Roth Conversion for Architects (2026)
A Roth conversion for architects is a fact-specific calculation, because architecture income swings with project milestones and because architects, unlike doctors, lawyers, and CPAs, are explicitly kept out of the Section 199A specified service (SSTB) definition and remain eligible for the 20% pass-through deduction above the income thresholds because they are not subject to the SSTB phase-out, though the W-2 wage and property (UBIA) limitations can still reduce it and should be modeled with your CPA.
A Roth conversion moves money from a pre-tax traditional, SEP, or SIMPLE IRA into a Roth IRA and taxes it as ordinary income, with no dollar or income limit and a December 31 deadline (Source: IRS Publication 590-A). For an architect, the decision turns on two architect-specific variables, non-SSTB QBI status and project-driven income swings.
Roth conversion for architects: why lumpy project income changes the math
Architecture income rarely arrives in a flat line. Principals and sole practitioners bill against design phases and construction milestones, so a strong year of closings can be followed by a lean year between projects or during a construction slowdown. Those down years can be among the more useful conversion windows, because a conversion is taxed at whatever marginal rate the extra income lands in that specific year.
Licensed employee-architects with steadier W-2 pay face a flatter version of the same question, while firm principals with variable draws control the timing directly. The core comparison stays the same: your marginal rate on the conversion this year against the rate you project in retirement (Source: IRS Publication 590-A). What changes for architects is how much the profession’s income pattern lets you choose the conversion year. See our Roth conversion decision overview for the framework.
Architects are excluded from the SSTB definition under Section 199A
Architecture and engineering are the two professions explicitly carved out of the specified service trade or business (SSTB) list in Section 199A (Source: IRC 199A(d)(2); Treas. Reg. 1.199A-5(b)(3)). Doctors, lawyers, and accountants lose the 20% qualified business income (QBI) deduction once taxable income clears the thresholds. A qualifying architect keeps it, which changes how a Roth conversion interacts with your return.
This distinction is specific to architects and is easy to overlook. For an SSTB owner, extra income from a conversion can accelerate the loss of the pass-through deduction. For an architect whose firm income qualifies, the 20% deduction does not phase out on the SSTB test, so a conversion does not trigger that particular penalty. The interaction with the deduction’s other limit still matters, which the next section covers.
How the QBI deduction interacts with a Roth conversion
The QBI deduction is generally the lesser of 20% of qualified business income or 20% of taxable income minus net capital gains (Source: IRC 199A(a)). In a low-income year the taxable-income limit can be the binding one, so a Roth conversion that raises taxable income can, in some cases, let more of an architect’s QBI deduction through rather than phasing it out.
Because architects are not subject to the SSTB phase-out, the planning question becomes the taxable-income ceiling, not the service-business haircut. A conversion sized in coordination with your firm’s QBI figure can be modeled at year-end. This interaction is fact-specific and belongs in a tax projection with your CPA, not a rule of thumb. Our note on how much to convert to a Roth walks through the taxable-income levers.
Timing a Roth conversion in a low-income or between-project year
Because a Roth conversion is taxed as ordinary income with no income cap and a December 31 deadline (Source: IRS Publication 590-A), a lean project year lets an architect convert at a lower marginal rate than a boom year would. The 2026 standard deduction shelters the first $32,200 of a married-filing-jointly return, so a low-income year can create meaningful headroom (Source: IRS Rev. Proc. 2025-32).
A recession year, a gap between major commissions, or the year a principal steps back from full billing all tend to depress ordinary income. Filling the low brackets in exactly those years, rather than converting mechanically every year, is an approach the profession’s variable income pattern can make more practical. The conversion must be completed by the December 31 deadline to count for that tax year.
SEP IRA to Roth conversion for self-employed architects
A SEP IRA is convertible to a Roth just like a traditional IRA, and the converted amount is taxed as ordinary income (Source: IRS Publication 590-A). For 2026, SEP contributions are capped at the lesser of 25% of compensation (roughly 20% of net self-employment income) or the $72,000 defined-contribution limit; a SEP has no age-50 catch-up (Source: IRS SEP contribution limits; IRS Notice 2025-67).
Many firm principals and sole practitioners funded a SEP IRA for years because it is simple to run. That leaves a large pre-tax balance sitting in an IRA, which is exactly the balance you can convert opportunistically in a low-income year. The complication is that the same SEP balance drives the pro-rata rule, covered next.
The pro-rata rule and your SEP IRA balance
The pro-rata rule treats all your traditional, SEP, and SIMPLE IRAs as one pot. Form 8606 line 6 requires the total value of all traditional IRAs (including SEP and SIMPLE) as of December 31, so a large pre-tax SEP balance makes almost any conversion mostly taxable (Source: IRS Instructions for Form 8606, 2025; IRC 408(d)(2)).
This is where architects who diligently funded a SEP get surprised. You cannot cherry-pick only after-tax dollars to convert; the taxable fraction is computed across every traditional, SEP, and SIMPLE IRA you hold. A principal with a $500,000 SEP balance who makes a $7,500 non-deductible contribution and converts it will find nearly all of that conversion taxable pro-rata. Read the mechanics on our pro-rata rule page.
