Roth Conversions: The Complete Guide
The rare tax move where paying taxes early is often the smart play — plus the sizing worksheet, the FAQ traps, and a real 8-year case study.
The rare tax move where paying taxes early is often the smart play — plus the sizing worksheet, the FAQ traps, and a real 8-year case study.
What a Roth conversion is
You move money from a traditional IRA to a Roth IRA and pay ordinary income tax on the amount converted — this year. From then on, the money and its growth are tax-free forever, with no RMDs during your lifetime.
Why anyone would voluntarily pay tax early
Because the alternative is paying more tax later. If you'll be in a 22% bracket now and a 24% bracket at 73 (thanks to RMDs and Social Security combined), converting at 22% wins. Every dollar in a Roth grows tax-free, has no RMD, and passes to heirs tax-free (they still empty in 10 years but owe no income tax on it). Fewer future RMDs also means less Social Security taxation.
The window nobody talks about
Between retirement and age 73, most retirees have the lowest tax bracket they'll ever see again. Wages have stopped, Social Security may not have started, RMDs haven't started, deductions still apply. Filing Social Security, hitting 73, or a pension turning on can all close the window — permanently.
How much to convert — the sizing worksheet (2026 figures)
1) This year's baseline income: wages/self-employment $______ + pension $______ + Social Security × 0.85 $______ + interest/dividends $______ − standard deduction $______ = taxable income $______. 2) Room in the current bracket (2026 MFJ): top of 12% is ~$100,500; top of 22% is ~$210,950 (single figures roughly half). Room to convert without jumping: $______. 3) IRMAA check: first Medicare tier for 2026 is $109K single / $218K joint MAGI, based on your 2024 tax return. Would this conversion cross a tier? If yes, back off. 4) Pay the tax from a taxable brokerage account, not by withholding from the conversion itself. Outside cash available: $______. 5) Repeatability: years remaining until 73 × annual conversion = total capacity of your window. Check current-year figures at irs.gov and ssa.gov before finalizing — brackets adjust yearly.
FAQ: the traps
Income limit? None — CONTRIBUTIONS have income limits; CONVERSIONS do not. Undo? No — recharacterization was eliminated in 2018; once done, done. 5-year rule? Each conversion has its own 5-year clock; withdraw the converted amount within 5 years and before 59½ and you owe a 10% penalty on that piece. IRMAA? Yes — the converted amount is ordinary income; crossing a Medicare tier means higher Part B and D premiums two years later. Leaving it to charity? Usually don't convert first — traditional IRAs left directly to charity are received tax-free, so converting pays tax the charity wouldn't have owed.
The couple who converted a decade early
Mike and Ellen retired at 62 with $850,000 in traditional IRAs and no pension. They delayed Social Security to 70. Their taxable income from 62–69 stayed under $40,000 most years. Each year they converted ~$80,000 — filling the 12% bracket. Total converted over 8 years: ~$640,000. Total federal tax paid: ~$77,000. What they avoided: RMDs plus Social Security at 73+ would have pushed them into the 24% bracket and past the first IRMAA tier — roughly $170,000 in extra lifetime tax and Medicare surcharges. Their remaining traditional balance is now small enough that RMDs are minor; the Roth balance provides tax-free income and passes to their kids tax-free.
Roth conversions aren't for everyone. But for retirees in their 60s with sizable traditional balances, skipping this window can cost six figures. Convert steadily for years, not all at once. Sizing matters more than speed.
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