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Rogelio Gonzalez, CRPC®, CSRIC™
Financial Planner
Prudential Advisors
Pacific Northwest Financial Group
1700 SE Mile Hill Drive, Suite 264
Port Orchard, WA 98366
Phone: 360-919-4271
Email: rogelio.gonzalez@prudential.com
Website: www.prudential.com/advisor/rogelio-gonzalez
March/April 2026
Roth Conversions May Be Trickier Under OBBBA
The One Big Beautiful Bill of 2025 (OBBBA) appears to make Roth conversions more attractive because of temporarily lowered federal tax brackets, expanded standard deductions, and additional deductions for seniors. However, planning for Roth conversions under OBBBA isn't simply a matter of transferring funds. You need to weigh the impact of the conversion on other tax considerations.
Phaseouts and Deductions
Large conversions can increase your income to levels where you lose valuable deductions, such as the State SALT deduction and the Qualified Business Income deduction, subjecting you to higher effective tax rates.Surcharges
Roth conversions can raise your Modified Adjusted Gross Income (MAGI), potentially triggering surcharges for Medicare Income- Related Monthly Adjustment Amount (IRMAA) and the Net Investment Income Tax (NIIT), which may add thousands of dollars in unexpected costs.Higher Combined Tax Rate
In high-tax states, a substantial Roth conversion can push combined effective tax rates above 45%–50% because state taxes are only partially deductible under the SALT cap.Spreading It Out
The tax benefits of a Roth conversion depend heavily on when you convert and how much you convert in a given year. By converting smaller amounts over several years, you can minimize the tax impact. Instead of jumping into a higher tax bracket all at once, you'll be able to keep your taxable income relatively stable. You could save money in taxes and manage your overall tax situation more efficiently.A multi-year conversion strategy gives you flexibility. By stretching your conversions over several years, you can assess your financial situation annually and adjust your strategy accordingly. If your income is exceptionally high one year, you can opt to convert less that year and more the following year when your income might be lower. Not only does this approach help manage your tax liability more effectively, but it also provides greater control over your future finances.
While Roth conversions under OBBBA offer significant opportunities for tax-free growth, the decision is no longer straightforward. The interplay of federal tax brackets, deduction phaseouts, Medicare surcharges, and state taxation creates a complex calculation. Consult your financial advisor to determine how a Roth conversion might impact your tax situation and to explore the best conversion strategy for your specific circumstances.
*Converting a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax-free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must occur after age 59 or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime maximum). Roth IRA distributions may be subject to state taxes.
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Rogelio Gonzalez is a Financial Planner with and offers securities and investment advisory services offered through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
"Prudential Advisors" is a brand name for the propriety retail sales channgel of The Prudential Insurance Company of America ("PICA") and its insurance company and other affiliates (collectively "Prudential"). Prudential Advisors financial professionals are licensed insurance agents of Prudential.
Pursuant to a strategic relationship among Prudential, LPLE, and LPL Financial, Prudential Advisors financial professionals provide securities brokerage services and/or investment advice on securities solely as registered persons of LPLE, an affiliate of LPL Financial. These financial professionals are permitted to brand under "Prudential Advisors".
LPLE and LPL Financial are not affiliated with Prudential or Pacific Northwest Financial Group.
Prudential, Prudential Advisors, and the Pacific Northwest Financial Group are not registered as a broker-dealer or investment advisor.
Pacific Northwest Financial Group and LTM Marketing Solutions, LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Marketing Solutions, LLC, an unrelated third party. Articles are not written or produced by the named representative.
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