The One Big Beautiful Bill (OBBB), passed in 2025, extended the lower TCJA tax brackets and added meaningfully higher standard deductions — including a new senior deduction for taxpayers 65 and older. For IRA Millionaire households facing future required minimum distributions, that combination has opened the most favorable Roth conversion window in years.
The difference between a Roth conversion that saves some taxes and one that saves over a million dollars in lifetime taxes comes down to two things — getting the timing right and getting the amount right. Most plans stop at the top of the household’s current tax bracket and leave hundreds of thousands of dollars on the table. After more than 14 years and over 2,400 multi-year conversion plans, our team has watched this gap play out again and again. This article walks through what a Roth conversion does, the three paths every household chooses between, the key questions to answer before starting, and a real client case study showing the $1.8 million difference between a standard plan and an optimized one.
What a Roth Conversion Actually Is
A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. The amount converted becomes ordinary taxable income in the year of the conversion, federal (and sometimes state) tax is owed at the household’s marginal rate, and from that point forward those dollars grow tax-free, can be withdrawn tax-free in retirement, and pass tax-free to heirs.
The trade-off is simple in concept and complex in execution. The household pays a known tax now in exchange for eliminating an unknown future tax — and “later” can mean decades of compounded growth that would otherwise have been taxed each year RMDs hit the return. For an IRA Millionaire household, the lifetime savings can easily reach seven figures when the plan is built and executed correctly.
Plan Your Optimized Conversion
Our team has built more than 2,400 multi-year conversion plans, and the difference between “fill the bracket” and a truly optimized strategy can run over $1 million per IRA Millionaire household. Find out what an optimized plan looks like for your IRA — with no product pitch and no obligation.
Why 2026 Creates a Conversion Window
Three factors stack favorably this year.
Lower brackets remain in place. The 22%, 24%, and 32% brackets — where most Roth conversions sit — are still well below where future RMD income would land for an IRA Millionaire. Converting through them now locks in known rates against the risk of higher rates later.
Standard and senior deductions are larger. Households with at least one spouse over 65 can shelter a meaningfully larger amount of income before federal brackets begin. That effectively lets conversion income flow through at a lower blended rate than the same dollar amount would have produced in prior years.
Future uncertainty has a cost. Every year of delay is a year the IRA grows, future RMDs grow, and exposure to whatever future tax law looks like grows alongside both. Locking in known rates today against unknown future rates is itself a form of tax-risk management.
The Three Paths: Do Nothing, Fill the Bracket, or Optimize
Every IRA Millionaire household considering Roth conversions ends up on one of three paths.
Path 1: Do nothing. Leave the IRA alone, accept tax-deferred growth, and pay whatever tax is owed when RMDs eventually start. The upside is simplicity. The downside is a steadily growing IRA balance, the eventual cascade of RMD-driven taxable income, higher Medicare Part B and D surcharges, increased Social Security taxation, and a substantial tax bill due from heirs under the SECURE Act’s 10-year rule.
Path 2: Fill the bracket. The household converts each year up to the top of its current marginal bracket. This is the most common strategy presented by general-practice CPAs and investment advisors. It produces real savings — but consistently leaves significant dollars on the table compared to a fully optimized plan, and in some cases produces a higher lifetime tax bill than doing nothing.
Path 3: Optimize. The household runs a true multi-year projection accounting for RMD timing, Social Security strategy, Medicare surcharges, charitable plans, beneficiary mix, lifespan assumptions, and tax-law context together. The optimal conversion amount each year is then driven by that integrated picture, not by a single-year bracket calculation. The case study later in this article shows what the difference between Path 2 and Path 3 looks like in dollars.
Partial Conversions and Multi-Year Timing
A Roth conversion does not have to be all-or-nothing. In most plans our team has built, partial conversions over multiple years produce a materially better outcome than a one-time, full-balance conversion.
For households with charitable intent, a remnant traditional IRA is often the most efficient vehicle for Qualified Charitable Distributions — leaving 5% to 10% of the original balance unconverted can sometimes be the optimal answer. For households planning to live on retirement income, leaving enough in the traditional IRA to fill the standard deduction each year keeps that income effectively tax-free.
Multi-year timing matters equally. Most optimized sequences run four to ten years, calibrated to:
- Current IRA balance and projected growth
- Social Security and pension income timing
- Projected RMD start year and size
- Age difference between spouses
- Cash flow available to fund conversion taxes outside the IRA
Occasionally a one- or two-year aggressive conversion is the right answer — but that’s the exception. For more on why multi-year usually wins, see our team’s analysis of multi-year Roth conversion strategies.