Using a solo 401(k) for a cleaner Roth conversion
A solo (individual) 401(k) is invisible to the pro-rata calculation, because Form 8606 line 6 aggregates only IRAs, not employer qualified plans (Source: IRS Instructions for Form 8606, 2025). Rolling a SEP IRA into a solo 401(k) can therefore zero out the IRA denominator before a clean backdoor Roth. For 2026, solo 401(k) elective deferrals are $24,500, plus an $8,000 age-50 catch-up ($11,250 for ages 60-63), inside the $72,000 total limit (Source: IRS Notice 2025-67).
SEP IRAs and solo 401(k)s are sometimes discussed together, but only the SEP (and SIMPLE) IRA sits in the pro-rata denominator. A self-employed architect who consolidates a SEP into a solo 401(k) can remove the pro-rata drag, then execute a backdoor Roth cleanly. See solo 401(k) contribution limits for 2026.
Bracket-filling: how much of an architect’s IRA to convert
Bracket-filling means converting only enough to reach the top of a chosen tax bracket, then stopping, so the conversion is taxed at a known rate rather than spilling into a higher one. The 2026 married-filing-jointly standard deduction of $32,200 sets the first layer of room in a low-income year (Source: IRS Rev. Proc. 2025-32).
The illustration below assumes a married architect principal in a slow project year. The tax figures use rounded, illustrative marginal-rate assumptions, not IRS-published bracket dollar figures, purely to show how effective cost rises as the conversion grows.
| Amount converted (illustrative) | Bracket band filled | Est. federal tax on conversion | Approx. effective rate |
|---|---|---|---|
| $50,000 | Lower band only | ~$6,000 | ~12% |
| $100,000 | Into the middle band | ~$16,000 | ~16% |
| $150,000 | Reaches the 22% band | ~$28,000 | ~19% |
| $200,000 | Still within the 22% band | ~$42,000 | ~21% |
Illustrative only. Actual tax depends on your full return, state tax, and the QBI interaction described above. A projection models where your personal stop point falls. The comparison against a projected retirement rate is covered in our Roth conversion break-even discussion.
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Building a multi-year Roth conversion ladder around an architect’s project cycle
A Roth conversion ladder spreads conversions across several years to fill low brackets repeatedly rather than converting a large balance in one taxed year. Each conversion starts its own 5-year clock for penalty-free access to that converted amount, and the age-59.5 rule interacts with it (Source: IRS Publication 590-A). Conversions are irreversible; recharacterizing a conversion was repealed effective 2018 (Source: IRC 408A(d)(6)).
For architects, a ladder maps naturally onto the profession’s rhythm: larger conversions in lean years, smaller or none in boom years. Because Roth IRAs carry no lifetime required minimum distributions and the RMD age is now 73 (rising to 75 for those born in 1960 or later, beginning 2035), converting before RMDs begin can reduce later forced income (Source: SECURE 2.0 Act; IRS Notice 2025-67). See required minimum distributions for 2026.
Roth conversions for firm owners and partners around an equity buyout
A firm-equity buyout or partnership admission usually lands as a high-income event, which is generally the wrong year to convert. The years just before or after, when billing is lighter, tend to be lower-bracket windows. Partners and S-corp employee-architects whose prior-year FICA wages exceed the statutory $145,000 (indexed) also face the SECURE 2.0 Section 603 Roth catch-up rule beginning 2026 (Source: SECURE 2.0 Act sec. 603; IRS Notice 2025-67).
Ownership transitions create both liquidity and landmines. A buyout can fund the conversion tax from outside cash, but the buyout income itself may crowd out low-bracket room that year. A true sole-proprietor principal with a solo 401(k) has net self-employment earnings rather than FICA wages, so the Section 603 Roth-catch-up mandate generally does not bite the same way; W-2 partners over the threshold are the ones affected. This edge case belongs with a benefits attorney.
IRMAA Medicare surcharges after selling your firm equity
Medicare income-related monthly adjustment amounts (IRMAA) use a two-year MAGI lookback, so a large conversion or firm-equity sale at age 63 or later can raise Part B and Part D premiums two years afterward. A conversion is ordinary income that lifts MAGI, so the timing matters for anyone near or in Medicare (Source: SSA IRMAA rules).
An architect who sells firm equity in the same year as a big conversion can stack two MAGI spikes and cross IRMAA tiers. Sequencing the sale and the conversion into different years, or completing large conversions before the two-year lookback window opens, is a common planning move. Current-year thresholds are on our 2026 Medicare IRMAA brackets page.
Backdoor Roth for high-income architect earners
The direct Roth IRA contribution phases out at MAGI of $242,000 to $252,000 married filing jointly and $153,000 to $168,000 single for 2026 (Source: IRS IRS Notice 2025-67). A backdoor Roth (a non-deductible traditional IRA contribution followed by a conversion) is the route above those limits, but it collides with the pro-rata rule if you hold a pre-tax SEP balance.
