Why Roth Conversions Backfire for Most Retirees: The $12,000 Tax Bill Nobody Plans For

On the May 12 episode of The Clark Howard Podcast, financial advisor Wes Moss, CFP, told Clark Howard something most retirement content avoids saying out loud:

When the tax bill comes due 3 months later, 6 months later, a year later, people forget all the glory of Clark Howard talking about the Roth. And you know what they remember? $12,000 tax bill.

—Wes Moss, The Clark Howard Podcast, 05.12.26

Howard, who runs one of personal finance’s most influential shows with more than one million monthly downloads, copped to his own bias in the same conversation: I might as well have been Senator Roth from Delaware. I’m so into the Roth. So then you get blinders on and you don’t see the downsides.

I’ve spent years reading retirement-planning copy that treats Roth conversions as a no-brainer, and the math rarely supports the marketing. If you’re a retiree weighing a Roth conversion because every podcast and YouTube planner says you should, the stakes are simple. You write a five-figure check to the IRS this year in exchange for tax-free growth later. If your assumptions about future tax rates are wrong, you just paid a premium for nothing.

The math behind the conversion

Roth conversions are oversold to the average retiree. Federal tax brackets are marginal. A married couple in the 24% bracket isn’t paying 24% on their whole income. Their first dollars get taxed at 10%, then 12%, then 22%, and only the top slice hits 24%. Moss’s point: the effective rate in the 24% bracket lands around 16% to 18%, but a Roth conversion gets stacked on top of everything else and pays the full 24% on every converted dollar.

Run the scenario Moss laid out. A retired couple converts $50,000 from a traditional IRA to fill up the 24% bracket. The IRS treats that conversion as ordinary income. The bill: roughly $12,000, due with next April’s return.

That $12,000 has to come from somewhere. If it comes from the IRA itself, you’ve shrunk the asset you were trying to optimize. If it comes from a taxable brokerage account, you may trigger capital gains paying the bill on the conversion. Either way, you spent real money today to avoid a hypothetical tax bill decades from now, at rates Congress hasn’t written yet.

Moss’s blunt summary: People hate the tax bill that comes with it, whether it makes financial sense or not. They hate it because they’re already paying taxes and they’re paying more taxes. He said this is the real life story 90% of the time.

The IRMAA trap

Howard flagged the part that quietly wrecks budgets: the Income Related Monthly Adjustment Amount on Medicare premiums. Once Required Minimum Distributions kick in at 73, or when a big Roth conversion spikes your reported income, your Medicare Part B and Part D premiums climb. Moss noted the cruelest detail: You can’t exactly plan for IRMAA because they’re 2 years behind on what your income is going to be. You can only guess.

You pay tax on the conversion today, and two years later your Medicare premiums jump because of it. With CPI sitting at 332.4 in April 2026 after climbing 0.6% in a single month, fixed-income retirees feel every dollar of that double hit.

When conversions actually work

Conversions only win when your future tax rate is meaningfully higher than today’s. That depends on the gap between your current marginal bracket and your projected RMD-era bracket.

If you’re in the 12% bracket now and RMDs will push you into 22% or 24% later, a partial conversion can pencil out. The arbitrage is real.

If you’re already in the 24% or 32% bracket and your RMDs will land you in roughly the same place, you’re prepaying tax for no benefit. Add IRMAA, and you may have negative arbitrage, paying more total tax than if you’d done nothing.

The Fed has cut rates 75 basis points over the past year to 3.75%, and the 10-year Treasury yields 4.4%. That matters because the “tax-free growth” argument assumes a return spread that justifies the upfront cost. Lower bond yields stretch that payback window further out.

What to do before you sign

1. Build all three buckets, not just Roth. Moss’s prescription is tax diversification: after-tax brokerage, traditional pre-tax, and Roth. Future you wants optionality on which spigot to open in any given year.
2. Run the marginal versus effective math. Pull last year’s 1040, find your effective rate, and compare it to the marginal rate any conversion would hit. The gap is the real cost.
3. Model IRMAA two years forward. Use the current Medicare IRMAA brackets and project where a conversion pushes your Modified Adjusted Gross Income.
4. Convert in small slices. If conversion still makes sense, fill the bottom of a bracket, not the top. Stop before you cross into a higher bracket or trigger an IRMAA tier.

Howard’s enthusiasm for Roth is incomplete. The strategy that built his audience’s wealth, contributing to Roth accounts during working years, differs from converting six figures in your 60s. Moss’s $12,000 example is the gap between those two ideas, and it’s the gap most retirees only see after the check clears.