The Tax Sunset Got Canceled. Roth Conversions Still Make Sense.

For seven years, the pitch was simple. "Tax rates are going up in 2026. Convert now while rates are low."

Financial advisors said it. Tax planners said it. Every year-end planning article said it. The 2017 Tax Cuts and Jobs Act had a built-in expiration date, and the assumption was that Congress would let it happen. Convert your traditional IRA to Roth before the rates snap back. Lock in today's lower rates. The clock is ticking.

Then Congress passed the One Big Beautiful Bill Act and made the TCJA rates permanent. No sunset. No reversion.

So the natural question: should you still convert?

Short answer: probably yes, but for different reasons. And in some ways, the planning just got easier.

What Actually Changed

The OBBBA, signed into law in 2025, permanently extended the individual tax rates established by the TCJA. The top marginal rate stays at 37 percent. The bracket thresholds remain in place, adjusting for inflation as they always have. The OBBBA also provided an additional inflation adjustment for the bottom two brackets, widening the 10 percent and 12 percent brackets slightly more than the standard adjustment.

For 2026, the married filing jointly brackets look like this:

Standard deduction for married filing jointly: $32,200.

What this means for Roth conversions is straightforward. The decision is no longer about legislative timing. There is no deadline to beat. The conversion question is now entirely about your personal tax trajectory: what rate are you paying today versus what rate will you pay when the money comes out?

This is actually better for planning. You can model scenarios with confidence instead of guessing what Congress will do. The analysis becomes purely mathematical, which is where it should have been all along.

Why Conversions Still Work

Removing the sunset changes the urgency. It does not change the math. Here are four reasons Roth conversions remain one of the highest-value moves for retirees with large traditional IRAs.

RMDs Will Push You Into Higher Brackets

Required minimum distributions start at age 73 for those born between 1951 and 1959, and age 75 for those born in 1960 or later. The IRS determines the amount each year based on your account balance and a life expectancy factor.

A $2 million traditional IRA at age 73 generates roughly $75,000 in required distributions in the first year. That number grows as you age because the divisor shrinks. By 80, the same account might require $95,000 or more.

Now stack that on top of Social Security. A couple receiving $60,000 combined in Social Security benefits plus $75,000 in RMDs has $135,000 in gross income before any other sources. After the standard deduction, that puts them solidly in the 22 percent bracket, potentially touching 24 percent.

The problem is not what the rates are. The problem is being forced into brackets you did not choose because Congress requires you to withdraw money on their schedule, not yours.

IRMAA Cliffs Are Expensive

Medicare's Income-Related Monthly Adjustment Amount is a surcharge on Parts B and D premiums for higher-income retirees. The first threshold for married filing jointly in 2026 is $218,000 in modified adjusted gross income.

One dollar over that line costs approximately $2,300 per year in additional Part B and Part D premiums for a couple. That is not a marginal increase. It is a cliff. And the surcharges get steeper at each subsequent tier.

RMDs from a large traditional IRA, combined with Social Security and any other income, can easily push a couple over an IRMAA threshold they would have otherwise avoided. Every dollar in a traditional IRA is a dollar that will eventually count toward IRMAA calculations. Roth distributions do not.

Roth Assets Compound Tax-Free With No Distribution Requirements

Roth IRAs have no required minimum distributions. Your money grows without being interrupted by forced withdrawals. This was always true for Roth IRAs, and since 2024 under SECURE 2.0, Roth 401(k) accounts are also exempt from RMDs.

The compounding advantage is significant over a long retirement. Money that stays invested and untaxed for 20 or 30 years generates substantially more wealth than money that gets partially liquidated every year to satisfy RMD rules.

If you do not need the income, Roth assets can continue growing for decades.

Tax-Free Wealth Transfer

Under the SECURE Act's 10-year rule, most non-spouse beneficiaries must fully distribute an inherited IRA within 10 years of the original owner's death.

For a traditional IRA, that means your heirs pay income tax on every dollar they withdraw. If your children are in their peak earning years, those distributions stack on top of their existing income, potentially at the 32 percent or 35 percent rate.

A Roth IRA inherited under the same 10-year rule passes tax-free. The distributions are still required within the window, but there is no income tax due. For a family transferring $1 million in retirement assets, the difference between Roth and traditional can be $250,000 or more in taxes paid by the next generation.

The Conversion Ladder: A Hypothetical

Meet James and Linda. They are 63 and 61, recently retired, living in Florida. Their financial picture:

• Combined Social Security: $60,000 per year (starting at 63 for James)
• Traditional IRA: $2.2 million
• Taxable brokerage account: $400,000
• No pension or other income

James and Linda are a hypothetical couple created for illustrative purposes only. Any resemblance to actual individuals is coincidental.

James reaches RMD age at 73. That gives them a 10-year window from ages 63 to 72 where they control exactly how much taxable income they generate each year.

The strategy: Systematically convert a portion of the traditional IRA to Roth each year, filling lower tax brackets without triggering IRMAA surcharges.

