By Sean Hummel, CFP®

November 17, 2025

“The wealthiest families don’t react; they strategically position themselves for multiple possible futures.”

As a professional specializing in high-net-worth individuals, I’ve seen firsthand how proactive tax strategies can preserve and grow wealth over decades. With the calendar turning to late 2025, one opportunity stands out for those with substantial traditional IRA or 401(k) balances: strategically converting portions to Roth IRAs while leveraging the current federal income tax environment. This post explores the concept of “filling the 24% bracket” through Roth conversions (a general approach that involves converting just enough pre-tax retirement funds to reach the top of the 24% federal tax bracket without spilling into higher rates). While tax laws can evolve, the framework under current rules offers a window that’s worth examining closely before the end of the year.

Please note: This is educational content based on publicly available tax information as of November 2025. It is not personalized financial, tax, or legal advice. Every situation is unique, influenced by factors like income sources, state taxes, and estate goals. Consult your own CFP, CPA, or tax advisor to evaluate how these ideas might apply to you.

Understanding Roth Conversions: A Quick Primer

A Roth conversion involves transferring funds from a traditional IRA, 401(k), or similar pre-tax account into a Roth IRA. The converted amount is treated as taxable income in the year of the transfer, but once in the Roth, future qualified withdrawals (including earnings) grow and come out tax-free. Unlike direct Roth IRA contributions, which face income limits (e.g., full contributions phase out for married filing jointly above $246,000 in modified adjusted gross income for 2025), conversions have no such restrictions, making them accessible regardless of earnings.

The upfront tax bill can feel steep, but the long-term payoff often lies in shifting from taxable distributions to tax-free ones (potentially reducing required minimum distributions (RMDs) and minimizing taxes for heirs). For high earners, timing is everything: Convert when your effective rate is lower than projected future rates, and aim to stay within favorable brackets.

The 24% Bracket: Why It’s a Sweet Spot for High Earners

Under the Tax Cuts and Jobs Act (TCJA) of 2017, which remains in effect through 2025, federal income tax brackets are structured progressively: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For married couples filing jointly in 2025, the 24% bracket applies to taxable income from $206,701 to $394,600. (Taxable income is your adjusted gross income minus deductions, like the $31,500 standard deduction for joint filers this year.)

This bracket strikes a balance for many high-net-worth individuals. It’s accessible if you’re in early retirement or have controlled income streams, yet converting up to its ceiling can move significant assets (potentially $100,000 or more, depending on your baseline taxable income) into tax-free territory at a moderate rate. The jump to 32% (starting at $394,601) adds a steeper cost, so the strategy often focuses on “filling” the 24% space without crossing that line.

To illustrate the bracket’s reach, here’s a simplified table for 2025 married filing jointly (taxable income thresholds):

High earners might already hover near the 24% edge due to salaries, investments, or bonuses. By converting precisely to the top (say, if your projected taxable income is $250,000, you could add up to $133,900 without hitting 32%) you maximize the “bang for your tax buck.”

General Strategies for Bracket-Filling Conversions

While specifics vary, here are broad considerations drawn from established planning principles:

1. Project Your Taxable Income First: Tally expected wages, interest, dividends, and other income, then subtract deductions. The gap to the 24% ceiling reveals your conversion “room.” Tools like IRS worksheets or financial software can help model this.
2. Go Partial, Not All-In: Rather than a lump sum, convert in tranches to stay bracket-bound. For instance, if you have the room for $150,000, split it across months or quarters to manage cash flow for the tax obligations.
3. Factor in Broader Impacts: Conversions boost modified adjusted gross income, potentially affecting Medicare premiums (IRMAA surcharges, based on income two years prior) or net investment income taxes (3.8% for high earners). State taxes and charitable strategies (e.g., qualified charitable contributions) can offset federal bites.
4. Leverage Low-Income Windows: Early retirement years often mean lower baseline income, ideal for filling brackets before Social Security or RMDs kick in.
5. Pay Taxes from Outside Funds: Use non-retirement cash to cover the conversion tax, preserving more in the Roth for growth.

These steps align with the goal of paying taxes “on sale” today for tax-free benefits tomorrow.

Beyond the Bracket: Long-Term Wealth Implications

For high-net-worth families, Roth conversions extend beyond immediate savings. They can shrink future Required minimum distributions (RMDs), which might otherwise force sales in down markets or inflate taxable estates. Heirs inherit Roths tax-free, a boon amid potential estate tax changes. Over 20–30 years, tax-free compounding can amplify returns significantly.

Market dips, like those seen earlier in 2025, also sweeten the deal: Convert at depressed values for less tax per dollar recovered.

Wrapping Up: Time to Review Your Playbook

As 2025 draws to a close, the 24% bracket represents a tangible, low-cost avenue to fortify your retirement against future tax hikes. With the end of the year approaching, high earners have a narrow timeframe to act strategically to potentially lock-in decades of savings.

This isn’t about rushing into decisions; it’s about informed exploration. Schedule a review with your advisory team to run projections tailored to your portfolio, goals, and risk tolerance. In wealth management, the real edge comes from aligning tax moves with your broader legacy vision.

As reviewed against current law (November 2025).