Is a Roth IRA conversion worth it in 2026? Here are 3 clues

You want Roth savings in retirement, so you don't have to pay taxes on your withdrawals. But so far, most of your savings are in traditional IRAs or 401(k)s. That's not a huge problem. It just means you'll need to do Roth IRA conversions to change some of your tax-deferred savings into Roth savings.

That means paying taxes on the converted funds in the year you move the money to your Roth IRA. It needs careful handling so you don't walk away with a surprise bill. Here are three signs 2026 could be the perfect time for you to do a Roth IRA conversion.

1. You're in a low tax bracket

Roth IRA conversions are best done when you're in a low tax bracket. This way, you'll pay less in taxes when you convert. After that, your money will begin to grow tax-free, though you can't withdraw converted funds penalty-free until Jan. 1 of the fifth year following the conversion. For example, if you do a Roth IRA conversion in 2026, the clock starts on Jan. 1, 2026, and you can withdraw the money penalty-free on Jan. 1, 2031.

If your income is lower this year than in years past, perhaps due to a job loss or retirement, that makes 2026 a great year to go ahead with a Roth IRA conversion. You don't have to convert all your tax-deferred savings at once. Consider converting just enough to take you to the top of your current tax bracket. Then, convert a little more each year as necessary.

2. You qualify for the senior tax deduction

The new senior tax deduction is only in place through 2028, and it can reduce your taxable income by up to $6,000 for single adults or $12,000 for married couples. This could meaningfully reduce your tax bill over the next several years.

We don't know whether the government will extend the tax deduction beyond 2028, so if you qualify for it, take advantage of your reduced bill over the next few years to move some of your savings into Roth accounts. You may not even face a bill if your tax refund covers the cost of the conversion.

3. Your portfolio has taken a dip

When your investments are down, you'll pay less in taxes to do a Roth IRA conversion. Then, as your assets hopefully recover, all of that growth will be tax-free. This could help you hold onto more of your hard-earned savings in retirement.

If you're not sure whether a Roth IRA conversion is the right move for you this year, consider waiting until closer to December. This will give you time to get an idea of which tax bracket you'll fall into. Consult an accountant if you want a personalized estimate for how much a Roth IRA will cost you in 2026.

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