A Roth conversion strategy answers two practical questions: how much pretax money to move into a tax-free Roth each year, and when to do it. The tightest strategy sizes each conversion to the lower of two ceilings, the top of your target federal bracket and the next Medicare IRMAA threshold, and concentrates conversions in the low-income years after you retire. This guide covers the sizing rule, the timing windows, the named tactics, and how to reduce (not eliminate) the tax, for both retirees in their trough years and high earners who are still working.
A Roth conversion strategy sizes each conversion to the lower of two ceilings: the top of your target federal tax bracket and the next Medicare IRMAA threshold ($218,000 joint, $109,000 single in 2026), minus your other income. The lowest-cost years are usually the gap between retirement and RMDs at age 73, before Social Security starts. You can reduce the tax but not avoid it, because the converted amount is ordinary income by law.
What is a Roth conversion strategy?
A Roth conversion strategy is a multi-year plan for moving money from a traditional IRA or pretax 401(k) into a Roth account at a tax cost you control. You pay ordinary income tax on each converted amount in the year you convert, in exchange for tax-free growth and qualified withdrawals later. There is no income limit and no dollar cap, and the deadline is December 31, not the tax-filing date (Source: IRS Publication 590-A, 2026).
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Keep two income rules apart. Direct Roth contributions phase out at MAGI of $153,000 to $168,000 (single) and $242,000 to $252,000 (joint) in 2026, but a conversion has no limit: you can convert $10,000 or $1,000,000 regardless of income. The converted amount is taxable ordinary income, is irreversible, and cannot include a required minimum distribution. Our overview of how a Roth conversion works covers the mechanics.
How much should I convert to a Roth each year?
Convert up to the lower of two ceilings: the top of your target federal tax bracket, and the next Medicare IRMAA MAGI threshold, each minus your other income and deductions. In 2026 the first joint IRMAA threshold is $218,000 of MAGI ($109,000 single), which often sits below the 24% bracket top of $403,550 joint. For many retirees the IRMAA cliff, not the tax bracket, is the binding wall.
Bracket-filling means converting only enough to reach the top of your current bracket without spilling into the next rate. The IRMAA cliff is the second wall: crossing a Medicare tier by one dollar owes the full higher premium for twelve months. The sweet spots are the tops of the 12%, 22%, and 24% brackets.
| Marginal rate (2026) | Bracket top, single (taxable income) | Bracket top, married filing jointly | Conversion sweet-spot note |
|---|---|---|---|
| 10% | $12,400 | $24,800 | Rarely a target on its own |
| 12% | $50,400 | $100,800 | Popular ceiling for lower-income retirees |
| 22% | $105,700 | $211,400 | Frequent target in trough years |
| 24% | $201,775 | $403,550 | Common ceiling before the 32% jump |
| 32% | $256,225 | $512,450 | Seldom a target; watch IRMAA and NIIT |
| 35% | $640,600 | $768,700 | Only for a specific rate-arbitrage reason |
| 37% | above $640,600 | above $768,700 | Top rate, made permanent under OBBBA |
These edges are stated in taxable income (income after the deduction), so add the standard deduction back to find the gross income that lands at a bracket top. Our how much to convert to a Roth page sizes against both walls, and the Roth conversion break-even page frames whether the rate is worth paying.
When is the best time to do a Roth conversion?
The lowest-cost time to convert is usually the trough between the year you stop working and the year required minimum distributions begin at age 73 (age 75 if born in 1960 or later, first age-75 RMD year 2035). In that gap wages have stopped but Social Security and RMDs may not have, so your bracket is often at its lowest. Converting before you claim Social Security also keeps more of your benefit untaxed.
Because up to 85% of Social Security benefits can become taxable once other income rises, a conversion before you claim lands in a cleaner year than one after benefits and RMDs both flow. IRMAA also looks back two years, so a conversion at age 62 sets premiums at 64: converting before age 63 avoids touching your first Medicare premium year.
How do I reduce (not avoid) taxes on a Roth conversion?
You cannot avoid the tax on a Roth conversion, because the converted amount is ordinary income by law. You can restructure and reduce it. The five levers are: fill low brackets instead of high ones, spread the conversion across several years, convert when your balance is temporarily depressed, offset the income with charitable giving, and pay the tax from outside cash so more stays invested.
