IRAs are a core component of many people’s retirement plans. Also known as individual retirement accounts or individual retirement arrangements, these accounts come in two versions: traditional and Roth.
“You have to give Uncle Sam his piece of the pie,” says Regina McCann Hess, a certified financial planner and author of “Super Woman Wealth: How to Become Your Own Financial Hero.”
With a traditional IRA, the government provides a tax deduction for contributions and then collects taxes from withdrawals in retirement. Roth IRAs work the opposite way: Contributions are made with money that is already taxed, and then withdrawals are tax-free.
If you have a traditional IRA, you can move your money to a Roth account through a conversion. “They are a beneficial way to set you up for tax-free income in a later stage of life,” McCann Hess says.
You’ll need to pay taxes on the converted amount, and with the low tax brackets and added deductions offered by the One Big Beautiful Bill Act, 2026 may be a great year to consider a conversion.
[Read: IRA Rules: Contributions, Deductions, Withdrawals.]
What Is a Roth Conversion, and Is It Right for You?
A Roth conversion simply means taking money from a traditional IRA and putting it into a Roth IRA.
“It’s taking money from one bucket and putting it in another,” says Noah Damsky, founder and wealth advisor with Marina Wealth Advisors in Los Angeles. “It can be really handy.”
Damsky thinks almost everyone can benefit from a conversion. That’s because it not only provides tax-free money to retirees but also ensures heirs aren’t hit with a tax bill later. “If you pass Roth dollars, it doesn’t affect their taxable income,” he says.
[Read: How to Manage an Inherited IRA.]
Do the 2026 Tax Brackets Mean a Conversion Makes Sense Now?
To convert money to a Roth account, you need to pay taxes on it. That can make the timing tricky.
“What really matters is the tax rate when you’re converting versus the tax rate when you would take it out later,” according to Damsky.
Some people expect to have less income and be in a lower tax bracket in retirement. That’s why they chose to fund a traditional IRA; they believe it’s better to get a deduction now and pay taxes when they are in a lower tax bracket during retirement.
However, some older Americans find their taxable income doesn’t change as much as they thought in retirement. Plus, there is no guarantee that tax brackets won’t go up in the years to come. Currently, there are seven tax brackets, and in 2026, money is taxed at the following levels.
| Tax Bracket | Single | Married, filing jointly | Head of Household |
| 10% | $12,400 or less | $24,800 or less | $17,700 or less |
| 12% | Over $12,400 | Over $24,800 | Over$17,700 |
| 22% | Over $50,400 | Over $100,800 | Over $67,450 |
| 24% | Over $105,700 | Over $211,400 | Over $105,700 |
| 32% | Over $201,755 | Over $403,550 | Over $201,775 |
| 35% | Over $256,225 | Over $512,450 | Over $256,200 |
| 37% | Over $640,600 | Over $768,701 | Over $640,601 |
Federal income tax is progressive, and how money is taxed depends on where it falls in the brackets above. For instance, a single person with taxable income of $50,000 would pay 10% on the first $12,400 and then 12% on the remaining amount.
Joyce Franklin, a certified financial planner and senior wealth advisor with Mission Wealth in San Francisco, uses these brackets as guides when planning conversions for clients. For those with large IRAs, she recommends a series of conversions each year that “fill up” low tax brackets rather than converting a larger amount that could spill over into a higher bracket.
Converting in 2026 allows people to take advantage of the seven current tax brackets, which include relatively small jumps in the tax percentages compared to earlier versions of the tax code. For instance, in 1991, there were only three tax brackets with rates of 15%, 28% and 31%.
Another reason to consider a conversion in 2026 is the senior bonus deduction included in the One Big Beautiful Bill Act. Those age 65 and older can deduct an additional $6,000 from their income taxes or a total of $12,000 for married couples filing jointly.
“That gives a big amount of money we can use to offset a Roth conversion,” McCann Hess says.
[Read: 10 Tax Breaks for People Over 50.]
How Do You Know Whether a Conversion Saves More Money Than It Costs?
If you work with a financial planner, they likely have software that models conversions using different assumptions to determine if paying taxes now will lead to more savings later.
The benefits become more pronounced for those who are younger. In a Roth IRA, “All the growth plus the principal that has already been taxed comes out without tax,” Franklin says. For those in their 20s or 30s, that means decades of gains are tax-free.
Here’s an example of how the Roth conversion math works out for someone converting $50,000 at 22% and 24% tax. Assuming the money grows at a rate of 5% annually, converting to a Roth saves approximately $7,000 after a 10-year period. The comparison depends heavily on tax rates at the time of conversion versus withdrawal, and results can vary significantly based on assumptions.
| Tax rate | Tax paid if converting | Gains over 10 years | Tax paid if left in a traditional IRA |
| 22% | $11,000 | $31,444.73 | $17,917.84 |
| 24% | $12,000 | $31,444.73 | $19,546.74 |
Income tax savings are only one part of the equation, though. Money withdrawn from a traditional IRA could also trigger Medicare premium adjustments, known as IRMAA
, Franklin says.
In 2026, single taxpayers with modified adjusted gross incomes greater than $109,000 pay higher Medicare premiums, and that additional amount that can range from $81.20 to $487 per month for their Part B coverage.
However, since money from a Roth IRA is tax-free, retirees don’t have to worry about withdrawals from these accounts raising Medicare costs.
When Is the Ideal Window to Convert to a Roth Account?
Retirees may find they have a few low-income years after they stop working, and this can be an ideal window to convert money to a Roth IRA.
“They have a donut hole when their income stops, but their other (retirement) income doesn’t start yet,” Franklin says.
In particular, retirees will want to complete conversions prior to the start of required minimum distributions, or RMDs, from traditional retirement accounts. RMDs currently start at age 73 but will increase to age 75 for those born in 1960 or later.
A government formula determines the size of an RMD, and those with large IRAs may find they are required to withdraw — and pay taxes on — a large amount. Converting money to a Roth IRA doesn’t count as an RMD, and failure to pay an RMD results in a penalty of up to 25%.
For these reasons, Roth conversions should happen prior to reaching the start of RMDs.
What Roth Conversion Mistakes Do You Need to Avoid?
The biggest mistake according to McCann Hess is not consulting a financial professional. She adds that people should bring both their accountant and financial advisor into the conversation as they consider whether to convert money to a Roth account.
Once converted, make sure the money is invested appropriately. Franklin says she has seen at least one instance of someone leaving their IRA money uninvested, resulting in years of lost gains.
Also, don’t initiate the conversion unless you have funds to pay tax on the converted amount. “It’s really important that the taxes are paid outside that transaction with other assets,” Franklin says.
You can’t use money from the conversion to pay the taxes. Trying to do that would amount to making a withdrawal from your IRA, which could negate the tax savings and, depending on your age, result in a tax penalty.
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Roth Conversion in 2026: Is This the Year to Make the Move? originally appeared on usnews.com
