Article
There's a stretch of years most people don't notice until its half gone.
Earned income has stopped. Social Security hasn't started or has only just started. Required minimum distributions are still years away. Your taxable income, for the first time since your twenties, is unusually low.
That's the cheapest tax environment you'll ever operate in, and it's finite. Here's how to use it, and the traps that catch people who try.
Why the Window Exists
Three things happen at different times, and the gap between them is the opportunity:
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Earned income stops when you retire. Your marginal rate usually falls immediately and substantially.
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Social Security starts whenever you claim it, anywhere from 62 to 70. Delaying keeps taxable income low for longer.
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Required minimum distributions currently begin at age 73, and they aren't optional. Once they start, your taxable income steps up whether you need the money or not.
Between the first event and the third, you have room in the lower tax brackets that you're not using. A conversion fills that room deliberately, moving money from a traditional IRA or 401(k) into a Roth and paying tax now at a rate you chose rather than later at a rate the calendar chose for you.
Length of window, roughly: retire at 62 and you have about eleven years. Retire at 65 and you have eight. Retire at 68 and you have five. Every year you don't use is gone. See the Finance Lens flow for how this fits the rest of your plan.
What a Conversion Actually Buys You
1. No required distributions for the rest of your life
Roth IRAs have no RMDs during the owner's lifetime. Every dollar you convert is a dollar that never forces itself into your taxable income at 73.
2. A lower future tax bill on the same money
If you convert at 12% or 22% rather than distributing at 24% or 32% later, you've bought the same dollars at a discount. That's the whole trade.
3. Tax diversification
Three buckets, taxable, tax-deferred, and tax-free, give you levers in retirement. One bucket gives you none. The Traditional versus Roth comparison shows how the mix behaves over time.
4. A better asset to leave behind
Under current rules most non-spouse beneficiaries must empty an inherited IRA within ten years. Inheriting a traditional IRA means ten years of taxable distributions, often during a beneficiary's peak earning years. Inheriting a Roth means ten years of tax-free ones. Work through the Legacy Lens flow if leaving assets behind is part of the plan.
5. Protection against rate increases
Nobody knows future tax rates. Converting at a known rate today removes that uncertainty for the converted portion.
The Six Steps to Sizing a Conversion
1. Project this year's taxable income before any conversion
Pension, interest, dividends, capital gains, part-time work, any Social Security already claimed. This is your starting line.
2. Find the top of your current bracket
The gap between your projected income and the next bracket threshold is your headroom. That's the maximum you can convert without paying a higher marginal rate.
3. Check the IRMAA thresholds before the bracket thresholds
This catches people all the time. The tax bracket may have room while the Medicare surcharge does not, and the surcharge is the harder cliff. Details below.
4. Decide where the tax payment comes from
Taxable savings, ideally. If you withhold from the conversion itself you convert less and, under 59½, may trigger a penalty on the withheld amount.
5. Convert, then document
Your custodian reports it. Keep the paperwork with your tax records: basis tracking matters, particularly if you have non-deductible contributions in the mix (IRS Publication 590-B).
6. Repeat annually and re-measure
This is a multi-year program, not a single transaction. Income changes, brackets change, and the optimal amount changes with them.
The IRMAA Cliff, With Real Numbers
Medicare's income-related surcharge uses a two-year lookback. Income recognized in 2026 sets your 2028 premiums, which means a conversion today shows up on a premium bill two years from now, long after you've forgotten about it.
For 2026, CMS set the standard Part B premium at $202.90 a month. Here's what happens as income rises:
|
MAGI, single filer |
MAGI, joint filers |
Part B surcharge |
Total Part B / month |
Part D surcharge |
|
Up to $109,000 |
Up to $218,000 |
$0.00 |
$202.90 |
$0.00 |
|
$109,001 – $137,000 |
$218,001 – $274,000 |
$81.20 |
$284.10 |
$14.50 |
|
$137,001 – $171,000 |
$274,001 – $342,000 |
$202.90 |
$405.80 |
$37.50 |
|
$171,001 – $205,000 |
$342,001 – $410,000 |
$324.60 |
$527.50 |
$60.40 |
|
$205,001 – under $500,000 |
$410,001 – under $750,000 |
$446.30 |
$649.20 |
$83.30 |
|
$500,000 and above |
$750,000 and above |
$487.00 |
$689.90 |
$91.00 |
Source: CMS, 2026 Medicare Parts A & B Premiums and Deductibles, published 14 November 2025. MAGI is measured two years back, so these bands apply to 2024 income for 2026 premiums. Part D amounts are added to whatever your plan charges.
The critical mechanic: these are cliffs, not slopes. One dollar over a threshold moves you into the higher bracket for the entire year. For a married couple on Medicare, crossing the first threshold costs roughly $2,300 across the year in extra premiums, triggered by a single dollar of conversion.
So, the practical rule is to convert up to just below the next IRMAA threshold, not up to the top of your tax bracket. They rarely line up, and the surcharge usually binds first.
Five Things That Close the Window Early
1. Going back to work
Even part-time. Earned income fills the bracket space you were planning to use for conversions. A $40,000 consulting income that eliminates three years of low-bracket capacity may cost more than it pays.