Key Questions Before Starting a Conversion
Several questions need clear answers before the first conversion dollar moves.
Where will the tax dollars come from? A common myth is that conversions only work if the household has cash outside the IRA. That isn’t accurate. Many of our clients pay conversion taxes from within the IRA and still save millions over their lifetime. Paying from within does shrink the conversion size and is less efficient than paying from outside — but it doesn’t disqualify the strategy.
Can 401(k) contributions be redirected? For households still working, unmatched 401(k) contributions can be paused and that cash flow redirected into a taxable savings account to fund conversion taxes — without adding to the IRA balance.
When will the IRA actually be needed? Many IRA Millionaire households will never spend down their IRA during their lifetime. For those households, the conversion case strengthens — every converted dollar passes tax-free to heirs rather than landing in their highest-earning years under the 10-year rule.
What is the actual objective? Two motivations drive most conversion strategies: minimizing the household’s own lifetime tax bill, or avoiding leaving heirs with an outsized tax burden. The optimal plan looks different depending on which objective leads.
A $1.3M IRA Case Study: $459K vs. $1.8M in Lifetime Savings
To make the optimization difference concrete, consider an actual client situation our team analyzed. A couple in their early 60s came to us with $1.3 million in traditional IRAs and the question every IRA Millionaire eventually asks: should we be doing Roth conversions, and if so, how much?
Three scenarios were modeled.
Scenario 1: No Conversion. Leave the IRA alone. Lifetime RMDs would generate roughly $3.5 million of forced taxable income. Lifetime federal taxes: approximately $1.5 million. Estimated taxes due from heirs under the 10-year rule: roughly $900,000. Combined household-plus-heir burden: about $2.4 million.
Scenario 2: Fill the Current Tax Bracket. Convert each year up to the top of the household’s current marginal bracket. RMDs drop from approximately $3.5 million to $1.3 million over the lifetime. Lifetime taxes fall from $1.5 million to roughly $1.2 million. Heir taxes drop from $894,000 to about $656,000. Total savings versus Scenario 1: approximately $459,000.
Scenario 3: Optimize. Run the full multi-year projection and convert at the amounts and in the years the integrated math actually supports — sometimes pushing through higher current brackets in select years to eliminate much larger future RMDs. RMDs become near-zero. Lifetime household taxes drop to approximately $516,000. Heir taxes are eliminated entirely. Total savings versus Scenario 1: approximately $1.8 million.
| Scenario | Lifetime RMDs | Household Lifetime Tax | Heir Tax (10-Year Rule) | Savings vs. Scenario 1 |
|---|---|---|---|---|
| 1: No Conversion | ~$3.5M | ~$1.5M | ~$900K | — |
| 2: Fill Current Bracket | ~$1.3M | ~$1.2M | ~$656K | ~$459K |
| 3: Optimized Plan | ~$0 | ~$516K | $0 | ~$1.8M |
The gap between Scenario 2 and Scenario 3 — between “doing some conversions” and “doing them right” — is roughly $1.3 million in additional savings on a $1.3 million starting IRA. That’s not a rounding error. That’s the cost of stopping at the top of the current bracket instead of running the full optimization. For more on the planning approach behind these outcomes, our team has written about strategic Roth conversions that save over $1 million in taxes.
Delay has its own cost. Projecting this same client’s plan one year forward — starting at age 64 instead of 63 — added approximately $66,480 to the projected lifetime tax bill. That cost compounds with each year of delay because the IRA balance grows, future RMDs grow, and the runway for tax-free Roth compounding shrinks. For households uncertain about whether their projected RMDs will create this kind of problem, our team has built a free RMD calculator that estimates the future income impact.
Important caveat: this case applies to IRA Millionaire households. For more modest IRA balances, a top-of-bracket strategy can sometimes produce the best outcome — and in some cases, doing nothing produces a better lifetime result than partial conversions. Optimization isn’t always “convert more.” It’s “run the math properly and follow the math.”
The Benefits Beyond Lifetime Tax Savings
Beyond the dollars, several non-tax benefits accrue to households that complete a conversion sequence:
- No required minimum distributions on the Roth side. Roth IRAs carry no lifetime RMDs for the original owner — full control over withdrawal timing for decades.
- Tax-free access to converted dollars. Each converted amount has its own five-year holding period for earnings, but the converted principal itself is accessible immediately for households over 59½.
- Widow’s trap avoidance. When a married household leaves a large traditional IRA, the surviving spouse files as a single taxpayer — hitting higher brackets and IRMAA surcharges at much lower income levels than joint filers. Completing the conversion sequence while both spouses are alive significantly reduces that exposure.