Year-by-year math (simplified):

Social Security taxable portion (roughly 85 percent): approximately $51,000. Standard deduction (MFJ): $32,200. Taxable Social Security after deduction: approximately $18,800.

That leaves significant room in the 12 percent bracket, which tops out at $100,800 in taxable income for married filing jointly in 2026. James and Linda can convert approximately $80,000 to $82,000 per year and stay entirely within the 12 percent bracket. The federal tax on the conversion: roughly $9,600 to $9,800 per year.

If they want to be more aggressive, they can fill part of the 22 percent bracket, converting $120,000 to $150,000 per year. The blended tax rate on the conversion stays well below what they would pay later when RMDs and Social Security combine to push them higher.

After 10 years of converting approximately $80,000 per year at the 12 percent rate:

• Roughly $800,000 moved from traditional to Roth
• Total tax paid: approximately $96,000
• Traditional IRA reduced to roughly $1.8 million (accounting for growth minus conversions)
• RMDs at 73 are now based on a smaller balance, generating lower forced income
• IRMAA exposure is significantly reduced
• Roth balance has been growing tax-free for up to 10 years

Compare that to doing nothing: at 73, RMDs on $2.2 million (plus growth) could easily generate $90,000 or more per year, pushing James and Linda into the 24 percent bracket and potentially over IRMAA thresholds. They would pay higher rates on money they might not even need.

The conversion ladder does not eliminate taxes. It lets you choose when and at what rate you pay them.

When Conversions Do Not Make Sense

Roth conversions are not universal. They can be the wrong move when:

You genuinely expect a lower bracket in retirement. This is less common than people assume for higher-net-worth families, but it happens. If your retirement income will be substantially lower than your working income and your traditional IRA is modest, conversion may not produce a benefit.

You need the funds within five years. Converted amounts have a five-year holding period before they can be withdrawn without penalty for those under 59 and a half. If you are converting money you will need soon, the timing may not work.

The conversion would trigger IRMAA surcharges this year. If a large conversion pushes your MAGI over $218,000 in the current year, the Medicare premium increase could offset the long-term benefit. The ladder approach solves this by keeping each year's conversion within safe thresholds.

You have large unrealized gains in taxable accounts. In some cases, the tax-free step-up in basis at death for taxable accounts produces a better outcome than converting and paying tax now. This requires case-by-case analysis.

The Florida Advantage

State income taxes matter in conversion planning. A Florida resident converting $100,000 pays only federal tax on that conversion. A California resident converting the same amount pays an additional $12,000 or more in state income tax. New York, New Jersey, and Minnesota are similarly expensive.

Florida residents get the cleanest Roth conversion math in the country. No state tax means the breakeven period is shorter and the lifetime benefit is larger. If you relocated to Florida for retirement, this is one of the financial benefits worth capturing.

The Social Security Interaction

Here is a detail that often gets overlooked. Traditional IRA withdrawals count toward the provisional income formula that determines how much of your Social Security benefit is taxable. Roth withdrawals do not.

For most retirees with meaningful retirement savings, up to 85 percent of Social Security benefits become taxable. But the formula is based on your combined income, which includes traditional IRA distributions.

By converting traditional IRA assets to Roth during the years before or shortly after Social Security begins, you reduce the future income sources that feed into that formula. The result: a smaller portion of your Social Security is taxable in later years, which reduces your overall tax burden and helps manage IRMAA exposure.

This is a secondary benefit, but for couples with large Social Security benefits and large traditional IRAs, it can add up to meaningful tax savings over a 25- or 30-year retirement.

The Urgency Changed. The Math Did Not.

The OBBBA removed the deadline. That is a good thing. It means you can plan a Roth conversion strategy based on your actual financial situation rather than racing against a legislative clock.

But the underlying math is unchanged. RMDs still force distributions at rates you may not want to pay. IRMAA cliffs still penalize retirees whose income creeps above the thresholds. Roth assets still grow tax-free. And the estate planning advantage of passing Roth dollars to heirs instead of traditional IRA dollars is as compelling as ever.

A Roth conversion ladder remains one of the highest-value planning moves available to retirees with large traditional IRAs. The window between retirement and RMDs is still the best time to execute it. And for Florida residents, the math is as favorable as it gets.

The question was never really about what Congress would do. It was always about what your tax picture looks like today versus what it will look like in 10, 20, or 30 years. Now you can answer that question with more certainty.

If you want to map out what a conversion ladder looks like for your specific situation, we are happy to walk through the numbers with you.

This article is for educational purposes and does not constitute tax advice. Roth conversion decisions involve tax, estate, and retirement planning considerations that vary by individual. Consult your CPA or tax advisor before executing a conversion strategy. The tax rates, brackets, thresholds, and figures referenced are based on 2026 law and are subject to change. FamilyVest is a trade name used by Todd Sensing, an investment adviser representative of Farther Finance Advisors, LLC, an SEC-registered investment adviser.