Craig Wear, CFP® explains why the GOP tax law does not eliminate the value of Roth conversions. He argues that the current lower tax brackets are temporary (they sunset in 2028), so converting now lets taxpayers lock in lower rates, avoid potentially higher future taxes, and benefit from tax-free withdrawals and no required minimum distributions (RMDs).
So did the new GOP tax law just kill Roth conversions? Some people think the new GOP tax law makes Roth conversions pointless. Why pay tax now if rates are going to stay low? Why not just keep your money under traditional IRA and worry about the taxes later? Well, here's the problem. These lower rates aren't forever the current brackets Sunset in 2028 and history says tax rates often go up, not down. And if you wait until after the sunset, you could be converting at much higher tax rates, shrinking your retirement savings. A Roth conversion lets you pay tax today, lock in the lower rates and protect your future withdrawals from tax hikes. And with no RMDs on a Roth, you keep full control over when and how you take money out. So while you think the new GOP law makes conversions less attractive, the reality is for many people this window before 2828 especially might be the best time in decades to get it done.
