Milky Way | Moment | Getty Images Roth IRA conversions can potentially reduce lifetime taxes. But the strategy isn’t right for everyone, and the election is now more complex amid updates to President Donald Trump’s “big, beautiful bill” and other changes. Roth conversions transfer pre-tax or non-deductible IRA funds to a Roth IRA, spurring tax-free growth. The downside is that they can generate more revenue in the year of conversion. The move may be attractive if you have large pre-tax retirement balances and expect higher tax rates when it comes time to withdraw the funds, experts say. At the end of 2025, IRA-owning households in the U.S. had $15.9 trillion in assets in traditional IRAs, compared with $2.4 trillion in after-tax Roth IRAs, according to a 2026 report from the Investment Company Institute, an investment trade organization. Advisors: Weighing Roth conversions, or partial Roth conversions, is “a strategy that remains very popular year after year,” said Charissa Anderson, a certified financial planner and executive vice president at Ferguson Wellman Capital Management in Portland, Oregon. His firm ranked No. 52 on CNBC’s Financial Advisor 100 list for 2026. As of March 31, Roth conversions were up 41% this year compared to the same period in 2025, according to the latest data from Fidelity, based on an analysis of 19.6 million IRA accounts. But experts say the strategy isn’t right for everyone. “There are so many variables” when looking at a potential Roth conversion, said Tommy Lucas, CFP at Moisand Fitzgerald Tamayo in Orlando, Florida. His company is ranked No. 44 on CNBC’s Financial Advisor 100 list for 2026. These could include when you apply for Social Security, your life expectancy and your legacy goals, among other factors, he said. Depending on your tax bracket, “sometimes it’s just not worth the juice,” Lucas said. “And we are going to have to tighten every year” because multiple factors can change the analysis. If you’re considering a Roth conversion before the end of the year, here are some key things to consider. Roth Conversions Impact Tax Benefits When deciding on a Roth conversion, projections should include current year taxes, along with an analysis of future years, financial advisors say. “He [tax] “The level you see isn’t always what you pay,” because higher income could eliminate or reduce other tax benefits, according to CFP Tommy Blackburn, senior financial planner and partner at Mason and Associates in Newport News, Virginia. He is also a certified public accountant. As an example, Blackburn pointed to a client in the 22% tax bracket with a child in college. Income from a conversion could result in taxes higher than 30% because the client would lose an education tax credit, which is subtracted from their taxes. owed, he said. By comparison, a customer in the 10% tax bracket could convert a limited amount under their standard deduction without owing additional taxes for the current year, he said. ACA enrollees should “proceed with caution.” and enrollees may owe full premiums for medical coverage. The gap affects ACA enrollees when family income exceeds 400% of the federal poverty line, which varies depending on family size. For 2026, those limits are about $63,000 for a single person or $129,000 for a family of four. That’s why Marketplace health insurance enrollees should “proceed with caution” before completing a Roth conversion, said CFP Bill Shafransky, senior wealth advisor. with Moneco Advisors in New Canaan, Connecticut. “This is one of those financial strategies where you really want to dot your i’s and cross your t’s before you act,” he said. CNBC does not receive compensation for placing financial advisory firms on our Financial Advisor 100 list. Additionally, the appearance of a firm or advisor in our rankings does not constitute an individual endorsement by CNBC of any firm or advisor.
