Roth Conversions in 2026: How to Decide How Much, and When

Every fall, the same question shows up in a dozen different forms. Should I convert some of my IRA to Roth this year? How much? Is it too late? The honest answer is that a Roth conversion is neither a magic trick nor a trap. It's a decision about tax rates, made under uncertainty, with a handful of side effects that decide whether it was worth doing. This is how we work through it.

What a conversion actually does

When you convert, you move money from a traditional IRA or 401(k) into a Roth account and add the converted amount to your taxable income for the year. You pay ordinary income tax on it now. In exchange, that money and everything it earns from then on comes out tax-free, there are no required minimum distributions on a Roth IRA during your lifetime, and your heirs inherit it without an income tax bill attached.

So the whole question boils down to one comparison: the tax rate you pay on the conversion today versus the rate that money would've been taxed at later. Later might mean your own withdrawals in your seventies, your required distributions, or your children's withdrawals after they inherit. If today's rate is lower, converting wins. If it's higher, it loses. Everything else is detail.

That framing rules out two bad habits. Converting because Roth "feels" better. And refusing to convert because writing a check to the IRS feels worse. Neither feeling is a tax rate.

The window that makes conversions work

For most people the best years to convert are the ones between leaving full-time work and the start of required minimum distributions, which begin at age 73 under current law (75 for anyone born in 1960 or later). In that window, earned income is gone, Social Security may not have started, and taxable income can drop into the 10%, 12%, or 22% brackets for the first time in decades.

Those low-bracket years are use-it-or-lose-it. Every year you leave the 12% or 22% bracket unfilled is a year of cheap conversion capacity that doesn't carry forward. Once RMDs begin, the IRS decides how much comes out and your choices narrow.

The window can open earlier for people who retire in their fifties, and it can show up mid-career in a year with a job change, a sabbatical, or a business loss. Same pattern either way: look for years when your income is unusually low compared with what it'll be later.

Filling the bracket, not blowing through it

The mechanics are simple once you've got a projection of the year's income. In 2026, the 22% bracket for a married couple filing jointly runs to $211,400 of taxable income, and the 24% bracket runs to $403,550. For a single filer the same brackets end at $105,700 and $201,775. The standard deduction is $32,200 for joint filers and $16,100 for singles, and it comes off before you get to taxable income.

So a couple with $90,000 of taxable income before conversion has about $121,000 of room in the 22% bracket. Converting that much costs roughly 22 cents on the dollar. Converting $250,000 instead would push the top slice into 24% and then 32%. That might still be fine if their later rate would be higher, but it should be a deliberate choice, not an accident.

We generally target the top of a specific bracket and stop there. Which bracket depends on the projected rate later. For a household that expects to sit in the 24% bracket permanently once RMDs and Social Security arrive, converting up to the top of the 22% bracket every year is about as close to a free lunch as the tax code offers, and converting into the 24% bracket is roughly a wash that still buys tax-free growth and flexibility. Converting into 32% is usually a mistake, unless the estate is large enough that heirs in high brackets are the real endpoint.

The four side effects that decide the outcome

The bracket math is the easy part. The conversion also raises your adjusted gross income for the year, and several other parts of the tax code key off that number. These are the ones that catch people.

Medicare IRMAA. Two years after a conversion, the income shows up in your Medicare premium. In 2026, a joint filer with 2024 income above $218,000 pays a Part B surcharge, and the first tier alone adds roughly $965 per person over the year for Part B, plus a smaller Part D surcharge. The cliffs are exact. One dollar over a threshold triggers the whole tier. Once someone is within two years of Medicare, we treat the IRMAA thresholds as secondary bracket edges. Our IRMAA planning guide walks through the tiers.

Capital gains stacking. Long-term gains and qualified dividends sit on top of ordinary income. A conversion that fills the 22% bracket can push gains that would've been taxed at 0% into the 15% rate, because the 0% rate ends at $98,900 of taxable income for joint filers in 2026. A conversion in a year with a large gain can cost more than it looks.

ACA premium subsidies. If you retired before 65 and buy health insurance on the marketplace, your subsidy is based on household income. A conversion can shrink it or wipe it out. Sometimes the right answer is to hold off on conversions until Medicare begins. Sometimes it's to eat the subsidy loss because the conversion is worth more. It has to be modeled, not guessed.

State residency. Florida has no state income tax, which makes conversions here cheaper than in New York, New Jersey, or California. If you're planning a move to Florida, sequence it: convert after you establish domicile, not before. If you might leave, the reverse applies.

How much to convert: our method

We run the same steps for every client considering a conversion.

1. Project this year's income with everything known: wages, pensions, Social Security, interest, dividends, planned capital gains, and any Roth or IRA activity already done.
2. Project the later years with RMDs layered in. The goal is to estimate the marginal rate the unconverted money would face, including the effect of a surviving spouse filing as a single taxpayer, which squeezes the brackets roughly in half.
3. Pick the target bracket by comparing today's marginal rate to that later rate.
4. Check the side effects above and adjust the target if a cliff is within reach.
5. Decide where the tax will be paid from. Paying the conversion tax from a taxable account rather than from the IRA itself makes the conversion far more valuable, because the full amount lands in the Roth.
6. Execute in December once the year's numbers are firm, or in tranches during a market decline, when the same dollars of tax buy more shares.

Then we do it again next year. A good conversion plan is usually a series of moderate conversions over five to ten years, not one big one.

When not to convert

Some situations argue against converting, and they deserve naming.

• Your income later will clearly be lower. Think of a high earner who plans to retire to a modest lifestyle and has no large estate.
• You'd have to pay the tax from the IRA itself and you're under 59½, which triggers a penalty on the amount withheld.
• You plan to leave most of the IRA to charity, which pays no income tax anyway.
• You're in a year with other one-time income, like a business sale or a large bonus, that already has you in a high bracket.
• You have a large medical or long-term care expense coming that could be deducted against a traditional IRA withdrawal.

Conversions and your estate

Under the 10-year rule, most children who inherit an IRA must empty it within a decade, often during their own peak earning years. A $1.5 million inherited traditional IRA can add $150,000 a year to a child's income for ten years. Converting during the parents' lower-bracket years moves that tax from the child's 32% or 35% bracket to the parents' 22% or 24%. For families where the estate will likely pass to high-earning children, this is often the strongest argument for converting. Stronger than any calculation about the parents' own retirement.

What we do differently

Because tax planning and investment management sit with the same advisor here, the conversion decision gets made with the projection open and the portfolio in view. We can see the gain that would stack on top, the IRMAA threshold two years out, and the cash in the taxable account that'll pay the bill. The decision is documented and the conversion is executed before year end, with the withholding set so there are no surprises in April. If you'd like to see how the math works for your own accounts, our tax planning service is where that conversation starts.

Frequently asked questions

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.