From CNBC · Kate Dore, CFP®, EA · · 50s
Roth conversions get trickier as tax rules shift
Converting to a Roth IRA can cut lifetime taxes, but the strategy now faces new complexity from recent tax law changes and may not suit everyone.
In brief
Converting to a Roth IRA can cut lifetime taxes, but the strategy now faces new complexity from recent tax law changes and may not suit everyone. Roth conversions offer tax-free growth but trigger immediate income and tax bills, making them less attractive for many households as tax laws change. Originally reported by…
What a Roth conversion does
A Roth conversion moves pretax or nondeductible IRA funds into a Roth IRA, starting tax-free growth. The trade-off is increased income in the conversion year.
When conversions make sense
Conversions appeal to households with large pretax retirement balances who expect higher tax rates when withdrawing funds later, experts say.
Tax changes complicate the choice
Recent tax law changes, including President Donald Trump's big beautiful bill, have made the conversion decision more complex for year-end twenty twenty-five planning.
“big beautiful bill”
The bottom line
Roth conversions offer tax-free growth but trigger immediate income and tax bills, making them less attractive for many households as tax laws change.
