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Rethinking Roth Conversions: Navigating New Tax Laws and Opportunities

Fact-Checked Summary / Overview

In this session, Bob Keebler framed Roth conversions as a planning decision that now sits at the intersection of income tax management, beneficiary planning, Medicare surcharges, charitable strategy, and estate tax exposure. His central message was that advisors should stop treating Roth conversions as a simple “tax rate now versus tax rate later” exercise and instead evaluate them through multiple lenses: the married couple’s current return, the surviving spouse’s future return, and the beneficiaries’ likely tax environment. He also emphasized that the newest deduction rules and phaseouts can create hidden marginal-rate spikes, making software-driven modeling essential rather than optional.

The transcript also makes clear that Keebler distinguishes between routine, bracket-driven conversions that advisors can help coordinate and complex, estate-tax-driven conversions that require a coordinated team approach with the client’s CPA and estate attorney. He repeatedly stressed that Roth conversions are often most valuable when they are part of a broader multiyear tax and estate plan rather than a one-year tactical move.

At a rules level, several of the session’s core technical points align with IRS and SSA guidance: Roth IRAs generally have no lifetime RMDs for the original owner; most non-spouse beneficiaries are subject to the post-SECURE 10-year rule unless they qualify as eligible designated beneficiaries; higher MAGI can increase Medicare Part B and Part D costs through IRMAA; and estates can claim an income tax deduction under IRC Section 691(c) for estate tax attributable to income in respect of a decedent.

Key Topics and Expanded Insights

1. Roth conversions now require phaseout-sensitive modeling, not just bracket management

A major theme of the session was that recent tax-law changes can make a seemingly reasonable Roth conversion far more expensive than it first appears. Keebler highlighted three moving parts that can be affected by higher income from a conversion:

• the senior deduction,
• the qualified business income deduction,
• and the SALT deduction phaseout.

His most forceful warning involved the SALT phaseout. In his example, a couple at roughly $500,000 of income could lose a significant portion of their SALT deduction if a Roth conversion pushed them high enough, causing taxable income to rise by more than the conversion amount itself. His practical point for advisors was not merely that SALT matters, but that phaseouts can create effective marginal rates well above the nominal bracket. That means a conversion that looks acceptable on a tax-bracket chart may be unattractive once deductions are lost.

He made the same point, though less dramatically, with the senior deduction and QBI deduction. For both, the planning takeaway was that advisors should assume there may be hidden interaction effects whenever a client is near an income threshold, especially if the client is older, owns a pass-through business, or itemizes deductions. The IRS confirms that the QBI deduction phases out for SSTBs above specified taxable income thresholds and that above the applicable range, SSTB income generally is not counted for the deduction.

Planning implications:

• Advisors should model Roth conversions with tax software rather than rely on bracket charts or rough estimates.
• A client near a deduction phaseout may benefit from a smaller, more targeted conversion rather than a larger annual “fill the bracket” strategy.
• For business owners, QBI interaction should be reviewed with the CPA before conversion recommendations are finalized.

2. The right way to evaluate a Roth conversion is through three taxpayer lenses

One of the transcript’s most useful frameworks was Keebler’s instruction to analyze a Roth conversion through three perspectives:

1. the married couple,
2. the surviving spouse,
3. the children or other ultimate beneficiaries.

This matters because a conversion that appears inefficient on the couple’s current return may still be attractive if the surviving spouse is likely to be pushed into much higher single-filer brackets later. Keebler specifically noted the “married versus single” bracket compression problem and urged advisors to think forward to the first spouse’s death. IRS rules confirm that Roth IRA owners are not subject to lifetime RMDs, while traditional IRA owners must generally begin RMDs at age 73, which can accelerate future taxable income for a survivor.

The beneficiary lens is equally important. Keebler pointed out that a child living in a high-tax state may face materially worse tax treatment than parents living in a no-tax or low-tax state. That can create a compelling argument for parents to recognize conversion income during life, especially if they live in Florida, Texas, or another no-income-tax state and the child lives in California or New York. This was one of the session’s clearest examples of family tax-rate arbitrage.

Planning implications:

• State residency of both parents and beneficiaries can materially change Roth conversion math.
• For married clients, conversions may be justified partly as “surviving spouse bracket protection.”
• Beneficiary location, expected earnings, and inherited-IRA compression should be part of the conversion memo or planning analysis.

3. The SECURE Act’s 10-year rule increases the planning value of Roth assets for many families

Keebler devoted substantial time to the way inherited IRA rules affect Roth planning. His basic argument was that the SECURE Act’s 10-year distribution rule can create compressed taxable distributions for children, especially only children or beneficiaries already in high brackets. The IRS confirms that after the decedent’s death, most designated beneficiaries must empty inherited retirement accounts by the end of the tenth year unless they qualify for an exception as an eligible designated beneficiary.

