Roth IRA: Convert Now or Pay Later?
Why the tax-code change should put a hurry-up on your decision to convert a traditional IRA into a Roth.


The wait is over.
If you were delaying your plans to do a Roth conversion until you knew for sure that President Trump could deliver on his tax cut promises, you have your answer.
Now is the time. And the clock may be ticking. It’s likely these low tax rates won’t last until you retire — even if your retirement isn’t all that far off.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
That’s because even though it may be great for the short term, most economic models, including that of Congress’ own Joint Committee on Taxation, show this tax plan will add at least $1 trillion to the nation’s debt over the next decade.
The problem is the government keeps kicking our debt can down the road, leaving it for some future generation to figure out. Meanwhile, the amount keeps growing — and it’s already more than $20 trillion, making it the largest national debt in the world.
And if the Fed continues to raise interest rates, the rates on government securities also will rise, which could add to the problem.
There are only a few ways this staggering burden can be reduced:
- The government can cut spending. (But it doesn’t like that idea much.)
- It can drive economic growth at a faster rate than the debt. (Republicans say this tax cut will accomplish that.)
- Or it can raise revenue by raising taxes.
If that happens and you’ve accumulated a hefty sum in your traditional IRA or 401(k) — as most workers have been trained to do over the past three decades — you could be in for a nasty surprise when you’re ready to withdraw those tax-deferred funds. (Or when you’re forced to take required minimum distributions at age 70½.)
And there’s no telling when a tax increase could happen. It could be in three years, if Trump isn’t re-elected — or maybe 10 or 20 years from now.
Think of this as a fire sale. We’re going to have much lower tax rates for at least the next few years. If you file a joint return, you can make as much as $315,000 and still be in a 24% tax bracket. So there’s a lot of room to start moving money out of traditional retirement plans and into a tax-free Roth.
Of course, to do that, you’ll have to pay the taxes on the money you withdraw now. But you should ask yourself: Would I rather pay 24% now or potentially pay 40%, 50% or more in the future?
Those percentages aren’t unprecedented.
Right now, for 2018, the highest rate you can be taxed at is 37%. In 1917, the highest tax rate jumped from 15% to 67% — and to 77% in 1918. In 1932, Congress raised taxes on top earners from 25% to 63%. And in 1944, the top rate peaked at 94% on taxable income over $200,000.
If you’ve been a diligent saver — putting money into your tax-deferred account for years and building a significant nest egg — this is an important decision to make, and the window could be narrow. Talk to your tax accountant and/or financial adviser now about the advantages of a Roth conversion and how it would fit in your overall retirement plan.
Kurt Supe and John Culpepper offer securities through cfd Investments, Inc., Registered Broker/Dealer, Member FINRA & SIPC, and Kurt Supe offers advisory services through Creative Financial Designs, Inc., Registered Investment Adviser. Creative Financial Group is a separate unaffiliated company. The CFD Companies do not provide legal or tax advice. Neither Creative Financial Group nor the CFD Companies are associated with SmartVestor or Ramsey Solutions. Neither SmartVestor nor Ramsey Solutions recommend or make an endorsement for services provided under the SmartVestor program.
Kim Franke-Folstad contributed to this article.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Kurt Supe is a certified public accountant and financial adviser as well as senior partner and co-founder of Creative Financial Group (www.creativefinancialgrp.com). He holds a bachelor's degree in finance from the University of Kentucky and has nearly 20 years of experience in the financial services industry.
-
Stock Market Today: Dow Sinks 715 Points as Inflation Unrest Grows
Inflation worries are showing up in both hard and soft data.
By Karee Venema Published
-
What the Senate's Vote to Repeal CFPB Bank Overdraft Fees Cap Means For You
The Senate voted to overturn the Consumer Financial Protection Bureau's cap on overdraft fees. Here's what you need to know.
By Sean Jackson Published
-
Ask the Editor: Taxes, March 28, 2025
Ask the Editor In our new Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions related to filing of tax returns and paying taxes.
By Joy Taylor Published
-
Retiring With a Pension? Four Things to Know
The road to a secure retirement is slightly more intricate for people with pensions. Here are four key issues to consider to make the most out of yours.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
How to Teach Your Kids About the Tax Facts of Life
Taxes are unavoidable, so it's important to teach children what to expect. Also, does your child need to file a tax return for 2024? Find out here.
By Neale Godfrey, Financial Literacy Expert Published
-
Revocable Living Trusts: The Good, the Bad and the Ugly
People are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
By Charles A. Borek, JD, MBA, CPA Published
-
How to Plan for Retirement When Your Child Has Special Needs
When your child has special needs, your retirement plan should include a plan for when you'll no longer be able to care for them yourself. A five-step guide.
By Christopher M. Butterworth, ChSNC®, CRPS, CLU® Published
-
IRS Layoffs Spark Delays, Doubt This Tax Season
Tax Season Tax experts say Trump’s downsizing of the IRS is already causing problems.
By Gabriella Cruz-Martínez Last updated
-
Tax Advantages of Oil and Gas Investments: What You Need to Know
Tax incentives allow for deductions and potential tax-free earnings — benefits accessible only to accredited investors in small producer projects.
By Daniel Goodwin Published
-
Charitable Contributions: Five Frequently Asked Questions
Make the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
By Stephen B. Dunbar III, JD, CLU Published