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One of our client’s shared a recent article he read in the Wall Street Journal, his question:  should I still continue with the Roth Conversions, and should I now place a large amount of money in a charity donor advised fund The answer, of course, is “it depends” — and it’s not quick or easy. Like most things tax-related, the answer is tailored to each client’s circumstances and goals and of course the tax law! 📚⚖️

Since it’s passing, our office has spent 30+++ hours attending seminars focused entirely on the newly passed One Big Beautiful Bill Act (OBBBA), Public Law 119-21. We’ve been learning the law and discussing how to educate our clients (and ourselves). We’ve been working up tax planning and tax minimization ideas for 2024 (where applicable), 2025, and 2026+++, and we’ll continue to do so as technical corrections and guidance are released.

Since its passing, I’ve been highlighting a different portion of the law in my weekly blog posts to start us thinking 🤔 / talking 🗣️ / planning ✍🏻. This isn’t about quick answers or solutions — which are often like “putting a band-aid on a bullet hole” 🩹🔫. These “quick questions” are just jumping-off points for deeper conversations, just as these blog posts are designed to get you thinking… but the real answers will depend on your short-term and long-term financial goals. 🧭💬

This Week’s Focus: should we continue to convert regular IRA’s to ROTH IRA’s for tax savings now that the One Big Beautiful Bill Act (OBBBA) has passed,

The article was insightful, listed some pros and cons which basically added up to “it depends”.   We are able to plan a bit more as we are aware of the tax rates HOWEVER  even though the bill did not change the fundamental rules of or reasons for Roth conversions.  

• There are no required withdrawals for the original Roth IRA owner.
• The conversion amount is taxable at ordinary income rates (accelerating a tax bill and paying it at the saver’s top marginal rate in hopes of reaping a reward later)
• Would the taxpayer be eligible for the new $6,000 Deduction for Seniors (Age 65+) as discussed in my July 18th blog post 
• The planning includes confirming the tax rate on the tax rate on the conversion amount (amount being converted from Traditional IRA into the Roth account) is lower than the tax rate on the traditional IRA dollars expected at withdrawal (taxpayers shouldn’t pay tax at 24% to convert funds if the top rate on their withdrawals in the future would likely be 15%)

✅Final Thoughts as copied and pasted from one of my past blog posts:   “Consider a Direct Rollover into Your ROTH IRA”

This is the time of year I meet with our individual tax clients for our tax return exit appointments.  We compare and discuss prior, current and future income expectations as a way to do some simple tax planning.  Again this year I am recommending people consider rolling a traditional IRA into a ROTH IRA.  We know that contributions into a deferred compensation plan (SIMPLE IRA, 401K, etc) or traditional IRA are great planning tools for tax free investment growth and current tax savings.  Once those funds are withdrawn they are subject to tax.  The timing of direct rolls into a ROTH IRA can be an opportunity to convert funds when your income expectations and tax rates are at a low level relative to other years.

Please continue working with your accounting professional and investment advisor on conversion strategies; consider continuing the conversations, but you may want to pause if you can create the situation where you or you and your spouse are eligible for the new $6,000 Deduction for Seniors

📌Let the planning begin: Please keep the “quick questions” coming — but let’s also keep the conversations going until we’re confident we’ve landed on the best possible answers and strategies. Your financial plan is more than a number — it’s your roadmap and should include tax minimization planning

 🚀Seems like this is another call to action, no wishful thinking, let’s not say “I wish I had…”,  and as always

 Feel free to search our website for some of our complementary resources or get in touch:  Contact us if you have tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals.  Use our search box 🔎for those posts specific to tax minimization, business planning, business best practices, casualty losses, etc. and see what “pop’s” up. Here’s a link to other blog posts and those specific to IRA Conversions.