He also emphasized that Roth assets are more powerful under the 10-year rule because beneficiaries may be able to defer distributions until late in the period while preserving tax-free growth, subject to the applicable inherited-Roth rules and the account’s five-year history. IRS beneficiary guidance confirms that most withdrawals of earnings from an inherited Roth IRA are tax-free if the five-year holding requirement has been satisfied.

The transcript adds several practical nuances often omitted from shorter summaries:

• clients with multiple children may be able to manage inherited-IRA compression more easily than clients with one child,
• beneficiaries under the eligible-designated-beneficiary exceptions require different trust and beneficiary-designation planning,
• and special-needs beneficiaries may make Roth treatment even more attractive when paired with the right trust structure.

Planning implications:

• The SECURE Act makes Roth planning more compelling for clients with large IRAs and high-income beneficiaries.
• Beneficiary designations and trust drafting should be reviewed alongside any major Roth conversion plan.
• Advisors should not assume that “the children can just spread it out later” without analyzing the actual post-death tax burden.

4. Beneficiary and trust design are not side issues; they are part of the Roth conversion decision

A particularly valuable point from the transcript is that Roth conversions are not just tax calculations. Keebler repeatedly tied them to beneficiary-form design and trust coordination. He stated that once a client moves significant assets into a Roth, beneficiary designations may need to be updated, and he strongly encouraged collaboration with estate counsel for larger or more complex cases.

He also explained that special-needs planning and trust tax rates can materially change the desirability of Roth assets. For example, if an IRA is payable to a trust that will retain income, the trust can hit the top income-tax bracket very quickly. That makes Roth treatment potentially more attractive, especially for special-needs trust planning where preserving tax-free growth and avoiding compressed trust taxation can be valuable.

The transcript also highlighted a technical point that many advisors miss: if a surviving spouse is under age 59½, rolling inherited assets into the spouse’s own IRA may reduce access flexibility, because early-distribution penalties can become relevant. Keebler’s practical checklist point was that the spouse’s access needs between the date of death and age 59½ should be examined before defaulting to a rollover approach.

Planning implications:

• Roth planning should trigger a beneficiary-designation review.
• Special-needs and trust-based planning may strengthen the case for a Roth conversion.
• Surviving-spouse age and access needs matter, especially before age 59½.

5. Estate tax can make Roth conversions more attractive, especially in state-estate-tax jurisdictions

Keebler went beyond basic Roth planning and focused on situations where estate tax changes the outcome. His key point was that paying income tax before death can reduce the size of the taxable estate, and that this can produce a better result than leaving a larger traditional IRA exposed to estate tax. He specifically noted that this effect can be even more attractive in states with their own estate tax, because the federal income tax deduction under IRC Section 691(c) does not create a deduction for state estate tax in the same way.

The IRS confirms that estates may claim a deduction related to estate tax attributable to income in respect of a decedent under Section 691(c). Keebler’s transcript discussion adds the practical advisor takeaway: the interaction between federal estate tax, state estate tax, and post-death income taxation can create a mathematical advantage for converting during life rather than leaving the entire traditional IRA intact.

He also referenced state-specific cliff issues, such as New York’s estate tax cliff, as a reason some clients may benefit from conversion-driven estate-size reduction. That point is more planning-oriented than universal, but it underscores the need to evaluate state estate tax rules, not just the federal exemption.

Planning implications:

• Estate tax analysis can materially alter the Roth recommendation.
• Clients in state-estate-tax jurisdictions may have stronger reasons to convert than similarly situated clients in no-estate-tax states.
• Larger Roth cases should be reviewed jointly with the CPA and estate attorney, not handled in isolation.

6. IRMAA, Social Security taxation, and ACA credits are real conversion costs, not footnotes

Keebler warned that advisors can damage client trust if they recommend a Roth conversion and fail to address higher Medicare premiums. SSA and CMS guidance confirms that higher MAGI can increase Medicare Part B and Part D costs through IRMAA and that the calculation generally uses tax return data from two years prior.

He also noted that Roth conversions can affect Social Security taxation and ACA premium credits. The transcript’s practical takeaway was that conversions done before Medicare age can sometimes improve later planning flexibility by reducing future RMD-driven MAGI. That does not make early conversions automatically right, but it means the timing window between retirement and Medicare can be especially valuable.

Planning implications:

• Roth analyses should include Medicare premium effects, not just federal and state income tax.
• The years after retirement but before age 65 can be a particularly important Roth planning window.
• Advisors should explain these secondary costs clearly before implementation.

7. Non-deductible IRA basis, charitable carryovers, and other favorable attributes can materially improve the economics

The transcript adds several useful planning levers beyond the headline issues. Keebler stressed the importance of identifying non-deductible IRA basis because basis can make part of a conversion effectively tax-free. IRS Publication 590-B addresses basis and Roth conversion treatment through the pro rata rules.

He also mentioned charitable carryforwards, NOLs, and other favorable tax attributes that can reduce the effective cost of conversion income. This is one reason he urged advisors to coordinate with the CPA and not treat Roth planning as a purely investment-side exercise.

