Roth Conversions and the TCJA "Sunset" That Didn't Happen: A 2026 Planning Update for Physicians

If you're a physician who spent late 2024 and early 2025 hearing that you needed to rush Roth conversions before the 2026 TCJA sunset, you probably approached this year expecting higher brackets, a smaller standard deduction, and a narrower window to convert pre-tax retirement dollars to Roth. That framing was reasonable at the time, but the tax law changed underneath it. The sunset didn't happen the way advisors widely anticipated, and the planning conversation has shifted in a meaningful way. This article walks through what actually changed, what the 2026 brackets look like under current law, and how physicians and their planners are typically thinking about Roth conversions now that the old countdown clock is gone.

None of this is a recommendation to convert or not convert. Roth conversion decisions are deeply personal, tied to current income, future retirement income, state of residence, Medicare timing, and legacy goals. But understanding the current-law landscape matters, because the strategy most commonly discussed in 2023 and 2024 ("convert aggressively in 2025 before rates go back up") rested on an assumption that is no longer true. For a broader look at how physicians can think about tax strategy across a career, see our overview on tax strategies for doctors.

What Actually Happened to the TCJA Sunset

The Tax Cuts and Jobs Act of 2017 created the seven-bracket structure most physicians have been filing under, with a top marginal rate of 37%. Most of its individual provisions, including the lower marginal rates, the larger standard deduction, the SALT cap, and the 20% qualified business income deduction, were originally scheduled to expire at the end of 2025. In July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law and made the majority of those individual provisions permanent. According to IRS guidance on 2026 inflation adjustments reflecting OBBBA, the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets continue to apply for 2026 with standard inflation adjustments, and the 37% top rate remains in place under current law rather than reverting to the pre-TCJA 39.6%.

The IRS summary of OBBBA provisions for individuals and workers describes the full scope of what changed. It helps explain why so many physicians and advisors were modeling aggressive conversions in 2025: under the old law, rates were scheduled to step up in 2026, and brackets were scheduled to compress, which would have raised the effective cost of converting later. That risk has now been materially reduced under current statute.

A reasonable physician question at this point is, "So does that mean rates will never go up?" No one can answer that. Tax law can be changed again by future Congresses, and long-term federal debt projections suggest ongoing pressure on rates. What changed is the near-term certainty. The automatic rate increase scheduled for January 1, 2026 has been removed. Any future rate increase would now require new legislation, new political conditions, and a new effective date. That is a very different planning environment than a statutorily scheduled sunset.

Why This Matters Specifically for Physician Households

Most attending physicians live in the 32%, 35%, or 37% federal bracket during peak earning years. Add state income tax (especially in California, Oregon, New York, Minnesota, and the Northeast), Medicare surtaxes, and the net investment income tax, and the all-in marginal rate on an additional dollar of income can sit meaningfully above 40%. That's the rate a Roth conversion dollar is typically taxed at for a working attending, because a conversion is taxed as ordinary income in the year of the conversion. Research discussed by the Kitces analysis of TCJA rate changes points out that marginal-rate planning is only as good as the rate comparison you're doing. The core question physicians are weighing hasn't changed: is today's marginal rate likely higher, lower, or the same as the marginal rate you'll face when you eventually pull the money out?

For many physicians, the honest answer is that peak-earning-year brackets (32% to 37%) are often higher than the bracket they'll live in during the "gap years" between retirement and required minimum distributions. That's the pattern that makes Roth conversion planning interesting for physicians. But the right window is rarely during peak attending income. The window is much more often in the lower-income years before RMDs begin, which is exactly when brackets can collapse and leave room to convert at lower rates. For a complementary view of how retirement accounts fit together for doctors, our guide to retirement planning for doctors walks through the account types involved.

What the 2026 Brackets Actually Look Like Under Current Law

Because OBBBA preserved the TCJA structure, 2026 brackets continue to use the same seven rates with modest inflation adjustments. Per the IRS 2026 inflation adjustments, the rough thresholds for married-filing-jointly households (which covers most of the physician families we work with) look like this under current law:

These are approximate figures published for the 2026 tax year and should be confirmed with your CPA for your exact filing situation. The Tax Foundation summary of 2026 brackets provides full detail, including head-of-household thresholds and capital gains brackets. The standard deduction for married-filing-jointly households has also risen to $32,200, which pushes even more income into the lower brackets before the 24% rate kicks in.