For a high-earning principal, the backdoor Roth and a larger multi-year conversion answer different questions: the backdoor moves the annual $7,500 contribution limit into a Roth (Source: IRS Notice 2025-67), while a conversion ladder drains an existing pre-tax balance over time. Both stall if a SEP IRA sits in the pro-rata pot, which is why the solo 401(k) consolidation step above often comes first.
How Rothology works for architects
Rothology Premier is a flat-fee, fiduciary Roth conversion planning service from Q3 Advisors, carrying a one-time fee of $11,000. It builds a multi-year conversion plan, runs tax projections, and delivers annual reviews. Q3 Advisors sells no products and earns no commissions. Typical clients hold $750,000 or more in pre-tax retirement assets across traditional, SEP, or rollover accounts.
For architects, the engagement models your project-income pattern, checks the QBI and taxable-income interaction with your CPA’s numbers, screens for the SEP-IRA pro-rata trap, and sequences conversions around any firm-equity event and the IRMAA lookback. Every figure is illustrated conditionally; nothing here is individualized tax or investment advice.
Frequently asked questions
Should architects do a Roth conversion in a slow year or between projects?
A low-income or between-project year generally offers a lower marginal rate on the conversion, since it is taxed as ordinary income with no cap (Source: IRS Publication 590-A). The 2026 married standard deduction of $32,200 adds headroom (Source: IRS Rev. Proc. 2025-32). Whether it fits depends on your full return and cash to pay the tax; a projection confirms the year.
How does the QBI deduction affect a Roth conversion for a self-employed architect?
The QBI deduction is generally limited to the lesser of 20% of qualified business income or 20% of taxable income minus net capital gains (Source: IRC 199A(a)). In a low-income year the taxable-income limit can bind, so a conversion that raises taxable income may, in some cases, let more of the deduction through rather than reducing it. This is best modeled with a CPA.
What is the pro-rata rule and how does it hit architects with a SEP IRA?
The pro-rata rule aggregates all traditional, SEP, and SIMPLE IRAs on Form 8606 line 6 as of December 31, then taxes conversions on the pre-tax fraction of that combined pot (Source: IRS Instructions for Form 8606, 2025; IRC 408(d)(2)). A large pre-tax SEP balance makes almost any backdoor Roth mostly taxable, which surprises many firm principals.
Can I convert my SEP IRA to a Roth IRA as a firm principal?
Yes. A SEP IRA converts to a Roth like any traditional IRA, and the amount is taxed as ordinary income with no dollar limit (Source: IRS Publication 590-A). The pre-tax SEP balance also drives the pro-rata rule, so many principals first roll the SEP into a solo 401(k), which is excluded from the IRA pro-rata calculation (Source: IRS Instructions for Form 8606, 2025).
At what age should an architect consider starting a Roth conversion ladder?
There is no single right age; the common windows are lean-income years and the stretch after peak billing but before RMDs begin at 73 (75 for those born 1960 or later from 2035) (Source: SECURE 2.0 Act; IRS Notice 2025-67). Each conversion starts its own 5-year clock, so starting earlier gives clocks time to mature (Source: IRS Publication 590-A).
Do I have to pay the conversion tax from my IRA or from cash?
Paying the tax from outside (non-IRA) cash generally keeps more of the balance inside the Roth, because using IRA money to cover the tax reduces the amount converted and, before age 59.5, can trigger a 10% early-distribution penalty on the withheld portion (Source: IRS Publication 590-A). Having outside cash to pay the bill is a common prerequisite for converting.
Will a Roth conversion push me into IRMAA Medicare surcharges after I sell my firm equity?
It can. A conversion is ordinary income that raises MAGI, and IRMAA uses a two-year lookback, so a conversion stacked on a firm-equity sale can lift Part B and Part D premiums two years later (Source: SSA IRMAA rules). Sequencing the sale and conversion into different years is a common way to manage the tiers.
Sources
- IRS, Publication 590-A, Contributions to Individual Retirement Arrangements (conversions taxed as ordinary income, no income or dollar limit, December 31 deadline, 5-year rule).
- IRS, Instructions for Form 8606 (2025), line 6 (IRA aggregation for pro-rata; employer plans excluded).
- IRC 408(d)(2) (traditional IRA includes SEP and SIMPLE for pro-rata).
- IRC 199A(a) and 199A(d)(2); Treas. Reg. 1.199A-5(b)(3) (20% QBI deduction; architecture and engineering excluded from SSTB).
- IRC 408A(d)(6) (recharacterization of conversions repealed, effective 2018).
- IRS Notice 2025-67 (2026 retirement-plan contribution and catch-up figures; 415(c) defined-contribution limit).
- IRS, Revenue Procedure 2025-32 (2026 annual inflation adjustments, including the $32,200 married-filing-jointly standard deduction).
- IRS, IRS Notice 2025-67 (2026 Roth IRA MAGI phase-out ranges).
- IRS, SEP contribution limits.
- SECURE 2.0 Act, including sec. 603 (Roth catch-up rule for high earners, effective 2026) and RMD ages 73/75.
- SSA, Medicare IRMAA rules (two-year MAGI lookback).