Another useful transcript point is that clients should not automatically assume a Roth conversion is unattractive just because they are currently in a high bracket. If future RMDs, beneficiary tax rates, state tax differences, or estate taxes are worse, a current conversion can still make sense. Conversely, he also acknowledged that for some very high-income clients, the right answer may be to do only a token Roth conversion to start the five-year clock and wait for a later low-income window.

Planning implications:

• Always ask about IRA basis before dismissing or recommending a conversion.
• Tax attributes outside the IRA itself can change the analysis substantially.
• High-income clients may still have Roth opportunities, but the right answer is often sequencing, not “convert everything now.”

8. Oil and gas was presented as a niche sheltering tool, but only for sophisticated clients

One of the more unusual parts of the session involved using oil and gas investments to generate deductions that could offset Roth conversion income. Keebler described the favorable treatment of intangible drilling costs and said this can be useful for certain sophisticated clients. He also clearly warned that this is not a mass-market solution and that it can go badly if the client does not understand the risk or if commodity economics turn against the investment.

This section should be interpreted carefully. It was presented as an advanced planning tactic, not as a default Roth tool. Keebler contrasted it with passive-loss strategies and specifically noted that real estate losses generally cannot offset Roth conversion income unless the taxpayer qualifies under the relevant active or real estate professional rules.

Planning implications:

• Oil and gas may be relevant for certain high-income, sophisticated clients, but it is not a general-purpose Roth strategy.
• Advisors should be cautious about recommending niche shelters without deep due diligence and tax coordination.
• This is an area where product risk can overwhelm the tax planning benefit if the investment itself is unsuitable.

9. Advisors should avoid overconfidence and know when the issue belongs with tax or legal counsel

A particularly strong practical theme in the Q&A was Keebler’s warning that some post-death IRA questions, trust issues, and beneficiary-rule questions should be handled by CPAs or tax lawyers, not improvised through internet research or generalized planning knowledge. He specifically cautioned against trying to “Google or AI” one’s way through fact-intensive inherited-IRA disputes and trust design problems.

He also made an important liability-management point: in difficult Roth or inherited-IRA cases, involving the CPA does not just improve technical accuracy; it also helps ensure the advice is being vetted by someone whose professional role is directly tied to tax interpretation. That is a practical advisor protection point, not just a technical one.

Planning implications:

• Advisors should distinguish between coordinating a Roth conversion and independently rendering technical tax/legal advice.
• Complex inherited-IRA, trust, and post-death issues should be escalated to tax or legal specialists.
• Team-based planning is both a client-service issue and a risk-management issue.

Practical Advisor Takeaways

Start with a multiyear projection, not a one-year tax bracket. The transcript makes clear that terminal tax rates, survivor brackets, beneficiary compression, and estate tax can matter more than the client’s current marginal rate.

Model deduction loss and phaseout effects explicitly. Senior deduction, QBI, SALT, charitable limitations, Medicare surcharges, and Social Security taxation can all change conversion economics.

Use the three-lens framework on every substantial case:

• married couple,
• surviving spouse,
• ultimate beneficiaries.

Do not overlook state tax and state estate tax. Cross-state family structures can create meaningful arbitrage, and state-estate-tax jurisdictions may strengthen the case for conversion.

Review beneficiary forms and trust coordination when major Roth assets are created. Conversion implementation is not complete until post-death distribution planning has also been reviewed.

Flag special cases early:

• spouse under 59½,
• special-needs beneficiaries,
• large traditional IRAs in estate-taxable estates,
• clients with basis,
• clients nearing IRMAA thresholds,
• business owners subject to QBI rules.

Bring in the CPA and estate attorney sooner, not later, for large or unusual cases. Keebler’s practical view was that collaboration improves both planning quality and advisor protection.

External Reference Sources

Internal Revenue Service, Retirement Topics – Beneficiary
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary

Internal Revenue Service, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
https://www.irs.gov/publications/p590b

Internal Revenue Service, Roth IRAs
https://www.irs.gov/retirement-plans/roth-iras

Internal Revenue Service, Qualified Business Income Deduction
https://www.irs.gov/newsroom/qualified-business-income-deduction

Internal Revenue Service, Instructions for Form 8995
https://www.irs.gov/instructions/i8995

Internal Revenue Service, Instructions for Form 8995-A
https://www.irs.gov/instructions/i8995a

Internal Revenue Service, Publication 559, Survivors, Executors, and Administrators
https://www.irs.gov/publications/p559

Social Security Administration, POMS HI 01101.010, Modified Adjusted Gross Income (MAGI)
https://secure.ssa.gov/poms.nsf/lnx/0601101010

Social Security Administration, POMS HI 01101.020, IRMAA Sliding Scale Tables
https://secure.ssa.gov/poms.nsf/lnx/0601101020

Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles
https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles