Are Roth conversions worth it after OBBBA? For many retirees with large pre-tax balances, often yes, though the rationale has shifted. The 2026 rate sunset that drove much of the urgency is gone, so the question is no longer whether you can beat a legislated rate increase. It is whether you can beat your own future marginal rate.
Yes, for many retirees Roth conversions can still be worth it after OBBBA, but the reason changed. OBBBA (signed July 2025) made the 2017 individual tax rates permanent, so the 2026 rate sunset that created a deadline is gone. The structural case remains: converting can trim future required minimum distributions, soften the survivor filing penalty, and reduce lifetime and heir tax exposure.
The Short Answer: Yes, But the Reason Changed
For a decade, a common argument for converting was a countdown clock: the 2017 tax cuts were scheduled to expire after 2025, with rates set to jump in 2026. OBBBA removed that clock by making the current 10 percent to 37 percent brackets permanent. For retirees roughly age 60 to 73 with sizable traditional IRA or 401(k) balances, the case rests on their own future marginal rate, as the Q3 Advisors Roth conversion overview explains.
Talk With Craig Wear's Team
Craig has helped IRA millionaires save over $1 million each in unnecessary taxes. Find out if a Roth conversion strategy fits your retirement, with no sales pressure and no product pitch.
What went away
The “convert before rates snap back to 39.6 percent in 2026” argument is retired. Because the brackets are now permanent, there is no legislated cliff forcing action by December 31, 2025, and no built-in risk that a conversion done at today’s rates looks overpriced against higher rates next year. If beating the sunset was your only reason to convert, that specific reason is gone.
What survived
Everything driven by your personal tax trajectory rather than the tax code’s calendar. A growing pre-tax balance still compounds toward a required minimum distribution (RMD) spike. A surviving spouse still faces compressed single-filer brackets. Medicare surcharges (IRMAA) and the Social Security “tax torpedo” still recur every year. And under the SECURE Act 10-year rule, non-spouse heirs still inherit an embedded tax bill.
What OBBBA Actually Changed (and What It Didn’t)
OBBBA (Public Law 119-21) locked in the seven current rates and added a few new wrinkles for retirees. Understanding what moved helps you see why a permanent code can, in some ways, make a conversion easier to plan rather than less worthwhile. The table below contrasts the permanent 2026 rates with the pre-2018 rates that would have returned had the 2017 law been allowed to sunset.
| Bracket | Permanent rate (2026, post-OBBBA) | Rate if TCJA had sunset in 2026 |
|---|---|---|
| 1 | 10% | 10% |
| 2 | 12% | 15% |
| 3 | 22% | 25% |
| 4 | 24% | 28% |
| 5 | 32% | 33% |
| 6 | 35% | 35% |
| 7 | 37% | 39.6% |
TCJA rates made permanent
The top rate stays 37 percent and the middle brackets no longer revert in 2026. Removing the sunset removes the deadline, but it also removes a risk that cut the other way: the chance that a conversion taxed today would look expensive against a lower future schedule. With a permanent code, a conversion is a known, fixed cost measured against a more predictable future. That predictability is one reason many investors now favor a steady multi-year plan over a rushed lump sum.
The 2026 itemized-deduction haircut for the 37 percent bracket
OBBBA limits the value of itemized deductions for top-bracket filers so that each dollar of deduction is worth roughly 35 cents rather than 37 cents (a 35 divided by 37 haircut). In practice, high earners who lean on deductions to manage taxable income get slightly less relief from them. A Roth conversion, by contrast, carries a fixed and known cost in the year you do it. As deduction planning gets marginally less powerful for the highest earners, the certainty of a conversion becomes comparatively more attractive.
The temporary senior deduction (2025 to 2028)
OBBBA created a temporary deduction of up to $6,000 per person age 65 and older ($12,000 for a qualifying couple), available for tax years 2025 through 2028. It phases out at 6 percent of the amount by which modified adjusted gross income (MAGI) exceeds $75,000 (single) or $150,000 (joint), and disappears entirely at $175,000 (single) or $250,000 (joint). Because a conversion adds to MAGI, a large conversion can shrink or erase this deduction for some filers age 65-plus. That is a reason to size a conversion carefully, not a reason to skip it.
Four Reasons Conversions Still Make Sense With No Deadline
With the sunset removed, four durable, tax-trajectory reasons remain. Each is about your future marginal rate rather than a legislated one. Together they explain why a converter’s core anxiety (that OBBBA erased the case) is largely misplaced: the deadline was only ever one argument among several, and arguably not the decisive one.
