Roth conversions: How to decide whether they’re worth it under the SECURE Act 2.0

With the 2026 tax law changes now in effect and Required Minimum Distribution (RMD) rules clarified under SECURE Act 2.0, Roth conversions have become less about finding a universal answer and more about making deliberate, well-timed decisions.

For higher-income families, the value of a Roth conversion depends on who ultimately pays the tax, when that tax is recognized and whether the long-term benefit justifies the upfront cost.

The focus is no longer simply today’s marginal rate versus a future rate, but on how taxes are managed across multiple years—and often across generations.

When does a Roth conversion make sense?

Effective Roth planning starts with understanding the role retirement assets are expected to play. Assets intended to fund lifetime spending require a different approach than those likely to pass largely intact to heirs or support charitable objectives. For families with meaningful wealth, retirement accounts often serve more than one purpose, and conversion decisions should reflect those competing goals.

For this reason, the first question is not whether a Roth conversion reduces taxes in isolation, but whether it improves outcomes given how the assets are ultimately expected to be used.

Roth vs. traditional IRA: Key differences

The choice between Roth and traditional retirement accounts is best understood as a tradeoff between flexibility and certainty.

• Traditional IRAs offer control. Distributions can be timed, coordinated with other income, offset through charitable strategies, or passed to beneficiaries whose tax circumstances may differ.
• Roth IRAs offer certainty. Growth and distributions are tax-free, lifetime RMDs are eliminated for owners and surviving spouses, and while non-spouse beneficiaries must distribute assets within ten years, those distributions are not subject to income tax.

The optimal structure depends on which taxpayer, the owner or the beneficiary, is better positioned to absorb the tax.

Who should pay the taxes? Comparing generational tax rates

For families that expect to remain in higher tax brackets, the most relevant comparison is often not the account owner’s future rate, but the tax rates heirs may face after inheriting the account.

Under current rules, non-spouse heirs must fully distribute an inherited IRA within 10 years of the original owner’s death. However, the distribution within those 10 years depends on whether the owner had already reached their required beginning date (RBD) for RMDs.

SECURE Act 2.0 increased the RMD age to 73 for individuals born between 1951 and 1959, and to 75 for those born in 1960 or later. If the IRA owner dies before reaching their RBD, heirs are generally required to empty the account within 10 years but are not subject to annual RMDs during years one through nine.

If the owner dies on or after their RBD, final RMD regulations require non-spouse heirs to take annual RMDs in years one through nine, with the remaining balance distributed by the end of year ten.

In either case, inherited IRA distributions often stack on top of heirs earned income, compressing taxable income into a relatively short timeframe. This income “stacking” can materially increase the tax burden borne by the next generation.

As a result, Roth conversions may be most effective when they shift taxable income away from heirs who are likely to face equal or higher marginal tax rates.

When Roth conversions can add value

Roth conversions are often most compelling for high-income, multi-generational families with substantial traditional IRA balances and limited need to draw on those assets during life.

When retirement accounts are expected to pass largely intact to heirs who are also high earners, Roth conversions can meaningfully reduce income stacking during the SECURE Act’s 10-year distribution window.

This benefit is strongest when there is a long post-conversion growth horizon and sufficient time for tax-free compounding to offset the upfront tax cost.

When Roth conversions may disappoint

Roth conversions may deliver limited incremental value when implemented late in life, when heirs are expected to face similar tax rates or when the time horizon for tax-free growth is short.

Conversions may also be less effective for households with persistent high marginal tax rates and those with significant charitable intent. For these families, Qualified Charitable Distributions—up to $111,000 per person in 2026—can materially reduce or eliminate the income tax impact of required distributions, often diminishing the advantage of conversion.

In these cases, breakeven points—the time required for the benefits of conversion to outweigh the upfront tax cost—may extend well beyond the SECURE Act’s 10-year payout period. While conversions may still support secondary goals such as intentional estate reduction, the economic benefit alone may be modest.

Executing a conversion: Using a multi-year approach

Once you’ve clarified how the assets will be used, weighed the intergenerational tax tradeoffs, and compared the benefits of Roth versus traditional accounts, the focus turns to execution.

For most high-income households, converting an entire IRA in a single year may not be optimal. Roth conversions tend to work best when executed gradually, with partial conversions spread across multiple years. This approach allows families to manage taxable income, preserve flexibility, and reduce the risk of converting at an inopportune time. Importantly, for a Roth conversion strategy to be most effective, the income tax due on the conversion should generally be paid with non-IRA assets rather than from the IRA itself. This allows the full converted amount to remain invested in the Roth and continue growing tax-free.

Opportunities often arise in years when income is temporarily lower, deductions can offset ordinary income or when market values are depressed. In each case, the objective is not to avoid tax, but to improve the timing of when that tax is paid—aligning conversions with years when the cost is least disruptive to the broader plan.

A tool, not a rule

Roth conversions remain a powerful planning tool, but they are not universally beneficial. Their value depends on timing flexibility, intergenerational tax rate differences, charitable intent, and growth horizon.

For high-income families, the most effective approach is a disciplined, long-term analysis that looks beyond current tax rates and focuses on how taxes are ultimately paid—over time and across generations.