So, we’re going to get into the details of Roth IRA conversions. But the general idea with a Roth is you want to convert when taxes are as low as possible.
If everything else stays the same — that is your work status, your retirement status, your required minimum distribution status, your Social Security status, etc., etc., etc., — which, of course, it won’t, but if everything is the same, our rates are lower now than they will be in 2026 and by a considerable amount.
Now traditionally, the best time to convert is after retirement. So, when you were working, your income was way up here. Then after you retire, your income is way down here. Then after Social Security and required minimum distributions, a lot of times your income is way back up here.
And ideally, you want to convert in those in-between years. Because typically, that will be for many if not most people, the lowest tax rates of their life. If they do retire, let’s say, at 66 or 67, they have a number of years of low income to make those Roth IRA conversions.
But under the SECURE Act, even with steady tax rates and even before the SECURE Act, it made a lot of sense to do Roth conversions. But now, it even makes more sense for people who are still working and people who are already retired and taking required minimum distributions and Social Security.
So, the scope of Roth IRA conversions has grown in importance, and particularly if you have a child with a disability. We’re playing defense now. Before we were doing Roth IRA conversions, if you will, offensively. “Oh, if you do this, this is going to be great for your family and all the wonders that we’re going to get tax-free growth for the next two generations,” and frankly, I’ve been doing that for over 20 years.
But now, it’s more defense. The SECURE Act is just going to murder us. With the high tax rates on our IRAs and our required minimum distributions, we’re going to get slaughtered unless we are proactive. And one of the best things that most people can do, not everybody, of course, is a series of Roth IRA conversions.