Wes Moss Warns $50,000 Roth Conversions Can Trigger $12,000 Tax Bills for Retirees
Updated
Updated · 24/7 Wall St. · May 13
Wes Moss Warns $50,000 Roth Conversions Can Trigger $12,000 Tax Bills for Retirees
1 articles · Updated · 24/7 Wall St. · May 13
$50,000 Roth conversions can leave retirees owing about $12,000 at tax time, Wes Moss said on The Clark Howard Podcast, arguing many people remember the bill more than the promised long-term tax benefits.
That hit comes because conversions are taxed at the full marginal rate on each converted dollar, while a retiree in a 24% bracket may face an effective federal rate closer to 16% to 18% on ordinary income.
IRMAA can make the math worse: a conversion that lifts reported income can raise Medicare Part B and Part D premiums two years later, creating a second delayed cost for retirees on fixed incomes.
Moss said conversions work mainly when today's bracket is clearly below the rate retirees expect once required minimum distributions begin at 73; otherwise, partial conversions or broader tax diversification may be safer.
Has the new 2025 tax law turned Roth conversions into a financial trap for most American retirees?
How can retirees sidestep the hidden Medicare 'double hit' that comes years after a Roth conversion?