Roth Conversions: “Beautiful” But Messy

If you thought Roth conversions were a tax-planning headache before, buckle up. President Trump’s “One, Big, Beautiful Bill Act” (OBBBA) has turned the Roth conversion playbook inside out, with a cascade of time-limited credits, new deductions, and income thresholds that threaten to snarl even the best-laid plans. For anyone over 65 and eyeing retirement, the stakes—and the risk of missteps—have never been higher.

At the heart of Roth conversion strategy is tax bracket management: the delicate art of moving money from a traditional IRA or 401(k) to a Roth IRA, paying taxes now for tax-free growth later—ideally by “filling up the lowest brackets” without getting knocked into a costlier tax band. As I mentioned to Moneywise for their article, tax bracket management was always a balancing act; now, with OBBBA’s special deductions for Americans over 65 (up to $6,000 per individual, $12,000 for couples), the equation is even trickier. These breaks are tempting but fleeting—available only from 2025 through 2028, and they phase out completely once income exceeds $75,000 for singles or $150,000 for couples.

This leaves retirees with a genuine dilemma: Should you convert less and keep the deduction, or go bigger on Roth conversions—potentially forgoing the tax break now in exchange for avoiding 30% tax rates later when required minimum distributions (RMDs) come due? For some, the best move may still be to sacrifice the short-term deduction and secure conversions at current 22% or 24% rates, rather than risk steeper taxes down the line.

The bottom line: Roth conversions remain a powerful tool, but under OBBBA, the risks and complexity have multiplied. A poorly-timed move could mean thousands lost in missed deductions, surprise tax bills, or Medicare premium hikes. In this environment, intentional planning isn’t optional—it’s essential. Before making a move, talk with your advisor, crunch the numbers, and make sure your “beautiful” tax strategy won’t get ugly in retirement.