- Fill low brackets, not high ones. Converting at 12% or 22% instead of 32% is the single largest lever for most households.
- Spread it across years. A multi-year ladder keeps any single year from spiking into a higher bracket or IRMAA tier.
- Convert in a down market. A temporarily depressed balance converts at a lower tax cost, and the recovery then happens inside the Roth.
- Offset the income with deductions. Bunching charitable gifts through a donor-advised fund can absorb part of the conversion income. After age 70½ a qualified charitable distribution (up to $111,000 in 2026, from an IRA not a 401(k)) can give without adding to income and can satisfy an RMD.
- Pay the tax from outside the account. Using taxable cash rather than IRA dollars lets the full amount keep compounding. Converting $100,000 and paying $24,000 from outside cash keeps the full $100,000 in the Roth instead of $76,000. Under 59½, tax withheld from the IRA is treated as a distribution and can carry a 10% penalty (Source: IRS Publication 590-B).
Should I convert in a down market?
Converting when your account balance is temporarily depressed means paying ordinary income tax on a smaller number, and any recovery then happens inside the Roth, free of future tax. If a $100,000 position falls to $80,000 in a downturn, converting the shares at $80,000 moves the same shares across for $20,000 less taxable income, and the rebound is tax-free.
What is a Roth conversion ladder, and how does it work?
A Roth conversion ladder spreads a large traditional balance across several tax years so no single year spikes your income into a higher bracket or IRMAA tier. A household with $700,000 in a traditional IRA might convert roughly $160,000 to $170,000 a year, each year sized to the lower of the bracket top and the IRMAA cliff, rather than converting the whole balance at once.
The following is a hypothetical illustration, not a real client and not a projection of any result. A married couple, both 62, retired, have $50,000 of baseline taxable income and $700,000 in traditional IRAs. Because MAGI sits below taxable income by the standard deduction, the first joint IRMAA threshold ($218,000) is the binding wall in premium-setting years.
| Year (age) | Baseline income | Conversion | Approx. MAGI | Binding ceiling | Note |
|---|---|---|---|---|---|
| 2026 (62) | $50,000 | $161,000 | ~$211,000 | Top of 22% bracket | Before Medicare; IRMAA not yet the constraint |
| 2027 (63) | $50,000 | $168,000 | ~$218,000 | First IRMAA tier | First MAGI that sets an age-65 premium |
| 2028 (64) | $50,000 | $168,000 | ~$218,000 | First IRMAA tier | Sets age-66 premium |
| 2029 (65) | $50,000 | $140,000 | ~$190,000 | First IRMAA tier | On Medicare; balance nearly converted |
Over four years this couple moves roughly $637,000 across at a top rate of 22%, while keeping MAGI at or below the first IRMAA tier in every premium-setting year; a single-year conversion would have hit the 32% bracket and several IRMAA tiers. Each conversion also starts its own five-year clock (see the FAQ below).
How does a conversion affect Medicare premiums (IRMAA) and the 3.8% NIIT?
IRMAA is an income-related surcharge added to Medicare Part B and Part D premiums, based on your MAGI from two years earlier. In 2026 it begins above $109,000 of MAGI (single) and $218,000 (joint), on top of the $202.90 standard Part B premium (Source: CMS, 2026). Because it is a cliff, one dollar over a tier triggers the full higher premium for twelve months. A 2026 conversion sets your 2028 IRMAA.
Managing IRMAA means keeping the conversion year’s MAGI under whichever tier you accept. Figures above the first tier come from secondary reporting of the CMS announcement and are worth confirming against the CMS fact sheet.
| 2026 MAGI: single | 2026 MAGI: joint | Total Part B premium (monthly) | Part D surcharge (monthly) |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | $0 |
| $109,001 to $137,000 | $218,001 to $274,000 | $284.10 | $14.50 |
| $137,001 to $171,000 | $274,001 to $342,000 | $405.80 | $37.50 |
| $171,001 to $205,000 | $342,001 to $410,000 | $527.50 | $60.40 |
| $205,001 to $499,999 | $410,001 to $749,999 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | about $689.80 | $91.00 |
The 3.8% net investment income tax (NIIT) is a separate wall, applying to the lesser of your net investment income or the MAGI over $250,000 joint ($200,000 single); these thresholds have not been indexed since 2013 (Source: IRS Topic No. 559). A conversion is ordinary income, not investment income, so it is not itself taxed by the NIIT, but it raises MAGI and can pull your interest, dividends, and capital gains above the line. Our 2026 NIIT guide covers the details; harvesting capital losses reduces the income the surtax hits.
