Roth Conversion Strategy: The Retiree's Tax Playbook

A Roth conversion moves money from a traditional IRA (taxed when you withdraw) to a Roth IRA (grows and withdraws tax-free). You pay tax now to save more later.

The question isn't whether to convert — it's how much and when.

Why Convert in Retirement?

Most retirees have the majority of their savings in pre-tax accounts (traditional IRAs, 401(k)s). Every dollar they withdraw is taxed as ordinary income. This creates three problems:

1. RMDs force withdrawals starting at age 73 — whether you need the money or not
2. RMDs increase your provisional income — triggering taxes on Social Security
3. RMDs can trigger IRMAA — adding thousands to your annual Medicare premiums

The Sweet Spot: How Much to Convert

The goal is to convert enough to "fill up" your current tax bracket without spilling into the next one.

If your taxable income is $50,000 and you're married filing jointly, you can convert approximately $44,300 and stay in the 12% bracket. That conversion costs you $5,316 in tax today but saves you from paying 22%+ on that money later.

The IRMAA Trap

This is where most people make mistakes. Medicare looks at your income from two years ago to set your premiums. A large Roth conversion in 2026 affects your Medicare premiums in 2028.

The IRMAA brackets start at $103,000 (single) and $206,000 (married). Crossing these thresholds can add $1,000 - $5,000+ per person per year to your Medicare costs. Read our IRMAA guide for the exact brackets.

The 5-Year Conversion Playbook

Rather than converting everything at once, spread it over multiple years:

1. Year 1-2: Convert to the top of the 12% bracket. Low tax cost, big long-term savings.
2. Year 3-4: Evaluate if converting into the 22% bracket makes sense based on your projected RMDs.
3. Year 5+: Adjust based on tax law changes, health, and spending needs.

When NOT to Convert

• You're already in a high tax bracket and expect to be in a lower one in retirement
• You need the money within 5 years (the 5-year rule applies to conversions)
• You'd have to sell investments at a loss to pay the conversion tax
• You're already on Medicare and the conversion would trigger IRMAA surcharges