What Does the One Big, Beautiful Bill Mean for Roth IRA Conversions in Retirement?
If you’ve been following tax strategy headlines over the past few years, you’ve probably heard a common refrain: convert to a Roth IRA before tax rates go up in 2026. But now that the billed called “One Big, Beautiful Bill” has been passed and lower Trump-era tax bracket are permanent, does that advice still hold up?
For many retirees and pre-retirees, the answer is yes, but the strategy looks a little different with more time to plan and less deadline driven urgency.
Why Roth Conversions Still Make Sense
Even without a looming tax hike, Roth conversions remain one of the most effective tools for building tax flexibility in retirement:
You increase control over retirement income
Roth IRA withdrawals don’t count as taxable income. This gives you more control when planning things like:
- ACA premium subsidies (for those under 65)
- Medicare IRMMA brackets
- Social Security tax thresholds
You can spread conversions over time
Without a hard 2025 deadline, you now have more room to gradually convert traditional IRA assets each year. This allows you to fill up lower tax brackets without triggering higher Medicare premiums or unnecessary taxation of Social Security benefits.
You reduce future RMD Exposure
Every dollar in a traditional IRA becomes a taxable Required Minimum Distribution (RMD) later. Roth IRAs don’t have RMDs. Converting now can reduce your future tax burden, even under the same tax brackets.
You’re planning for the surviving spouse
When one spouse passes away, the survivor often pays more in taxes due to single filing status. Converting while both spouses are alive can reduce the surviving spouse’s future tax liability.
You hedge against future policy changes
Yes, the current tax rates are now “permanent.” But nothing in tax law is truly permanent. Converting under today’s known tax conditions can give you more certainty and control, regardless of future policy shifts.
Strategic Conversion Is Still Smart Conversion
While the urgency around a 2025 deadline is gone, the planning opportunities have actually improved. With more time and less pressure, retirees and pre-retirees can integrate Roth conversions into a thoughtful, tax-aware income strategy.
In other words: Roth conversions aren’t going away, they’re just getting smarter.
At Custom Fit Financial, we specialize in advice only fee only retirement planning for individuals and couples age 55 and over. We offer hourly and project based financial planning with no sales pressure or product commissions. Whether you’re in Cedar Rapids, Iowa City, or working with us virtually across the United States, we help you make confident informed decisions about your retirement.
Want help deciding if a Roth conversion makes sense for you this year? Schedule your free intro call today.