How Roth Conversions Typically Fit Into a Physician's Life

A Roth conversion is the act of moving money from a pre-tax retirement account (traditional IRA, rollover IRA, or pre-tax 401(k) balance rolled into an IRA) into a Roth IRA. The converted amount is added to that year's ordinary income and taxed at the household's marginal rate. Once inside the Roth, future growth and qualified withdrawals are generally tax-free, and (under current law) Roth IRAs are not subject to required minimum distributions during the original owner's lifetime. That last detail is why Roth conversions come up so often in retirement planning: they can meaningfully reduce the size of future forced taxable distributions.

The tricky part for physicians is that the mechanics interact with the career arc. It's common for physicians to see three distinct bracket environments across a lifetime: a lower-bracket training period (residency, fellowship), a long stretch of peak attending income in the 32% to 37% brackets, and then a retirement period that may start at a much lower bracket before RMDs and Social Security fully ramp up. Roth conversions can be taxed very differently depending on which of those environments you're in. Physicians and their advisors commonly discuss conversions in the context of:

• Residency and fellowship years, when income is low and Roth contributions (or Roth 401(k) deferrals) may be attractive even without a formal conversion strategy.
• Peak attending years, where large pre-tax 401(k)/403(b)/457(b) balances are typically built up and conversion at current rates is often less attractive.
• The "gap years" between retirement and age 73 (or later) when taxable wage income drops and there's often room under the 22% or 24% bracket to convert without creating a tax spike.
• The years before Medicare enrollment, since Roth conversion income can affect Medicare Part B and Part D premiums through IRMAA on a two-year lookback.

The common misconception among physicians is that Roth conversions are something to do while still working and earning a high income. In practice, converting during a 35% attending year into a projected 24% retirement bracket is usually a tax loss, not a tax win. This is one of the reasons physicians often find that the right conversion window is years away, not right now. For a deeper dive into how conversions sit alongside backdoor Roth contributions, see our article on the pro-rata rule most physicians miss on their backdoor Roth IRA, which also affects how conversions are taxed when there are pre-tax IRA balances in the picture.

Planning Considerations That Come Up in Conversations

Given the current-law environment, here are the factors physicians and their advisors typically weigh when deciding whether, when, and how much to convert. None of this is prescriptive. These are the variables that tend to drive the decision, and the right answer for any individual household depends on their specific numbers.

Current Marginal Rate vs. Expected Future Marginal Rate

The single biggest input is the rate comparison. Converting at 35% today to spend at 22% later is typically a poor trade. Converting at 12% today to spend at 24% later is typically a good trade. Most working attendings are in the former environment, not the latter. This is why the conversations many physicians have with their CFP often focus on identifying future low-income years rather than on converting right now.

Medicare IRMAA Cliffs

For physicians planning conversions in their 60s, the Medicare Income-Related Monthly Adjustment Amount is a real cost to model. IRMAA brackets are cliffs, not gradual, so crossing a threshold by even a small amount can trigger a meaningful surcharge on Medicare Part B and Part D premiums for the whole year. The lookback is two years, so 2026 income typically drives 2028 premiums. This matters a lot for the "just convert to fill the 24% bracket" reflex, because the IRMAA surcharge on that marginal dollar can materially change the math.

State Tax and Residency

State income tax treatment of conversions varies widely. A physician living in Oregon, California, or New York during conversion pays a meaningfully different total rate than a physician who has relocated to a no-income-tax state in retirement. For physicians who anticipate moving in retirement, timing conversions to occur in a lower-tax state of residence is a routine piece of the planning conversation, though residency rules are strict and need to be reviewed with tax counsel.

