Gerald came to see me last September, a few weeks after his 64th birthday. He'd retired from a manufacturing management job in June, and his wife Carol had stopped teaching the year before. Between them, they had about $640,000 in traditional IRAs and a small pension paying $22,000 a year. No Social Security yet — they planned to wait until 67.
"Ben, we're in this weird spot," Gerald said. "Our income dropped off a cliff, but we have all this money sitting in IRAs we can't touch without getting taxed. What are we supposed to do for the next nine years?"
I smiled, because Gerald had just described the single best opportunity most retirees don't know they have. A Roth conversion window.
What a Roth Conversion Actually Is
A Roth conversion is moving money from a traditional IRA — where you got a tax deduction going in — into a Roth IRA, where withdrawals come out tax-free. The catch is you pay income tax on the amount you convert in the year you do it.
That sounds like a bad deal until you look at the math. In a traditional IRA, every dollar you withdraw is taxed as ordinary income. In a Roth, it's not. So the real question isn't whether you'll pay tax — you will, one way or the other. The question is when you pay it, and at what rate.
In my experience working with retirees, the answer is almost always: pay it now, while your income is low, rather than later, when required distributions and Social Security force your rate up.
The Window Most People Don't Know Exists
Here's what I told Gerald. The years between retirement and age 73 are often the lowest-income years you'll have for the rest of your life.
Think about it. Your salary is gone. You haven't started Social Security yet (if you're smart enough to delay). And you don't have required minimum distributions until age 73, thanks to the SECURE 2.0 Act.
For Gerald and Carol, this meant their 2026 taxable income — before any conversion — was roughly $22,000 from the pension, minus a standard deduction of about $16,500 for married filing jointly. That left just $5,500 in taxable income. They were barely in the 10% federal bracket.
That gap — between their current low income and the bracket they'll land in at 73 — is the conversion window. And it doesn't stay open forever.
Why 2026 Makes This More Urgent
Let me be direct about something that changed this year. The Tax Cuts and Jobs Act provisions expired after December 31, 2025. That means federal tax brackets shifted back to their pre-2018 structure, adjusted for inflation.
The old 12% bracket is now 15%. The old 22% is now 25%. The old 24% is now 28%. And the standard deduction dropped from roughly $30,000 for married couples back to about $16,500.
This is where most people make their mistake. They hear "tax rates went up" and assume conversions are a worse deal now. But here's what they're missing: if your income is low enough to convert within the 10% and 15% brackets today, you're still paying far less than the 25% or 28% you'll face when RMDs and Social Security stack up at 73.
For Gerald and Carol, the math worked out to roughly this: they could convert about $18,300 and stay entirely in the 10% bracket. Or they could push into the 15% bracket and convert up to roughly $90,000, paying approximately $13,000 in federal tax. That's money they'd owe eventually anyway — they're just paying it at a discount.
The Medicare Trap Nobody Mentions
This gets a bit technical, but bear with me — it matters.
Medicare Part B premiums aren't flat. If your income exceeds certain thresholds, you pay a surcharge called IRMAA — the Income-Related Monthly Adjustment Amount. And here's the wrinkle: it's based on your income from two years prior.
So a conversion you do in 2026 affects your Medicare premiums in 2028.
For married couples filing jointly, the 2026 IRMAA threshold is roughly $212,000 in modified adjusted gross income. Below that, you pay the standard $202.90 per month. Above it, surcharges start at $81 per person per month and climb to $443.90 at the highest tier.
A client of mine, Mildred, converted $180,000 in one year. Combined with her other income, she crossed the IRMAA threshold, and two years later she was paying an extra $162 per month in Medicare premiums. For both her and her husband, that was nearly $4,000 in unexpected costs that year. She was furious. Not at me — she'd done the conversion on her own — but at the fact that nobody had warned her.
The lesson: spread your Roth conversions over multiple years. Convert $40,000 to $60,000 annually rather than $180,000 all at once. The tax result is similar over time, but you stay below the IRMAA cliffs.
How Conversions Interact with Social Security Taxes
If you're already collecting Social Security, this matters. Up to 85% of your benefits can be subject to federal income tax, and the threshold is lower than most people expect: $44,000 in "combined income" for married couples filing jointly.
Combined income is your AGI plus nontaxable interest plus half your Social Security benefit. A conversion adds directly to your AGI, which can push more of your Social Security into the taxable zone.
This is another reason the pre-Social Security years are prime time for conversions. Gerald and Carol aren't collecting yet — no interaction to worry about. But if you're 70 and already receiving benefits, you need to factor this into your calculations. A good CPA can model it for you, and I'd strongly recommend asking them to before you convert a single dollar.
