Unintended tax consequences could arise from your Roth IRA conversions.

• Converting funds from a traditional IRA to a Roth IRA allows for tax-free growth in the future.
• Experts advise that the move could increase your adjusted gross income and potentially lead to other tax implications.

As year-end approaches, you may be eyeing Roth individual retirement account conversions.

Experts advise that while the strategy may increase your income, it could also result in other tax implications.

Converting Roth IRA funds from pretax or nondeductible IRAs results in tax-free growth in the future, but increases your current-year adjusted gross income.

JoAnn May, a certified financial planner and public accountant, warned that increasing AGI can have unintended consequences. She is the principal and co-founder of Forest Asset Management in Riverside, Illinois.

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Experts advise monitoring AGI throughout the year, whether making Roth conversions or incurring other income, to avoid losing eligibility for tax breaks or triggering tax hikes.

Social Security recipients may owe taxes on up to 85% of their benefit income if their earnings exceed a certain threshold, May stated.

Deducting medical expenses becomes more challenging with higher AGI, as per her statement. For 2024, you can claim unreimbursed costs above 7.5% of your AGI, provided you itemize tax deductions.

Experts advise keeping an eye on these major tax issues.

You could pay 'excess premiums' for Medicare

If you are approaching Medicare age or already enrolled, increasing your AGI may affect your income-related monthly adjustment amounts (IRMAA) for Medicare Part B and Part D premiums.

Your modified adjusted gross income, which is your AGI plus tax-exempt interest, is used to determine IRMAA. IRMAA is based on a two-year lookback, meaning your 2024 MAGI could impact IRMAA for 2026.

"Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina previously stated to CNBC that "a big piece" is that "no one likes paying excess premiums.""

If your 2022 MAGI was above $103,000 as an individual or $206,000 as a married couple, your Medicare Part B premium for 2024 could be higher than the standard $174.70.

Experts caution that exceeding the earnings thresholds can result in a sudden increase in taxes, and Roth conversion income could exacerbate this issue.

""Now your Medicare premiums have just jumped up substantially, which is the last thing you want," Lawrence said."

You could lose marketplace tax credits

The premium tax credit, a marketplace health insurance tax break, is currently enhanced through 2025, providing another reason to watch your AGI.

In 2024, approximately 19.7 million people were eligible for advance payments of premium tax credits, which on average reduced yearly health insurance premiums by $700, according to the U.S. Centers for Medicare and Medicaid Services.

Calculating credit eligibility is complex because it involves determining the difference between a benchmark premium and a maximum contribution based on income.

May, a representative of Forest Asset, stated that she does not perform Roth conversions for clients who claim the premium tax credit.