2. Claiming Social Security early
Benefits are taxable above certain thresholds, and claiming at 62 adds income for eight extra years. Delaying keeps the window open and raises the benefit
3. A large one-off event
A property sale, a business exit, an inheritance producing income, a big capital gain. Any of these can consume an entire year's conversion room and push you up an IRMAA bracket at the same time.
4. A pension starting
If a defined benefit pension begins at 65, your baseline income steps up permanently from that date. Conversions are cheapest before it starts.
5. Simply running out of years
The most common one. People intend to look at conversions and then look at them at 71, with two years left instead of ten. Size the RMD early so you can see what's coming.
Four Mistakes That Cost Money
1. Paying the tax from the IRA
You convert less, you lose the growth on the money used for tax, and under 59½ the withheld portion can be treated as a distribution and penalized. Pay from taxable savings if possible.
2. Converting in one large lump
A single big conversion pushes you through multiple brackets and probably several IRMAA tiers. Spreading the same amount over five or six years usually costs materially less tax.
3. Forgetting the five-year rule
Each conversion starts its own five-year clock. Withdraw converted principal before that clock runs and, if you're under 59½, a 10% penalty can apply even though tax was already paid (IRS Roth IRA rules).
4. Ignoring the pro-rata rule
If you hold pre-tax money in any traditional, SEP or SIMPLE IRA, the IRS treats them as one account when calculating what's taxable. You can't convert only the after-tax portion. This surprises people with old rollover IRAs sitting somewhere they've forgotten about.
Who This Is Not For
Worth saying, because conversion content rarely does:
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If your tax rate now is genuinely higher than it will ever be later, converting loses money.
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If you plan to leave the account to charity, converting is wasted: a charity pays no tax on a traditional IRA.
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If paying the tax would force you to sell assets at a bad time or leave you without a cash buffer, wait.
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If you'll need the converted money within five years and you're under 59½, the clock works against you.
The honest answer for some households is that a partial conversion over several years beats both a full conversion and doing nothing. That's usually where this lands.
Frequently Asked Questions
What is a Roth conversion?
Moving money from a traditional IRA or 401(k) into a Roth IRA and paying income tax on the converted amount in the year you convert. Afterwards it grows tax-free and has no required distributions during your lifetime.
When do RMDs start?
Currently at age 73 under SECURE 2.0, rising to 75 in 2033. The gap between retiring and that first distribution is the conversion window.
How much should I convert each year?
Enough to fill your current bracket without crossing the next IRMAA threshold, which usually binds first. Model it annually; the right number changes with your income.
Does converting affect my Medicare premiums?
Yes, two years later. IRMAA uses a two-year lookback, so 2026 income sets 2028 premiums. The brackets are cliffs, so one dollar over a threshold raises your premium for the full year.
Should I pay the tax from the IRA?
Generally no. Paying from taxable savings lets you convert the full amount and keep more compounding tax-free. Under 59½, withholding from the conversion can also trigger a penalty.
What is the five-year rule?
Each conversion has its own five-year waiting period before the converted amount can come out penalty-free if you're under 59½. There's a separate five-year rule for earnings on contributions; they aren't the same rule.
What is the pro-rata rule?
The IRS treats all your traditional, SEP and SIMPLE IRAs as one account when working out how much of a conversion is taxable. If any of it is pre-tax, you can't convert only the after-tax portion.
Can I undo a conversion?
No. Recharacterization of conversions was eliminated by the Tax Cuts and Jobs Act. Once done, it's done, which is why sizing it correctly matters.
Is there a limit on how much I can convert?
No dollar limit, and no income limit on conversions. Contribution limits are separate and much lower: $7,500 for an IRA in 2026, plus a $1,100 catch-up at 50 and over.
What if my income was unusually high because of a conversion?
IRMAA has a reconsideration process for certain life-changing events, but a voluntary conversion isn't one of them. Plan around the threshold rather than appealing afterwards.
Does a conversion affect how my Social Security is taxed?
It can. Conversion income raises provisional income, which determines how much of your benefit is taxable. Converting before you claim avoids that interaction entirely.
A Window, Not a Deadline
Nothing about this needs to happen this month. What it needs is to happen deliberately, across several years, with the thresholds in front of you rather than discovered afterwards.
The people who do best here treat it as an annual autumn task: check the projected income, check the thresholds, convert to just under the line, repeat. Unglamorous and worth a great deal over a decade.
The people who do worst discover the window at 71.
Size a conversion against your own numbers. Run the Roth conversion calculator, then check what it does to the rest of your income plan.
Related Articles
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The 4 Percent Rule in 2026: sizing withdrawals once the conversion window has closed.
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How Much Tax Will You Pay in Retirement: the broader tax picture a conversion sits inside.
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Reviewing Your Beneficiaries: the beneficiary side of the inherited-Roth point above.
The information provided on Retirelens is for educational and informational purposes only and does not constitute financial, legal, tax, or investment advice. You should consult qualified professionals before making any financial or estate-planning decisions. Rules change, check with the IRS, Social Security, your plan provider, or a professional you trust. IRMAA thresholds and Part B premiums are 2026 figures published by CMS on 14 November 2025 and change annually. Conversion decisions interact with your full tax position; model them with a qualified tax professional before acting.