The One Big Beautiful Bill Act (OBBBA) and SEP IRAs: Today’s Slott Report Mailbag

Jul 24, 2025

By Andy Ives, CFP®, AIF®
IRA Analyst

QUESTION:

Does the new $6,000 additional deduction for seniors under the One Big Beautiful Bill Act (OBBBA) also apply if the senior itemizes their taxes?

Thanks,

Robert

ANSWER:

Robert,

The new $6,000 addition to the standard deduction is for seniors aged 65 and older for years 2025-2028. This is per person, so a married couple could deduct up to $12,000 if each spouse is aged 65 or over. This is in addition to the regular standard deduction AND the extra deduction for those aged 65 or blind. This new deduction will also be available to seniors who itemize.

Note that the deduction phases out beginning with modified adjusted gross incomes of $75,000 for individuals and $150,000 for married filing jointly. It phases out completely at $175,000/$250,000, respectively.

QUESTION:

Hello,

I have a SEP-IRA annuity which was opened in 2011. I am age 74. I am considering doing a full conversion of the total SEP annuity balance to a Roth annuity, while keeping all of the particulars of the annuity policy the same. After paying the tax on that total conversion amount, do I have to wait 5 years after that conversion for the monies to become totally tax free? I have established a Roth already and I am over age 59½.

Duane

ANSWER:

Duane,

I am operating on the assumption that the Roth IRA you already established has been open for 5 years. Since you are over age 59½ AND you have already owned a Roth IRA for 5 years, then you never have to wait out another 5-year clock. Upon converting your SEP IRA annuity to a Roth IRA, any and all future earnings with be immediately available for withdrawal tax- and penalty-free. (Just be sure you take your required minimum distribution before doing the conversion.)

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

https://irahelp.com/the-one-big-beautiful-bill-act-obbba-and-sep-iras-todays-slott-report-mailbag/