3 Questions to Ask Yourself Before Doing a Roth Conversion in 2026
Before moving forward, make certain a Roth conversion actually makes sense.
When contemplating a Roth conversion for 2026, it's crucial to address three pivotal questions. First, examine your current tax bracket. High earners in brackets like 32% might find that converting to a Roth IRA isn't as advantageous. For instance, converting $100,000 at a 32% rate would incur $32,000 in taxes, making the move less appealing.
Second, consider your expected tax bracket in retirement. If you anticipate being in a lower tax bracket, the benefits of a Roth conversion may not outweigh the costs. However, keep in mind, the math behind this scenario is complex, as other factors come into play. Lastly, assess whether your retirement plan includes significant charitable donations.
Roth conversions don't align with charitable giving, as they involve paying taxes on the converted amount, which defeats the purpose of charitable distributions. In such cases, it's more tax-efficient to make qualified charitable distributions directly to your chosen charities, thereby bypassing taxes and potential increases in your tax bill.
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