In this video, CFP® Craig Wear warns high‑net‑worth retirees that postponing Roth conversions in 2026 can create massive, hidden tax liabilities. He argues that most IRA millionaires evaluate conversions only by the current year’s tax bracket, treating the move as a one‑year event. Wear reframes Roth conversions as a component of a broader, lifetime tax strategy that influences future required minimum distributions (RMDs), Social Security taxation, Medicare IRMAA, capital gains, and the tax burden passed to surviving spouses and heirs. He introduces the "gap year window"—the early retirement years when taxable income is low and retirees have greater flexibility—to strategically reshape the tax picture, but cautions that simply using the lower bracket isn’t enough. The core of his decision framework is three questions: (1) What will the IRA balance be when RMDs start? (2) What will my tax rate be after my spouse passes? and (3) What tax burden will my heirs inherit? He illustrates the stakes with a case study (the Smiths) showing how a $2.5 M IRA can balloon to $4.2 M, generating $160 k of taxable RMD income that grows 20 % every five years, potentially locking retirees into higher brackets. Wear directs viewers to an RMD calculator based on data from over 2,000 clients and teases a follow‑up video outlining three steps to optimize a Roth conversion this year.
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Skipping Roth conversions in 2026 can be one of the most expensive tax mistakes you could possibly make. A lot of retirees think that Roth conversions matter less now because rates haven't jumped up and the markets are unpredictable. But for people with large IRAs, that kind of thinking quietly lets a long-term tax problem really spin out of control. So in this video, I'd like to show you why Roth conversions are still one of the most important decisions IRA millionaires in 2026, how to think about this decision so you avoid making a tax move that looks smart this year, but actually hurts you in the long run, and how to make the decision that reduces future RMD pressure and leaves less of your IRA exposed to higher lifetime taxes. But to understand how skipping Roth conversions in 2026 affects your long-term tax plan, you first need to know the mistake most retirees make when they evaluate them. A lot of retirees look at Roth conversions through one simple question: What tax bracket will I be in if I convert this year? That makes sense. I mean, converting means voluntarily paying more taxes now, so of course the first instinct is to measure the cost in this year's bracket. But that cost is really just the tip of the iceberg. What most IRA millionaires don't see is what's sitting below the surface. Because when you make the decision based on what it'll cost this year, you're only measuring the most visible part of a Roth conversion. But the tip isn't what makes the iceberg dangerous. It's what's below the water that will affect the rest of your financial life much later. So we want to stop treating Roth conversions as a one-year tax event. Instead, you got to think of it as the tip of the iceberg of a much bigger retirement plan, one that affects your income, affects your tax exposure, affects how much of the money you spend your whole life building ends up with the IRS. So to make the right decision, the real question becomes, what happens to my long-term tax picture if I don't convert? Once you start looking at the decision that way, you're going to see why so many people underestimate the true cost of really ignoring it. To get a sense of what that looks like for you, you can use an RMD calculator below this video. And next, I'd like to show you how to look at that question in a little bit different light. When most retirees look at their long-term tax picture, they try to answer it with the same kind of math they were using before. They project future taxes using today's tax environment. And if things look good based on that current environment, it's easy to assume your tax future is predictable and safe. But that's where the picture still doesn't quite fit because your long-term tax outcome isn't only shaped by what is true today. See, tax law will change over time and the options you have now may not be the options you have in just a few years from now. We've all seen the change that happens. So even if this year's return doesn't make the problem look urgent, that doesn't mean the long-term picture is stable. The real pressure just hasn't shown up yet. And that is exactly why putting this decision off is costing so many retirees 6 and 7 figures in lifetime taxes. Let's take the Smiths, for example. If the Smiths have $2.5 million in IRAs at age 64, By the time they get to age 73, their balances could realistically grow to $4.2 million and create additional taxable income of $160,000 the first year the RMD happens. And that RMD is going to grow 20% every 5 years, just assuming standard tables. So at first, skipping conversions doesn't seem dangerous because taxable income is low, the brackets look manageable, but after just 8 years, they don't have the same control over that taxable income. The IRA dumps an additional $160,000 each year onto their tax return. So once RMDs kick in, you're forced into a certain amount of income and that tax bracket that comes with that. So if the tax law changes and the brackets get tighter or rates go up, you're going to be paying those higher taxes whether you want to or not. But luckily there's a period in retirement when you have far more control over your future tax picture. I call that period the gap year window. In that period, your taxable income drops. Which gives you far more