Roth conversions: When the ‘juice isn't really worth the squeeze,’ according to a top-ranked advisor

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Roth individual retirement account conversions can potentially reduce lifetime taxes. But the strategy isn't right for everyone, and the choice is now more complex amid updates from President Donald Trump's "big beautiful bill" and other changes.

Roth conversions transfer pretax or nondeductible IRA funds into a Roth IRA, which kick-starts tax-free growth. The trade-off is that they can trigger more income in the year of the conversion.

The move can be attractive if you have large pretax retirement balances and you expect higher tax rates when it's time to withdraw the funds, experts say.

At year-end 2025, IRA-owning households in the U.S. had $15.9 trillion in assets in traditional IRAs, compared with $2.4 trillion in after-tax Roth IRAs, according to a 2026 report from the Investment Company Institute, an investing trade organization.

Weighing Roth conversions, or partial Roth conversions, is "a strategy that continues to be very popular year-over-year," said Charissa Anderson, a certified financial planner who is an executive vice president at Ferguson Wellman Capital Management in Portland, Oregon. Her firm ranked No. 52 on CNBC's Financial Advisor 100 list for 2026.

As of March 31, Roth conversions were up 41% this year compared with the same period in 2025, according to the latest Fidelity data, based on an analysis of 19.6 million IRA accounts.

But experts say the strategy isn't right for everyone.

"There are just so many variables" when analyzing a possible Roth conversion, said Tommy Lucas, a CFP at Moisand Fitzgerald Tamayo in Orlando, Florida. His firm is ranked No. 44 on CNBC's Financial Advisor 100 list for 2026.

These could include when you claim Social Security, your life expectancy and legacy goals, among other factors, he said.

Depending on your tax bracket, "sometimes the juice isn't really worth the squeeze," said Lucas. "And we're going to have to squeeze every single year" because multiple factors can change the analysis.

If you're eyeing a Roth conversion before year-end, here are some key things to consider.

When deciding on a Roth conversion, projections should include the current year's taxes, along with an analysis of future years, financial advisors say.

"The [tax] bracket you see isn't always the rate you pay," because more income could phase out, or reduce, other tax benefits, according to CFP Tommy Blackburn, senior financial planner and partner at Mason and Associates in Newport News, Virginia. He is also a certified public accountant.

As an example, Blackburn pointed to a client in the 22% tax bracket with a child in college. Income from a conversion could trigger taxes above 30% because the client would lose an education tax credit, which is subtracted from their taxes owed, he said.

By comparison, a client in the 10% tax bracket could convert a limited amount under their standard deduction without owing additional taxes for the current year, he said.

Boosting your AGI with Roth conversions can also reduce the premium tax credit, which makes Affordable Care Act marketplace health insurance less expensive.

Earning even $1 more than a certain income limit can threaten eligibility for the credit — known as the "ACA cliff" — and enrollees could owe full premiums for health coverage. 

The cliff affects ACA enrollees when household income exceeds 400% of the federal poverty line, which varies by family size. For 2026, those limits are about $63,000 for a single person or $129,000 for a family of four.

That's why marketplace health insurance enrollees should "proceed with caution" before completing a Roth conversion, said CFP Bill Shafransky, a senior wealth advisor with Moneco Advisors in New Canaan, Connecticut.

"This is one of those financial strategies where you really want to dot your i's and cross your t's before acting," he said.

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