Legacy and Heir Considerations

Under the SECURE Act rules, most non-spouse beneficiaries must empty inherited retirement accounts within ten years. For a physician's adult children who may be in peak earning years themselves when they inherit, inheriting a Roth IRA vs. a traditional IRA can have different tax consequences. This is one of the places Roth conversions most often come up in a planning sense, and it's a conversation that belongs in the context of a broader wealth management approach for doctors rather than a standalone conversion decision.

Asset Location and Where the Tax Gets Paid

Paying the conversion tax from outside funds (not from the converted amount) is one of the most common pieces of guidance in published conversion research, because it maximizes the dollars that end up growing tax-free. That typically requires a taxable brokerage account large enough to absorb the tax bill without disrupting long-term plans. For physicians still building a taxable account, this alone can be a reason conversions are timed later rather than sooner.

Common Patterns That Come Up in Physician Conversations

Across planning conversations with physician households, a few patterns come up repeatedly that tend to complicate conversion strategy. These are framing issues as much as execution issues, and they're worth being aware of before modeling a conversion.

• Treating Roth conversions as urgent because of the now-superseded TCJA sunset deadline. Under current law, that statutory deadline is gone, and the old urgency doesn't carry.
• Converting into the 32% or 37% bracket during peak attending years without a clear projection showing the future bracket will be higher.
• Overlooking IRMAA. Converting to the top of the 24% bracket and accidentally crossing an IRMAA threshold can quietly add a four-figure cost that doesn't always show up in a conversion calculator.
• Running a conversion while holding a sizable pre-tax traditional IRA balance alongside a backdoor Roth, which can create a pro-rata tax surprise. Physicians with rollover IRAs from prior employers are particularly exposed to this.
• Paying the conversion tax out of the conversion itself, which tends to undercut the long-term value.
• Not factoring state tax, especially for households who may move in retirement.

How Physicians and Planners Often Frame Conversion Timing

Without being prescriptive about any individual household, the framework that most often comes up in planning conversations with physician clients looks roughly like this. During peak attending years, the main tax-efficient savings lever is usually maxing out pre-tax 401(k)/403(b)/457(b) space and, where eligible, a backdoor Roth, rather than large conversions. The bigger conversion decisions typically get designed years in advance, built around specific projected low-income windows. Those windows most commonly appear in sabbatical years, part-time transition years, early retirement before Social Security claims, and the gap between retirement and age 73. By modeling those windows early, a physician household can often plan 10 to 20 years ahead for a multi-year Roth conversion ladder that fills lower brackets efficiently rather than squeezing a rushed conversion into a high-bracket year.

A multi-year Roth conversion ladder isn't a product or a one-time decision. It's a planning pattern, usually integrated with withdrawal sequencing, tax-loss harvesting in taxable accounts, and RMD projections. It's the kind of decision that tends to benefit from being updated annually, because tax law, markets, and household income all shift. Our investing for doctors resource walks through how this interacts with portfolio design.

The Bottom Line for Physicians in 2026

The big story for 2026 is that the TCJA sunset many of us were modeling against didn't happen. OBBBA locked in the seven-bracket structure and the 37% top rate as current law, and the 2026 brackets look very similar to the 2025 brackets with standard inflation adjustments. That means the urgency argument ("convert now before rates automatically go up") no longer applies. What does still apply is the fundamental conversion question: is your current marginal rate meaningfully lower than the rate you'll face when you withdraw this money later? For most working attendings, the honest answer is typically no, and the conversion conversation is really a conversation about identifying future low-income windows, not about acting this quarter.

Current law can change again. OBBBA is permanent in the sense that no automatic sunset is scheduled, but a future Congress could adjust rates, deductions, or retirement-account rules. That's a reason to stay engaged with annual planning, not a reason to accelerate conversions into today's high brackets. The Roth conversion strategies that tend to hold up well for physician households are patient, multi-year, and built around a lifetime tax projection rather than a single year's news headline.

If you'd like help modeling whether a Roth conversion window fits your household's career arc, brackets, and retirement timeline, we'd be glad to walk through it together. You can start a conversation at physicianfamily.com/start or reach us at contact@physicianfamily.com. Every household is different, and the right Roth conversion plan for your family is the one built on your actual numbers, not on a generic rule of thumb.