flexibility over your future tax. It's the early years of retirement before your IRA grows even larger. So security and RMDs fully kick in and the tax system becomes harder to manage. Those years are the best opportunity to reshape your future. But there's a subtle trap that gap year window creates. So let me show you how to avoid that. Most retirees look at the lower income years in front of them and start thinking about how much room they have inside a favorable tax bracket. The flexibility and control that lower income gives them makes using that space intentionally sound like a smart move, but using the window is not the same thing as using it well. And a lot of IRA millionaires assume that taking advantage of a lower bracket today guarantees a better long-term outcome, but that is absolutely not always true. Because the real goal is to reduce the lifetime tax burden attached to your IRA. Not just to take advantage of the lower bracket today. Using up the space in that bracket this year can still leave behind a much larger IRA that's vulnerable to future taxes. So that's why Roth conversion isn't really a strategy by itself. It's just one move inside a much bigger system. So how do you actually use this window to save as much as possible in lifetime taxes? Well, to answer that, we have to look at the hidden variables that actually change the math. Because a Roth conversion affects a lot of moving parts, and those parts interact over time, changing your future income, your tax exposure, and how much your money ends up with the IRS. Think of it like a table with multiple legs. Each leg represents a different part of your financial life, maybe your income, your taxes, your Social Security, and your Medicare costs. And when one leg shifts, even so slightly, It doesn't just affect that one piece, it can make the entire table less stable. That's exactly what happens with a Roth conversion. That's why simple bracket math can be so misleading. Even if the conversion looks manageable on paper today, that doesn't mean it's actually saving you money in the long run. Because you're not just adjusting one number, you're shifting one of the legs that everything else is resting on. Roth conversions aren't really a tax move, but really a lifetime tax strategy. They affect how much your Social Security becomes taxable, whether your Medicare premiums are going to go up, and how capital gains stack on top of your other income. They even affect whether your loved ones inherit more wealth or they inherit a massive tax burden. If we don't look at Social Security, IRMAA, capital gains, widows' rates, RMD pressure, inherited IRA consequences altogether, then we're not actually keeping the table steady. That's why even smart IRA millionaires who use Roth conversion can still end up losing 6 and 7 figures in lifetime taxes. We see it all the time. So if this decision is bigger than this year's tax bracket and using a lower income window isn't enough on its own, then what should actually drive it? Well, it comes down to which questions you use to make the decision. If you ask the wrong question and you lose sight of what the conversion does for you in the long term, But the right questions force you to look at what ignoring the conversion will cost you later. So we ask all of our clients 3 questions to help them see where their tax situation is really headed. The first one protects them from extremely high RMDs. If your IRA keeps growing and you do little or nothing to reduce it before RMDs begin, your tax problem has gotten way bigger than it needed to. The higher balance forces larger withdrawals and pushes your income up into higher brackets. So before you decide whether a Roth conversion makes sense, you need to know what will my IRA be worth when RMDs start. That is really a question about how large the future tax problem is becoming if you leave it alone. The second question takes that even one step further. A lot of retirees file their taxes jointly with their spouse, but for most people, that's not going to be the case all the way through retirement. If one spouse dies, the surviving spouse has to file as a single taxpayer with less room in the brackets and far less flexibility than they had before. And that turns the exact same IRA into a much more expensive tax problem overnight. Now, it's not a fun question, but it's important to ask, what will my tax rate be when my spouse is gone? Because if that future is more expensive than you think, then waiting costs a lot more than it appears today. And that brings us to the third question, because just like with a spouse passing, an IRA doesn't stop existing after you're gone. Instead, the tax burden simply moves to the next generation. Your heirs or children may inherit the account, but they also inherit a compressed timeline, forced withdrawals, and the tax bill that comes with it. So the last question is simply, what tax burden will my children or my heirs inherit? Because once you see that, you realize this decision is not just about this year's taxes. It's about how much future tax pressure you're choosing to leave inside the IRA for yourself, for a surviving spouse, and potentially for your family. Those are the questions that should drive your decision, not a single-year decision. And to make sure your answers to those questions are as accurate as possible, click the link in the description to our RMD calculator that uses real data of over 2,000 of our clients to give you the most precise overview of your future tax risk. Or if you want to know how to optimize your Roth conversion this year, there's 3 easy steps that do exactly that. I break them down in this video, so go watch that next.