The RMD tax spike at 73 or 75
A pre-tax balance you never touch keeps compounding until RMDs begin, and then the IRS forces income out on its schedule. Using the Uniform Lifetime Table divisor of 26.5 at age 73, an illustrative $1,000,000 traditional IRA throws off a first-year RMD of about $37,700, stacked on top of Social Security and any pension. That forced income can push a retiree into a higher bracket and higher Medicare surcharges. In an RMD year the RMD must be taken first and cannot itself be converted; see the 2026 RMD guide for the timing rules.
The widow’s and survivor penalty
This is often a significant post-OBBBA driver. When one spouse dies, the survivor typically files as a single taxpayer the following year, with brackets that are roughly half as wide, even though much of the household income continues. The illustrative table below shows the same $120,000 of taxable income taxed under 2026 married-filing-jointly versus single brackets.
| Same $120,000 taxable income (2026, illustrative) | Married filing jointly | Single survivor |
|---|---|---|
| Approximate federal income tax | ~$15,800 | ~$21,400 |
| Extra tax as a single filer | Baseline | ~$5,600 more per year |
| IRMAA exposure (joint $218,000 vs single $109,000) | Below first tier | Above first tier |
The survivor pays several thousand dollars more each year on the same income and can also cross the single IRMAA threshold. Converting during the married-filing-jointly years, while both wide brackets are still available, is one way to pre-empt that compression.
IRMAA and the Social Security tax torpedo
IRMAA is a recurring annual Medicare surcharge. In 2026 the standard Part B premium is $202.90, and surcharges begin above $109,000 MAGI (single) or $218,000 MAGI (joint), on a two-year lookback: 2026 income drives 2028 premiums. Rising RMDs can trip these tiers year after year, and the same income can make more of your Social Security taxable (the “torpedo”). A conversion is ordinary income and can lift MAGI in the conversion year, so it must be sized against these thresholds, but reducing future RMDs can lower the surcharges you would otherwise pay for the rest of your life.
Legacy under the SECURE Act 10-year rule
Most non-spouse heirs must empty an inherited traditional IRA within 10 years, often during their own peak earning years. If an heir is in the 32 percent to 35 percent bracket, a large share of an inherited pre-tax account can go to tax. As an illustration, a $500,000 inherited traditional IRA drawn down by an heir at 35 percent could send roughly $175,000 to the IRS over the decade, while an inherited Roth generally passes income-tax-free. With the federal estate exemption at $15,000,000 in 2026, the binding constraint for most families is income tax on inherited pre-tax dollars, not estate tax.
The 2026 Planning Shift: From Beating the Clock to Filling the Brackets
With no sunset, the planning frame shifts from urgency to arithmetic. The goal is to move pre-tax dollars into a Roth at a controlled, known rate during your lowest-income years, rather than letting the IRS choose the timing and rate later through RMDs and survivor filing. A permanent code makes a smooth, multi-year plan easier to commit to.
The conversion window
A common window is often the gap between retirement and the start of RMDs, when wages have stopped but forced distributions have not yet begun, roughly ages 60 to 72, with the years around 69 to 73 frequently a late low-income opportunity. Those who retire early can extend this runway; the Roth conversion ladder strategy for early retirees covers that longer horizon.
Why many spread conversions across years rather than one big year
One illustrative choice is between converting $80,000 per year for five years, staying inside the 24 percent bracket, versus $400,000 in one year. The lump sum pushes the top slices into the 32 percent to 35 percent brackets and can trigger IRMAA, so the same total is converted at a materially higher marginal rate. Spreading the conversions can keep every dollar taxed at 24 percent or less. Permanence is what makes this patience safe: there is no deadline forcing the lump sum. For sizing, see how much to convert to Roth.
Why many fill to the lower of their bracket ceiling and next IRMAA tier
A useful ceiling is whichever comes first: the top of your current bracket or the next IRMAA threshold. For a couple, the 24 percent bracket runs to $403,550 of taxable income in 2026, but the first joint IRMAA cliff at $218,000 MAGI usually bites long before that. Many couples therefore fill toward the IRMAA line rather than the bracket line. One approach is to leave a small cushion so ordinary dividends or a year-end mutual fund distribution does not tip you over.
