Roth Conversions Before Retirement: Seven Decisions to Coordinate

A Roth conversion before retirement adds taxable income in the year it is completed. That income is also read by ACA premium tax credits, by Medicare IRMAA two years later, by the formula that taxes Social Security benefits, and by the brackets a surviving spouse will face. A conversion that lowers one tax cost may raise another.

Most households receive guidance on these measures one at a time. A tax preparer evaluates the federal bracket. A health insurance broker evaluates the marketplace premium. Medicare materials explain IRMAA as a separate subject. Each answer may be correct on its own terms, and the combined result may still not fit the household.

Between 55 and 65, these decisions share one calendar. Retirement tax planning is the work of reading all of them for each year before a conversion is completed, because a conversion generally cannot be undone. This guide covers seven decisions to coordinate. For the basic mechanics of a conversion, see our overview of Roth conversion strategy. Figures below reflect 2026 rules published by the IRS, CMS, and SSA as of October 2026, and they adjust over time.

A hypothetical couple shows how the measures diverge

Consider a hypothetical couple, both age 60. They retired this year, hold $2,000,000 in traditional IRAs, and cover their expenses from taxable savings that produce little taxable income. They buy health insurance through the marketplace until Medicare begins at 65. The table compares three levels of household income created mainly by a conversion. It assumes the 2026 joint standard deduction of $32,200 and no other income.

Household income from conversion	Federal bracket on the top dollars	ACA premium tax credit, 2026 coverage	Medicare IRMAA if the income occurs at 63 or 64
$80,000	12%	Below the $84,600 income limit	Below the $218,000 first threshold
$130,000	12%	Above the limit, so no credit	Below the first threshold
$230,000	22%	Above the limit, so no credit	Above the first threshold at 2026 levels

Under these assumptions, the 12 percent bracket extends to about $133,000 of income, which may look like attractive room for conversion. The ACA income limit is $84,600. The two measures point in different directions, and neither one is the full answer. The table shows income limits only. Whether a credit would be available, and how large it would be, depends on plan prices and household details.

Hypothetical example for illustration only. It is not a projection or a recommendation, and results vary by individual circumstances.

Decision 1: Federal tax brackets

A conversion is ordinary income, so it fills brackets from the bottom up on top of other income. For 2026, the joint brackets run through 12 percent at $100,800 of taxable income, 22 percent at $211,400, and 24 percent at $403,550, after a $32,200 standard deduction (IRS).

The bracket is the first measure most households check, and it is only one of seven. The planning question is what else changes when income rises: credits, phase-outs, capital gains treatment, and the measures below. The tax itself also has to be paid. Paying it from cash outside the IRA keeps more in the Roth, and withholding from a conversion before age 59½ may be treated as an early distribution.

Decision 2: ACA premium tax credits before Medicare

For marketplace coverage, income is modified adjusted gross income: adjusted gross income plus nontaxable Social Security benefits and tax-exempt interest (IRS). A conversion is included. The enhanced subsidies expired at the end of 2025, so for 2026 coverage the credit generally requires household income of no more than 400 percent of the federal poverty level. For a two-person household that is $84,600. Above it, the credit is generally not available (IRS).

Two features raise the stakes. Advance payments are based on an income estimate made at enrollment. For tax years after 2025, there is no cap on repaying advance payments that exceed the final credit. And because conversions after 2017 cannot be recharacterized, the projection has to be made before the conversion, not after. California also offers state premium help aimed at lower incomes, which is described by Covered California.

Decision 3: Medicare IRMAA two years later

Medicare Part B and Part D premiums rise when modified adjusted gross income exceeds set thresholds. Social Security generally uses the return from two years earlier, so 2026 premiums rest on the 2024 return (SSA). For 2026, the standard Part B premium is $202.90 per month. On a joint return, the surcharge begins above $218,000, where Part B is $284.10 per person per month. Each spouse enrolled in Part B pays the applicable amount (CMS). Part D carries its own surcharge.

A conversion at 63 may show up in premiums at 65, and one at 64 at 66. Thresholds adjust each year, and CMS typically publishes the next year's figures in the fall. SSA accepts requests for review after specific life-changing events, such as work stoppage or the death of a spouse, on Form SSA-44. A voluntary conversion is not among them.