The RMD Problem a Roth Conversion Solves
At age 73, the IRS requires you to start withdrawing from your traditional IRA whether you need the money or not. These required minimum distributions are based on your account balance divided by an IRS life expectancy factor.
For Gerald, with $640,000 in traditional IRAs at 73 (assuming modest growth), his first-year RMD would be roughly $24,000 in taxable income he has no choice about. Add Social Security, add the pension, and suddenly he's looking at over $96,000 in income — firmly in the 25% bracket, possibly higher.
Roth IRAs have no required minimum distributions during your lifetime. None. Every dollar Gerald converts now is a dollar that won't force him into a higher bracket later. And if he doesn't need the money, it keeps growing tax-free.
What I've seen over 35 years is that most retirees underestimate how much RMDs will affect their tax picture. At 73, you don't get to choose your tax rate anymore. The IRS chooses it for you.
The Estate Planning Angle Your Kids Will Thank You For
I had a conversation with Gerald that I have with a lot of clients. "If you don't end up spending all this money," I said, "who gets it?"
His kids. Of course.
Under the SECURE Act, non-spouse beneficiaries must empty an inherited IRA within 10 years. If that's a traditional IRA, your children owe income tax on every withdrawal — likely during their peak earning years, when they're already in the 28% or 33% bracket.
If it's a Roth? Those withdrawals are completely tax-free. They still have to empty the account within the decade, but they don't owe a dime in income tax on any of it.
Gerald sat with that for a moment. "So I'm basically paying their tax bill for them right now, at my lower rate." Exactly. That's the estate planning case in a single sentence.
One Rule That Trips People Up: The Pro-Rata Trap
I wish I could tell you it's simpler than this, but there's one IRS rule you need to know. If you've ever made nondeductible (after-tax) contributions to a traditional IRA, you can't just convert that after-tax money and skip the tax bill. The IRS applies a pro-rata rule across all your traditional IRAs.
Example: if you have $500,000 total in traditional IRAs and $50,000 of that is after-tax contributions, only 10% of any conversion is tax-free. The other 90% is taxed as income. You can't cherry-pick the nontaxable portion.
If this applies to you, talk to your advisor about whether you can roll the pre-tax money into a current employer's 401(k) plan first. That isolates the after-tax money and makes a clean conversion possible. It doesn't apply to everyone, but when it works, it works well.
How to Actually Do This — Step by Step
Here's what the process looks like in practice:
- Talk to a CPA or financial planner first. Have them model two or three conversion scenarios at different dollar amounts so you can see the tax impact before you commit. This is not a DIY-on-a-napkin calculation.
- Open a Roth IRA with the same custodian that holds your traditional IRA — Fidelity, Vanguard, Schwab, wherever. Same custodian makes the transfer seamless.
- Choose your conversion amount. Stay within a target bracket. For most of my clients, that means converting enough to fill the 15% bracket without spilling into the 25%.
- Request a direct trustee-to-trustee transfer. Do not have the custodian withhold taxes from the conversion itself. Withholding from the IRA reduces what ends up in the Roth, and if you're under 59½, the withheld amount can trigger a 10% penalty.
- Pay estimated taxes from a separate account — checking, savings, anything that isn't the IRA. Quarterly deadlines are April 15, June 15, September 15, and January 15.
- Report it on your tax return. You'll need Form 8606. Your CPA will handle this, but make sure it gets filed.
- Repeat annually. This isn't a one-time event. It's a five- to ten-year plan that systematically reduces your traditional IRA balance before RMDs begin.
One more thing: if you live in a state that taxes retirement income — Connecticut does, up to 6.99% — factor that into your conversion math. If you're planning to move to Florida, Texas, or another no-income-tax state, it may be worth waiting until after the move to convert. Geography matters.
The Honest Math
Gerald and I mapped out a seven-year plan. Convert roughly $50,000 per year from 2026 through 2032, paying federal and Connecticut state taxes from their savings account — not from the IRA. By the time RMDs kick in at 73, his traditional IRA balance is roughly $300,000 instead of $640,000-plus. His RMDs are smaller. His tax bracket is lower. And about $350,000 is sitting in a Roth, growing tax-free, with no distribution requirements.
Is it perfect? No. He's writing checks to the IRS every quarter, and nobody enjoys that (yes, even I wince). But the alternative — doing nothing and letting RMDs push him into the 25% bracket for the rest of his life — costs considerably more. Over 20 years, the strategy saved Gerald and Carol an estimated $47,000 in federal taxes alone.
That's real money. And it's money their kids won't have to pay either.
You don't have to figure this out alone. But you do have to start before the window closes. If you're between retirement and 73, and most of your savings are in traditional IRAs, the conversation you should be having with your advisor isn't whether to convert. It's how much, and how fast.
