Should savers accelerate or delay roth conversions in 2025 given the updated rmd age and tax brackets?
Executive summary
For most savers, 2025 is a pivotal year for Roth conversions because the RMD starting age moved to 73 and Congress’s 2025 tax changes (the “One Big Beautiful Bill” or similar packages) locked in lower TCJA-era brackets—creating a window to convert while ordinary rates remain relatively low (sources note the permanence of TCJA brackets and advisers urging conversions now) [1] [2]. Experts across Vanguard, Schwab, Kiplinger and others recommend partial, bracket-filling conversions—convert up to your current bracket and spread conversions over years—to avoid jumping into higher marginal rates or Medicare/IRMAA and deduction phaseouts [3] [4] [5].
1. Why 2025 feels like a “now-or-wait” moment
Tax law changes in 2025 created a rare combination: the federal income-tax brackets from the 2017 TCJA were made effectively permanent in the new package, while other provisions and phaseouts were revised—meaning current statutory brackets are known and some advisors say that certainty makes 2025–2026 a sweet spot to prepay taxes via Roth conversions if you expect higher future taxes or big RMDs later [1] [2]. Several outlets explicitly frame 2025 as a favorable year to act because lower brackets are in place and conversion windows (including backdoor Roths) remain available [6] [7].
2. The arithmetic everyone cites: “fill the bracket” strategy
Advisors and firms repeatedly recommend converting only enough to “fill up” the current tax bracket—so you pay tax at a lower marginal rate but don’t trigger the next, costlier bracket (examples and calculators show how to compute the room in the 24% or 22% brackets for 2025) [8] [4] [9]. Vanguard’s BETR analysis and Schwab/Kiplinger guidance emphasize multi‑year partial conversions as the way to manage tax shock and maximize after‑tax value [10] [3] [6].
3. RMD‑age change affects timing and scale of conversions
SECURE/SECURE 2.0 changes raise the RMD beginning age to 73 for most people in 2025, which alters the calculus: you have more years to keep pretax money compounding, and you can convert earlier in lower‑income years. But that also means you may still face large RMDs later if you don’t convert, and advisors warn RMDs could push you into much higher brackets in your 70s and 80s—another argument for gradual conversions now [11] [12].
4. Hidden costs and counterarguments you cannot ignore
Several reputable sources warn of traps: large conversions can erase deductions, trigger IRMAA/Medicare surcharges two years later, push you into net investment income tax, or create state‑level consequences—so the headline “convert now” can backfire without modeling [13] [14] [13]. The One Big Beautiful Bill also changed deduction landscapes (senior deduction, SALT limits) that interact unpredictably with conversion income, so a conversion that looks attractive on federal brackets might harm your effective tax rate [15] [13].
5. Practical steps advisers and platforms recommend
Trusted providers suggest concrete routines: model future tax brackets and IRMAA/Medicare effects using 2–3 scenarios; convert just enough to reach the top of your current bracket and spread the rest across low‑income years; pay conversion taxes from outside retirement pools to preserve nest‑egg growth; and use market dips or realized losses to offset conversion income—tools and calculators from Schwab, Fidelity, NerdWallet and independent calculators are built for that job [3] [16] [17] [14].
6. Who should probably accelerate conversions — and who should wait
Accelerate if you expect your marginal tax rate to be higher in retirement, expect large future RMDs, have room in lower brackets this year, can pay taxes outside the IRA, or want Roth legacy benefits [6] [4]. Delay if you face narrow bracket room, need the cash to pay conversion taxes from the IRA itself, are near Medicare‑IRMAA thresholds that a conversion would breach, or if available sources show you’re better off preserving deductions and credits that a conversion would phase out [13] [14].
7. Bottom line and what the reporting leaves unsaid
The consensus in current reporting is tactical: partial, multi‑year conversions that “fill” low brackets are the prudent middle path in 2025 [3] [4]. Available sources do not mention a one‑size‑fits‑all rule; instead they prescribe individualized modeling and professional counsel because state taxes, IRMAA, deduction phaseouts and market timing materially change outcomes [13] [14]. Use calculators from Schwab, Fidelity, or independent planners to run scenarios and involve a CPA or CFP before pulling the trigger [8] [16].