free. The question many investors are asking right now is whether 2026 presents a particularly attractive window for this strategy.

What Changed: TCJA Rates Are Now Permanent

The Tax Cuts and Jobs Act of 2017 lowered individual income tax rates across most brackets, and those rates were originally scheduled to expire after December 31, 2025. That is no longer the case. The One Big Beautiful Bill Act, signed in July 2025, made the current brackets, 10%, 12%, 22%, 24%, 32%, 35%, and 37%, permanent, so there is no scheduled reversion to pre-2017 rates in 2026 and the old argument to convert before a looming, calendar-driven rate increase no longer applies. What remains is a more durable question: are today's rates low relative to the rates you are likely to face later? That can happen for personal reasons, such as your own rising income or the required minimum distributions and Social Security that lift many retirees into a higher bracket. It can also happen for fiscal reasons: no rate increase is currently scheduled, but the federal government runs a large and growing deficit, and higher tax rates are one realistic way future Congresses may choose to address it. Permanent in tax law means until the law is changed again, not fixed forever.

Who Benefits Most from Roth Conversions

Roth conversions tend to be most beneficial for individuals who expect to be in a higher tax bracket in the future, those who do not need the converted funds for many years (allowing them to grow tax-free), and those who want to reduce required minimum distributions (RMDs) from traditional accounts. Retirees between ages 60 and 72, particularly those in a gap year between leaving work and claiming Social Security, often find themselves in unusually low tax brackets that make conversions especially attractive.

How Much Should You Convert?

The amount you convert should be calibrated to keep you within a favorable tax bracket. Converting too much in a single year can push you into a higher bracket, trigger the Medicare IRMAA surcharge, or increase the taxable portion of your Social Security benefits. A multi-year conversion strategy, sometimes called a Roth conversion ladder, allows you to spread the tax impact over several years while steadily reducing your traditional IRA balance.

Planning Ahead

If you are considering a Roth conversion, the planning is worth doing carefully. Work with your advisor to project your income across the next several years, compare your tax bracket today against the bracket you are likely to face once required minimum distributions and Social Security begin, and determine a conversion amount that fits within a favorable bracket. At Whitwell & Co., we build multi-year tax projections for every client considering this strategy, so the conversion is sized to create lasting value rather than an avoidable tax bill.