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.

The TCJA Sunset and Its Impact

The Tax Cuts and Jobs Act of 2017 lowered individual income tax rates across most brackets. However, these lower rates are scheduled to sunset after December 31, 2025, meaning that in 2026, rates could revert to their pre-TCJA levels. For example, the current 22% bracket could rise to 25%, and the 24% bracket could increase to 28%. If this happens, converting before the rates increase could lock in savings that persist for the rest of your life.

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 in 2026, the planning should begin now. Work with your advisor to project your income, estimate your tax liability under both current and post-TCJA rates, and determine the optimal conversion amount. At Whitwell & Co., we build multi-year tax projections for every client considering this strategy to ensure the conversion creates lasting value.