If you’re thinking about a Roth conversion, Trump’s “big beautiful bill” might make things a bit trickier, according to some financial experts. Roth conversions involve moving pretax or nondeductible IRA funds into a Roth IRA, setting the stage for tax-free growth down the line. The catch? You have to pay standard income taxes on the converted amount.
Trump’s new tax cuts might make these conversions more tempting for some investors, but watch out—earning too much might mess with your eligibility for certain tax breaks. When you’re weighing Roth conversions, it’s crucial to understand the multi-year effects on your state and federal taxes, says Judy Brown, a certified financial planner with SC&H Group in the D.C. and Baltimore area.
For instance, if you’re getting close to Medicare age or already there, bumping up your earnings could lead to higher monthly adjustments, or IRMAA, for Medicare Part B and Part D premiums. The strategy here is figuring out where each piece fits best for each client, says Brown, who is also a CPA.
Roth conversions are all about managing tax brackets, according to CFP Patrick Huey from Victory Independent Planning in Portland, Oregon. When converting, advisors usually rack up enough regular income to fill up the lowest brackets. Your federal brackets hinge on parts of your taxable income, calculated by subtracting either the standard or itemized deductions from your adjusted gross income.
Trump’s One Big Beautiful Bill Act changed things up. Before this, post-2025 tax brackets would’ve made converted balances pricier. His act made lower rates stick around, but there are new temporary breaks for things like older folks, tipped workers, and those with overtime or car loan interest. These breaks last 2025–2028 and might give more leeway for conversions before hitting higher brackets.
Once these cuts fade away, you could be shelling out more for the same conversion, says CFP Ashton Lawrence at Mariner Wealth Advisors in Greenville, South Carolina.
While Trump’s new cuts might open up lower brackets, higher income from conversions can cramp eligibility. For example, the extra $6,000 deduction for older folks starts shrinking once income tops $75,000 for single filers or $150,000 for joint filers. It’s probably a savvy move to convert funds at the 22% or 24% rates now—skipping that $6,000 deduction—to dodge hitting the 30% brackets with big pre-tax withdrawals later, adds Brown.
Most retirees have to take required minimum distributions (RMDs) from pre-tax accounts starting at age 73, or else face IRS penalties.
