What Is the 22% Roth Conversion Mistake?

David McKnight explores the so-called "22% Roth conversion mistake," which he considers a common and costly mistake when it comes to Roth conversions.

He points out that, despite Trump tax cuts being made permanent with the passage of the One Big Beautiful Bill Act in July 2025, tax rates can change at any time with a simple act of Congress.

That's why he refers to this as a "temporary permanent tax cut."

The $200 trillion underfunding of entitlement programs and the exploding interest on the national debt makes it clear that tax rates are unlikely to stay this low for long.

Many Americans currently find themselves in the 22% bracket and refuse to bump into the 24% bracket for Roth conversion purposes – because they've been told to stay in their current bracket.

However, if you stay in the 22% bracket, you are unlikely to be able to convert a meaningful amount of your IRA to Roth before tax rates go up for good.

David shares an example that illustrates why, by trying to save a little bit on taxes today, you actually set yourself up for a massive tax bill down the road.

The other scenario – where you allowed yourself to rise into the 24% bracket – buys you the ability to convert a lot more money every single year.

Even though most people would be willing to pay 2% more in taxes today if it meant avoiding potentially much higher tax rates in the future, most people don't consider this option.

That's because they have been conditioned to believe that any move into a higher tax bracket during the Roth conversion period is inherently bad…

10 years from now, you are probably going to look back at the 24% tax bracket as a good deal of historic proportions…

Remember: you are not trying to minimize taxes this year, you are trying to minimize taxes over the rest of your life.

For David, you shouldn't let the 22% Roth conversion mistake keep you from fully insulating your hard-earned retirement savings from the impact of future higher taxes.

The goal, he reminds everyone, should be to get to the 0% tax bracket in retirement.

Mentioned in this episode:

David's new book, available now for pre-order: The Secret Order of Millionaires

David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track

Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

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David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com