Is A Roth IRA Conversion Worth Considering In 2026?

Are you considering a Roth conversion in 2026?

With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, the U.S. tax landscape has shifted again.

The law makes the current Tax Cuts and Jobs Act (TCJA) tax brackets permanent, preserving today’s relatively low marginal rates indefinitely.

While many short-sighted investors may see less urgency to make a conversion, this shift may make Roth IRA conversions a more valuable potential planning opportunity, especially for investors focused on potential long-term flexibility and tax diversification.

The tax law change may provide more clarity for modeling. Investors may now be able to better project with confidence how conversions fit into a broader wealth-management plan.

Speaking with a fiduciary financial advisor could be a good first step to determining if a Roth conversion could make sense for your portfolio and future tax planning.

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Why Roth Conversions Still Matter

A Roth IRA conversion involves moving money from a tax-deferred account (like a traditional IRA or 401(k)) into a Roth. You would pay income taxes on the converted amount in the year of conversion.

Afterward, all future growth and qualified withdrawals are tax-free.

Even with stable tax rates, the potential benefits may remain powerful for your portfolio:

• No Required Minimum Distributions (RMDs): Roths allow assets to grow untouched for life, which could potentially help with estate and legacy planning.
• Tax-Free Growth Potential: This may be particularly attractive for investors expecting portfolio appreciation or higher income later in retirement.
• Estate Flexibility: Heirs may generally inherit Roth IRAs free from income tax, though distributions must occur within 10 years.

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Key Considerations Before Converting

Immediate Tax Impact: The conversion amount counts as ordinary income. A large conversion may elevate your current-year tax bill.

Five-Year Rule: Each conversion must remain in the account for five years before penalty-free withdrawals may apply.

Irrevocability: Conversions can no longer be reversed under current law.

Income Planning: Spreading conversions across several years or coordinating with charitable or capital-loss strategies may help manage the tax impact.

Making a Roth conversion before the end of the year will likely depend on your specific goals, and long-term strategy.

This could be why many investors may work with a fiduciary financial advisor or wealth manager to help personalize and continually update their broader wealth planning strategy.

Advisors may be able to help model out a conversion strategy, optimize for tax efficiency, and ensure your plan supports your retirement, investment and legacy goals.

SmartAsset’s latest proprietary model reveals that working with a financial advisor could potentially add from 36% to 212% more dollar value to investors’ portfolios over a lifetime, depending on multiple unique, individual factors.¹

If you’re concerned about how long your wealth will last and the potential RMD taxes associated with tax-advantaged retirement accounts, now may be the right time to speak with a fiduciary financial advisor.

That’s why we created a free tool to help match you with vetted financial advisors who serve your area, each legally bound to work in your best interest.

It's never too late to plan to work toward a comfortable retirement. Get your financial advisor matches today.

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This is a hypothetical example and is not representative of any specific security. Actual results when working with a financial advisor will vary.

This scenario is for illustrative purposes only and does not represent an actual client. Results may vary.

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Sources:
1. “The Value of a Financial Advisor: What’s It Really Worth?” SmartAsset (Nov. 2024)