High-income earners and retirees have a unique planning window that may not be around much longer — Roth conversions at today’s historically low tax rates. With the Tax Cuts and Jobs Act (TCJA) set to sunset at the end of 2025, now is the time to evaluate whether converting some of your pre-tax retirement savings to a Roth IRA makes sense.

Why 2025 Matters

The TCJA temporarily lowered income tax rates and widened tax brackets. When the law sunsets in 2026, rates are expected to revert to pre-2018 levels — meaning many individuals and couples could find themselves in higher brackets even with the same income. For retirees not yet subject to required minimum distributions (RMDs) and high earners thinking ahead, 2025 may be your final window to convert at today’s lower rates.

What Is a Roth Conversion?

A Roth conversion moves funds from a traditional IRA or other pre-tax retirement account into a Roth IRA. You pay income tax on the converted amount in the year you do it — but in return, you get tax-free growth and tax-free withdrawals in retirement, with no RMDs from your Roth during your lifetime.

Strategic Conversion Planning

Rather than converting everything at once and risking a higher bracket, partial conversions let you manage the tax impact over time. Consider:

  • Fill up your current tax bracket without crossing into the next one
  • Convert during low-income years — such as early retirement before Social Security or RMDs begin
  • Coordinate with other income sources to avoid tax surprises
  • Pay the tax due from cash or taxable accounts to maximize what stays in your Roth

Long-Term Benefits

  • Tax diversification — having both pre-tax and after-tax accounts gives you more flexibility in retirement
  • Potentially lower lifetime taxes — especially if future rates rise
  • A tax-free legacy — Roth IRAs pass to heirs tax-free, creating generational planning opportunities
  • No future RMDs — Roth IRAs are not subject to required minimum distributions during your lifetime

Take Action Before the Window Closes

2025 could be your final opportunity to make a tax-efficient Roth conversion before higher brackets return. We can create a personalized Roth conversion illustration that shows exactly how this strategy could benefit your long-term plan. Contact us at 708-665-6663 or marketing@4wealthfg.com. Or, visit 4wealthadvisors.com/get-in-touch to schedule a consultation.