The sacrifice-year senior-deduction tradeoff
Because the senior deduction reduces taxable income but not MAGI, it does nothing for IRMAA, ACA, or the Social Security torpedo, all of which are MAGI-based. That distinction matters when sizing conversions: a conversion that stays under a MAGI line still preserves those benefits even while using up the senior deduction. Giving up a full $12,000 couple deduction costs roughly $2,880 at 24 percent. In a deliberate “sacrifice year,” some investors accept that one-time cost when the conversion meaningfully lowers future RMD-driven taxes; others prefer to keep conversions under the phase-out line. The right answer depends on the size of the future RMD problem.
Work with Q3 Advisors
Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
When a Conversion Is the Wrong Move
Conversions are not universal, and honest guardrails matter. A conversion is taxable ordinary income in the year you do it, and since 2018 it cannot be reversed, as there is no recharacterization. Several common situations argue against converting, or against converting much, and each deserves a careful look before acting:
- A short time horizon or the likelihood of needing the money soon, so there is little runway for tax-free growth to justify the upfront tax.
- No outside cash to pay the tax, forcing you to withhold from the conversion itself, which shrinks the amount that reaches the Roth and can add penalties before age 59.5.
- Already sitting at or above the marginal rate you expect in retirement, so there is no lower-rate arbitrage to capture.
- A conversion that would push other investment income over the Net Investment Income Tax threshold; a conversion is not itself net investment income, but the added MAGI can drag other income into the 3.8 percent tax. See the NIIT 2026 overview.
For anyone weighing the tradeoff, a personalized break-even analysis is the cleaner way to decide than any rule of thumb.
Frequently asked questions
Did OBBBA make Roth conversions less valuable?
OBBBA removed one argument, the 2026 rate sunset, by making the 2017 brackets permanent. It did not touch the structural drivers: RMD bracket spikes, the survivor filing penalty, IRMAA surcharges, and the SECURE Act 10-year rule for heirs. For many retirees the core case is unchanged; only the “beat the deadline” framing is gone.
Are Roth conversions still worth it now that the tax cuts are permanent?
For many retirees with large pre-tax balances, they can be. Permanence removes the deadline but not the reasons tied to your own future marginal rate. Converting during lower-income years may reduce forced RMD income later, soften the single-filer survivor brackets, and lower the tax your heirs eventually pay on inherited pre-tax accounts.
What is the widow’s penalty and how does a conversion help?
When one spouse dies, the survivor usually files single, with brackets roughly half as wide, even though much of the income continues. On the same illustrative $120,000, a single filer can pay several thousand dollars more per year than a couple and cross the single IRMAA line. Converting during the joint-filing years can pre-empt some of that compression.
How much can I convert without triggering IRMAA in 2026?
IRMAA surcharges begin above $109,000 MAGI (single) or $218,000 MAGI (joint) in 2026, on a two-year lookback, so 2026 income affects 2028 premiums. A conversion raises MAGI in the year you do it. Many investors size conversions to stay just under the relevant tier, leaving a cushion for dividends and year-end fund distributions.
Does the new senior deduction change conversion planning?
It can. The temporary deduction (up to $6,000 per person 65-plus, 2025 to 2028) phases out between $150,000 and $250,000 MAGI for couples. Because it lowers taxable income but not MAGI, it does nothing for IRMAA or the Social Security torpedo. A large conversion can erase it, so it is a factor in sizing rather than a reason to avoid converting.
What are the RMD start ages under SECURE 2.0?
RMDs begin at age 73 for those born 1951 through 1959, and at age 75 for those born in 1960 or later. The earliest an age-75 RMD applies is 2035, not 2033. Every year you delay converting is a year the pre-tax balance keeps compounding toward that first forced distribution.
Can I be forced to take an RMD before I convert?
Yes. In any year you are subject to RMDs, the required amount must be distributed first and cannot be rolled into a Roth. Only amounts above the RMD can be converted. This is a key reason many investors do their heaviest converting in the pre-RMD window, before the required distribution consumes part of the low-bracket room.
How does the SECURE Act 10-year rule affect my heirs?
Most non-spouse heirs must empty an inherited traditional IRA within 10 years, often during peak earning years. An heir in the 32 percent to 35 percent bracket could lose a large share to tax; illustratively, a $500,000 pre-tax account could send roughly $175,000 to the IRS, while an inherited Roth generally passes income-tax-free. Converting can shift that embedded tax off your heirs.
