The number of Roth IRA conversions could rise, despite no tax increases from President-elect Donald Trump.

• Some advisors boosted Roth IRA conversions for clients due to the possibility of increased taxes after 2025.
• It appears that individual income tax hikes are less probable under President-elect Donald Trump and a potential Republican-controlled Congress.
• Experts predict that demand for Roth conversions will persist as investors look for long-term tax planning options.

Some advisors advised clients to convert their Roth individual retirement accounts before the election, in anticipation of higher taxes after 2025.

While tax hikes are less likely under President-elect Donald Trump, demand for Roth conversions will continue as investors seek long-term tax planning strategies, experts said.

Rita Assaf, vice president of retirement offerings at Fidelity Investments, stated that there is typically an increase in Roth conversions at the end of the year and into the new year, just before the tax filing deadline in April. She expects this trend to continue in 2025.

As of July, Assaf reported that Fidelity experienced a 45% increase in the number of Roth conversions compared to the previous year.

Despite the increasing popularity of Roth conversions, many investors remain unfamiliar with the strategy.

Certified financial planner Byrke Sestok, a partner at Moneco Advisors in Harrison, New York, stated that he believes there will only be an increase in Roth IRA conversions.

"The number of people who execute a Roth IRA conversion is even lower than the percentage of people who are aware of its benefits."

The benefit of Roth conversions

Converting funds from a pretax or nondeductible IRA to a Roth IRA can result in tax-free growth, but it requires paying regular income taxes on the converted balance.

Some advisors have advised their clients to accelerate Roth conversions in light of the scheduled expiration of Trump's 2017 tax cuts, which include lower federal income tax brackets, in order to take advantage of the lower tax rates through 2025.

Trump's plan to maintain lower tax brackets could be easier if Republicans retain control of the White House, Senate, and House of Representatives.

Experts suggest that even without tax increases from Congress, Roth conversions can lower long-term taxes on your portfolio, especially for older workers and retirees with significant pretax balances.

Whether Roth conversions are suitable depends on your individual financial circumstances, according to Assaf.

Filling up tax brackets

Often, advisors recommend completing Roth conversions during lower-income years, such as early retirement or taking required minimum distributions, to minimize the upfront tax bill and decrease your pretax balance.

According to Sestok, filling up the 12% and 24% tax brackets with income from a Roth conversion can result in a significant jump to the next tier.

It's crucial to conduct a comprehensive tax projection that takes into account all other sources of income before implementing the strategy, according to tax experts.

In 2025, the taxable income thresholds will be adjusted, with the greater of the standard or itemized deductions being subtracted from adjusted gross income to calculate taxable income.