Roth conversion strategies if you are a high earner still working
A 40- to 55-year-old pulling $300,000 to $600,000 of W-2 income has no low-income trough to convert into. The practical moves are the backdoor Roth (a nondeductible traditional IRA contribution of up to $7,500, or $8,600 if age 50 or older, then converted), the mega backdoor Roth inside a 401(k), and small conversions timed to a bonus-light or gap year, rather than large conversions at a 32% or higher rate.
Converting a large balance while earning near your peak means paying 32% to 37% today, which rarely pencils out. The higher-value moves add Roth dollars without adding much taxable income:
- Backdoor Roth each year to keep funding a Roth despite being over the contribution income limit.
- Mega backdoor Roth if your 401(k) allows after-tax contributions plus in-plan Roth conversion, up to the $72,000 Section 415(c) limit in 2026 minus your own deferrals and any match.
- Small strategic conversions in a year when income dips (a sabbatical, a business loss, a gap between jobs), sized to fill the rest of your current bracket.
The pro-rata rule and Form 8606
The pro-rata rule sets the taxable share of a conversion using the combined December 31 balance of all your traditional, SEP, and SIMPLE IRAs, not just the account you convert (Source: IRS Form 8606). The nontaxable portion equals your total IRA basis divided by your total aggregate IRA balance. You must file Form 8606 to record nondeductible basis.
This is what makes a “tax-free” backdoor Roth partly taxable. Say you make a $7,500 nondeductible contribution but also hold $92,500 of pretax money in a rollover IRA: your basis fraction is 7.5%, so converting $7,500 makes only $562.50 tax-free and $6,937.50 taxable. Because 401(k) and 403(b) balances are excluded from this aggregation, rolling pretax IRA money into an employer plan first (“isolating basis”) can restore a clean backdoor Roth.
2026 law changes that affect your strategy (OBBBA and SECURE 2.0)
The One Big Beautiful Bill Act of 2025 (P.L. 119-21) made the 37% top federal rate permanent, which removes the old “convert before the sunset” urgency. It also added a temporary senior bonus deduction of $6,000 per person age 65 or older ($12,000 per qualifying couple) for tax years 2025 through 2028. SECURE 2.0 sets RMDs at age 73, moving to 75 for those born in 1960 or later.
The senior deduction hides a marginal-rate increase almost no ranking page models: it phases out as MAGI rises from $150,000 to $250,000 joint ($75,000 to $175,000 single), reduced by 6 cents per dollar over the threshold. Every conversion dollar in that band is taxed at your bracket rate and shaves 6 cents off the deduction, so a couple sizing a conversion between $150,000 and $250,000 of joint MAGI through 2028 should account for the stacked cost. SECURE 2.0 also requires catch-up contributions to be Roth for employees earning above $145,000.
The widow’s penalty: how filing status changes the math
When one spouse dies, the survivor usually files as single the following year, and single brackets and IRMAA thresholds are far tighter than joint ones. In 2026 the 22% bracket ends at $211,400 joint but only $105,700 single, and the first IRMAA tier begins at $218,000 joint versus $109,000 single. The same income can jump a bracket and trigger a surcharge overnight.
The math is structural: a surviving spouse with the same portfolio faces a higher rate on RMDs and any remaining pretax balance, which is why moving pretax dollars to Roth while both spouses are alive is often part of a couple’s plan.
The long-term payoff: lower RMDs and what heirs inherit
The main long-term reason to convert is to shrink future required minimum distributions. Traditional IRA and 401(k) owners must begin RMDs at age 73 (age 75 if born in 1960 or later, first age-75 RMD year 2035), and those forced withdrawals are taxable. Roth IRAs have no RMDs for the original owner, and Roth 401(k)s no longer require lifetime RMDs as of 2024 (Source: IRS; SECURE 2.0).