- Tax-free inheritance. Roth IRAs inherited by non-spouse heirs still fall under the SECURE Act 10-year rule, but the distributions are entirely tax-free. Traditional IRAs inherited under the same rule force ordinary-income tax on every distributed dollar.
- Control over future taxable income. Households with substantial Roth balances can choose year by year when to recognize income and when to take tax-free withdrawals. That flexibility is itself a planning asset.
Common Mistakes to Avoid
Several errors quietly undercut otherwise sound conversion plans:
- Stopping at the top of the current bracket by default. The single most expensive mistake among IRA Millionaire households — the case study above shows what it costs.
- Skipping conversions because the household can’t pay taxes from outside the IRA. The single most expensive non-action. Funding from inside the IRA is less efficient but doesn’t disqualify the strategy.
- Treating conversions as one-and-done. Optimized plans are recalibrated each year against current income, deductions, and tax-law context. A plan built once and ignored is rarely the plan that should still be running.
- Ignoring the heirs question. Households focused only on their own retirement often miss the largest source of conversion value — passing tax-free dollars to children and grandchildren under the 10-year rule.
- Forgetting that conversions are permanent. Since 2018, recharacterizations of Roth conversions are no longer permitted. Once converted, the dollars stay converted and the tax stays paid.
For a broader look at the planning errors that derail conversion strategies, see 5 costly Roth conversion mistakes.
About Q3 Advisors
Q3 Advisors is a flat-fee fiduciary firm specializing in tax-efficient retirement planning for high-income professionals and retirees. As practitioners of Rothology® — the science of Roth conversion optimization — our team brings deep expertise in multi-year conversion strategy, integrating tax projections, RMD modeling, Medicare planning, and estate considerations into one comprehensive plan rather than a single-year bracket calculation. With $9 billion in projected tax avoidance for our clients over more than 14 years, we have the track record to guide your strategy.
Frequently Asked Questions
Is 2026 a good year to start Roth conversions?
For many IRA Millionaire households, yes. The OBBB extension of TCJA brackets keeps the 22% and 24% rates in place, the higher standard deduction and new senior deduction shelter more conversion income at lower effective rates, and the cost of delay grows with each year of unrealized opportunity. The case isn’t urgency for its own sake — it’s a favorable combination of known rates and known deductions against unknown future law.
How much of my IRA should I convert?
There is no universal percentage. The optimal amount depends on IRA balance, projected RMDs, Social Security and pension income, Medicare and IRMAA exposure, charitable intent, beneficiary mix, and lifespan assumptions. Most optimized plans convert 60% to 95% of the IRA over a four-to-ten-year sequence — but the right answer requires running the full multi-year projection.
Can I undo a Roth conversion if I change my mind?
No. The Tax Cuts and Jobs Act eliminated recharacterization for Roth conversions starting in 2018. Once a conversion is processed and the tax year closes, the conversion is permanent and the tax is owed. That is why getting the amount and timing right at the start matters.
What if I don’t have cash outside my IRA to pay the conversion tax?
The conversion can still work. Taxes can be paid from within the IRA, which reduces conversion size and is less efficient than paying from outside, but doesn’t disqualify the strategy. Many of our clients fund conversion taxes from inside the IRA and still produce millions in lifetime tax savings.
How long does a Roth conversion strategy typically run?
Most optimized sequences run four to ten years. The right length depends on the household’s projected RMD timing, Social Security claiming strategy, available cash flow, and tax-law context. One-and-done conversions exist but are exceptions — typically only when a unique low-income year creates a one-time opportunity.
Will a Roth conversion increase my Medicare premiums?
Each conversion year that pushes modified adjusted gross income above an IRMAA threshold raises Medicare Part B and D premiums for the following two years. The increase is real but bounded. A well-designed multi-year plan often saves tens of thousands of dollars in lifetime Medicare costs even when some conversion years sit in a higher IRMAA tier. For more, see our team’s analysis of how Roth IRA conversions impact Medicare premiums.
What is the “widow’s trap”?
When a married household leaves a large traditional IRA, the surviving spouse files as a single taxpayer — and single filers hit higher brackets and IRMAA surcharges at much lower income levels than joint filers. A surviving spouse with substantial RMD income can lose a meaningful portion of household after-tax income to that bracket compression. Completing a conversion sequence while both spouses are alive significantly reduces the exposure.
Plan Your Roth Conversion Strategy Today!
Whether 2026 is the right year to start a conversion — and how much to convert if it is — depends on far more than current tax brackets. The difference between a standard plan and an optimized one can run into millions of dollars for IRA Millionaire households. To find out what an optimized strategy looks like for your specific situation, schedule a consultation with our team and get a multi-year projection built around your numbers.
