For years, the conversation around retirement saving has been about moving from “tax-later” to “tax-never.” But as we enter 2026, the landscape has shifted. This year marks a historic convergence of the SECURE Act of 2019, SECURE 2.0 and the One Big Beautiful Bill Act (OBBBA).
These legislative changes represent perhaps the most sweeping retirement reset in decades. While the SECURE acts restructured legacy planning and expanded Roth catch-up options, OBBBA locked in lower tax brackets. We are currently standing in a window where stable brackets meet flexible new rules. However, in Washington, even ‘permanent’ law is written in pencil. This window could be temporary.
Why the Strategy May Work for You
A Roth conversion involves moving funds from a tax-deferred IRA or 401(k) into a Roth account. You pay income tax now, but in exchange, you secure tax-free growth and tax-free withdrawals. This is advantageous for a couple of reasons:
- Flexibility: You can access your original contributions at any time.
- Hidden Savings: Tax-free Roth withdrawals do not count toward Medicare’s IRMAA surcharges or Social Security taxation thresholds under current law.
The Power of the Conversion: A Tale of Two Retirees
Consider Sarah and Tom, who both have $100,000 in traditional IRAs.
Sarah converts the entire $100,000 now, paying a 22% tax ($22,000) from a separate, non-retirement account. Her full $100,000 grows entirely tax-free in her Roth IRA.
Tom leaves his IRA intact. At age 73, he begins Required Minimum Distributions (RMDs). Every withdrawal is taxed, and every tax payment trims the principal that could be compounding.
After 15 years, assuming a hypothetical 6% return, Sarah’s Roth is positioned to be significantly ahead. By converting within lower brackets today, Sarah didn’t just prepay her taxes — she eliminated the “tax drag” and future RMD uncertainty that Tom will have in his retirement.1
Your Opportunity Window: Ages 59½ to 73
The ideal timeframe for conversions lies between leaving the workforce and taking your first RMD. During these years, your income often dips, creating a “bracket valley” where you can convert assets at a lower rate. Since the 10% early distribution penalty ends at age 59½, you gain more control over your distribution strategy. Spreading conversions over 3 to 6 years rather than doing it all at once often makes more sense.
The Bottom Line: By paying the tax up front on conversions, you may be better positioned to grow your wealth and take back control of your retirement income.2
Are you curious how a Roth conversion might affect your specific Medicare premiums or Social Security taxes? Click here to schedule your call with me to discuss potential conversion opportunities.
1. This hypothetical illustration assumes Sarah has sufficient non-retirement assets to cover the tax liability, that her tax bracket remains the same or increases in retirement, and that a 6% annual return is applied consistently to both accounts. Results will vary based on actual investment performance, tax rates at the time of withdrawal, and individual circumstances. This example is for illustrative purposes only and does not represent any specific investment or guarantee of future results.
2. Roth conversions are not appropriate for everyone. A conversion increases taxable income in the year of the conversion, which may affect your current tax bracket, Medicare premiums, and eligibility for certain tax credits. State income taxes may also apply.
FleetStar Financial is a brand name under which the following affiliated companies operate: FleetStar Advisors, LLC, a multi-state registered investment adviser offering investment advisory products and services; and FleetStar Financial, LLC, offering insurance products and services Both entities are wholly owned by Mr. Luke G. Meekins, MBA. Registration as an investment adviser does not imply any level of skill or training.
This material is for informational and educational purposes only. It does not constitute investment, tax, or legal advice, and does not establish an advisory relationship with FleetStar Advisors, LLC. Neither FleetStar Advisors, LLC nor Mr. Luke G. Meekins, MBA provides legal, tax, or accounting advice; you should consult your own advisers before making any financial decisions. Investing involves risk, including the potential loss of principal.