Every dollar moved to Roth is a dollar that will never generate a taxable RMD, the core case for households whose balances would push RMDs into the 32% or 35% bracket; our 2026 RMD guide covers the schedule. There is also an estate dimension: most non-spouse heirs must empty an inherited IRA within ten years, and an inherited Roth is generally tax-free while an inherited traditional IRA is taxable to heirs in their peak earning years. With the federal estate exemption at $15,000,000 per person in 2026, for most families the question is income tax on heirs, not estate tax.
When is a Roth conversion the wrong move?
A conversion tends not to make sense when your current marginal rate is higher than the rate you expect in retirement, when you would pay the tax out of the IRA itself, when the added income would trigger an IRMAA tier or NIIT you cannot offset, or when you may need the money within five years while under 59½. For many peak-earning high-W-2 households, large conversions at 32% to 37% fall into this category.
The whole case rests on paying a lower rate now than later. If you are in the 35% bracket today and expect 24% in retirement, converting large sums now works against you, and the case weakens further if you lack outside cash for the tax or plan to leave much of the account to charity (a charity pays no income tax on an inherited traditional IRA).
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
Frequently asked questions
These are the questions savers ask most when weighing a Roth conversion strategy. The answers summarize how sizing, timing, the five-year rules, IRMAA, and the downsides work in 2026, with sources noted. Each is general information rather than advice, and the right answer depends on your own bracket, balances, and timeline.
What is the best Roth conversion strategy?
There is no single best Roth conversion strategy, because the right approach depends on your bracket, balances, and timeline. For most retirees it means sizing each conversion to the lower of the bracket top and the next IRMAA threshold, and concentrating conversions in the low-income years between retirement and RMD age 73. For high earners still working, the backdoor and mega backdoor Roth usually fit better than large conversions at a 32% or higher rate.
How much should I convert to a Roth each year?
A common approach is to convert up to the lower of two ceilings: the top of your target federal bracket and the next IRMAA MAGI threshold, minus your other income. In 2026 the 24% joint bracket runs to $403,550 while the first joint IRMAA tier begins at $218,000 of MAGI, so for many households the IRMAA cliff is the binding limit (Source: IRS Rev. Proc. 2025-32; CMS 2026).
How do I avoid taxes on a Roth IRA conversion?
You cannot avoid the tax entirely, because a conversion is ordinary income by law. You can reduce it through five levers: fill low brackets instead of high ones, spread the conversion across several years, convert when your balance is temporarily down, offset the income with charitable deductions, and pay the tax from outside cash so the full amount keeps compounding tax-free.
At what age is it too late to do a Roth conversion?
There is no upper age limit on a Roth conversion; you can convert at 75 or 85 if it fits your plan. What changes with age is the math: once RMDs begin at age 73 (75 if born in 1960 or later), you cannot convert the RMD itself, and the forced income fills your lower brackets first, leaving less room. Many households convert most in the years before RMDs start.
What is the 5 year rule for Roth conversions?
Each conversion starts its own five-year clock. Withdrawing a converted amount before that clock closes while under 59½ triggers a 10% recapture penalty on the portion that was taxable at conversion (Source: IRS Publication 590-B). A separate five-year rule governs whether Roth earnings come out tax-free: your first Roth IRA must be at least five years old and you must be 59½.
Is it better to do a Roth conversion when the market is down?
A market downturn can lower the tax cost of a conversion you were already planning, because you pay ordinary income tax on a temporarily depressed balance and the recovery then happens inside the Roth, free of future tax. The point is not to time the market but to recognize that a decline can make an intended conversion cheaper, especially in a low-income year.
What is the downside of a Roth conversion?
The main downside is paying tax now on money you could have deferred. A conversion can also push you into a higher bracket, trigger a Medicare IRMAA surcharge two years later, expose other income to the 3.8% NIIT, and it is irreversible. It tends not to help when your current rate is higher than the rate you expect in retirement.
Should I do a Roth conversion before or after Social Security?
Converting before you claim Social Security generally lands the income in a cleaner, lower-bracket year, because once benefits and RMDs are both flowing, up to 85% of your Social Security can become taxable and the conversion stacks on top. Many households prioritize conversions in the years after retirement but before claiming benefits.
