Episode #81: Are Roth Conversions Worth It In 2025?

If you’re sitting on a traditional IRA, chances are you’ve at least thought about Roth conversions. Should you do it now? Should you wait? And how much tax are you really going to owe?

Let’s break this down.

This post gives a 30,000-foot view of the Roth conversion strategy and why it might make sense in 2025. It’s not tax advice — you’ll want to talk to your tax advisor before making any decisions — but I’ll show you why now might be the best time in history to consider it.

Why the Tax Timing Matters Right Now

One of the biggest objections I hear is:
“But I don’t want to pay taxes on that money.”

Here’s the truth:
You’re not avoiding taxes with a traditional IRA — you’re deferring them. And the government will get its share eventually.

But there’s good news: today’s tax rates are historically low.

Year	Top Federal Tax Bracket
1950s	90%+
1980s (Reagan era)	Dropped significantly
2025	Mid 30% for the highest income earners

Think about it. If you’re going to pay taxes anyway, wouldn’t you rather do it when rates are historically low?

How the SECURE Act Changed Inheritance Planning

You may not need your IRA income now — maybe you’re holding onto it just in case or planning to leave it to your kids.

But the SECURE Act eliminated the “Stretch IRA” for non-spouse beneficiaries. That means:

• • Your heirs must empty the account within 10 years of your passing

• • Withdrawals are taxed as ordinary income
    

• • Large inherited IRAs can push your heirs into much higher tax brackets
    

This creates a real problem. Let’s look at what that could mean for your family.

Comparing Two Scenarios: Convert vs. Do Nothing

Let’s say we’re working with a married couple, both age 60, with:

• • $150,000 in annual retirement income
    (from Social Security, a pension, and dividends)

• • $1 million in a traditional IRA

• • A goal to convert it over 20 years at $50,000 per year

Here’s a side-by-side comparison:

	Convert to Roth Over 20 Years	Do Nothing (Keep in Traditional IRA)
IRA growth assumption	0% (converting steadily)	4% annually
Roth growth	4%	n/a
Total taxes paid	$220,000	$0 during lifetime (except RMDs starting at age 73)
Account value at death	$1.5M Roth	$2.2M Traditional
Value 10 years after death	$2.92M (tax-free)	$1.68M (after tax)
Taxes paid by heirs	$0	$540,000+

So by paying $220,000 in taxes over 20 years, you potentially leave your heirs $1.25 million more — and save them from a huge tax mess.

Should Your Kids Pay the Tax Bill?

Here’s a creative idea:

If you’re reluctant to pay the extra $11,000/year in taxes to convert, what if your heirs paid it for you?

Let’s say your children agree to cover the $11,000/year tax bill for 20 years. That’s $220,000 total. In return, they could end up inheriting $2.92 million tax-free.

That’s a pretty solid return:

• • Rough ROI: ~18–23% on their money over the long term

• • Zero market risk
    

• • Completely legal and simple to document
    

You’re effectively giving your heirs the chance to “buy” a tax-free inheritance at a steep discount.

The Role of Annuities in Roth Conversion Planning

Now, where do annuities come in?

Well, once you have decided to convert funds to Roth, you want to:

• • Keep them safe from market losses
    

• • Grow them steadily without unnecessary risk

• • Possibly use them for future tax-free income
    

That’s where annuities help. Some options we use:

• • Fixed Indexed Annuities (FIAs) – for growth potential with downside protection

• • Multi-Year Guaranteed Annuities (MYGAs) – for guaranteed interest rates

• • Income Annuities – to structure future tax-free income

Each case is different, but my role is to help you position your Roth conversion money in the right place after you’ve worked out the tax plan with your personal tax professional.

What to Do Next if You’re Considering Roth Conversions

Here’s what I recommend based on where you are:

If You’re New to Annuities

Watch my free video series:
20% More Spendable Income in Retirement — you’ll see exactly how annuities work and how they fit into a tax-efficient retirement strategy.

If You’re Already Researching Roth Conversions

You likely know this is a smart move — now you need someone to help implement it safely.
Schedule a Zoom call with me or use the “Schedule a Call” button at the top right of this page.

Final Thoughts

There’s no one-size-fits-all answer to Roth conversions. But if you want to:

• • Lower future tax exposure

• • Leave a bigger legacy

• • Protect your savings from market risk

Now — in 2025 — might be the best time to start exploring your options.

Thanks for reading, and make sure to watch the episode.

All the best,
— Marty Becker

Podcast Episode #81: Are Roth Conversions Worth It In 2025?

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