Decision 4: Social Security claiming and taxation

Social Security benefits may be taxable when half of the benefits plus other income exceeds $32,000 on a joint return, and up to 85 percent may be taxable above $44,000 (IRS Publication 915). Conversion income counts as other income in that formula.

Claiming age and conversion years therefore interact. Years before benefits begin may leave more room for conversion income, while a conversion after claiming may increase the taxable share of benefits. Delaying benefits to create that room is a separate decision with its own trade-offs, and it should be evaluated on its own merits rather than as a means to a conversion.

Decision 5: Required minimum distributions

Traditional IRA owners born from 1951 through 1958 begin required minimum distributions at 73, and those born in 1960 or later begin at 75. Birth year 1959 sits at the boundary, and the IRS treatment for that year should be confirmed. Original owners of Roth IRAs have no lifetime required distributions (IRS).

For the hypothetical couple, born in 1966, distributions would begin at 75. A $2,000,000 pre-tax balance may produce large required distributions at that age, layered on Social Security. A conversion can reduce the pre-tax balance those distributions are calculated on. It does so by recognizing the income earlier, and whether that trade fits depends on the other six measures. Once distributions begin, the year's required amount generally has to be taken before any additional amount is converted.

Decision 6: State income tax

For a California resident, the amount a conversion adds to federal income is generally added to California income as well. The Franchise Tax Board explains how differences in IRA basis are adjusted in Publication 1005.

California does not tax the IRA distributions of a nonresident (FTB Publication 1100), so residency on the date of the conversion matters. A planned move changes the analysis. A move made mainly for tax reasons raises residency questions that a tax professional should address before any conversion is scheduled.

Decision 7: The surviving spouse

When one spouse dies, the survivor generally files jointly for the year of death and then as a single filer, unless a status such as qualifying surviving spouse or head of household applies (IRS Publication 501). In 2026, the 24 percent bracket begins at $211,401 of taxable income on a joint return and at $105,701 on a single return. The first IRMAA threshold falls from $218,000 to $109,000.

A household with a large pre-tax balance may therefore leave a survivor with required distributions on that balance and brackets half as wide. Conversions completed while both spouses are alive are often evaluated against that outcome. The same reasoning applies to heirs, which is covered in why an estate plan is not done until your heirs understand it.

Rules of thumb and where they fall short

Rules of thumb can help frame the first question. None of them is a substitute for projecting the year.

• Fill the 12 percent or 22 percent bracket. This looks at one measure. In the hypothetical above, the 12 percent bracket extends well past the ACA income limit.
• Convert before required distributions begin. The window is long, and the rule does not say which years within it are better suited.
• Stay under the IRMAA threshold. The threshold sits on a two-year lookback and moves each year. In some households a temporary surcharge may be an acceptable cost and in others it may not be. The cost should be measured rather than ignored.
• Wait until 65. Waiting avoids the ACA income limit. It may also concentrate conversions into years when IRMAA, Social Security taxation, and the required-distribution clock are all active.

What changes between 55 and 65

• Ages 55 to 59. Wages or equity compensation may still stack with a conversion. Withholding from a conversion may raise early-distribution questions.
• Ages 60 to 62. For a household that has retired and buys marketplace coverage, the ACA income limit may become the binding measure. Social Security can begin at 62.
• Ages 63 and 64. Income begins to count toward IRMAA at 65 and 66.
• Age 65 and older. Medicare replaces the marketplace question, and IRMAA applies to premiums based on the return from two years earlier. The deduction for seniors of up to $6,000 per person, available for 2025 through 2028, phases down by 6 percent of income above $150,000 on a joint return (IRS), so conversion income above that level may reduce it.

Fiduciary considerations

A fiduciary standard calls for advice that serves the client's interest, which includes disclosing the costs of an action and not only its intended benefit. For a conversion, that means showing the effect under each of the seven measures, using the figures for each year, and documenting the assumptions. It also means working with the household's CPA and, where relevant, estate attorney, because tax, legal, and investment decisions rest with the household and its professionals. A plan built on 2026 rules should be tested again when thresholds are updated.

Coordinate the decisions before completing a conversion

A decision that reduces income tax could create costs elsewhere in a household's financial plan. That is the reason the seven decisions belong on one calendar. If you are weighing conversions in the decade before retirement, our guide to the retirement tax trap many 55-to-65-year-olds do not see coming explains why the timing window matters. You can also review how our planning services are structured before deciding whether a conversation would be useful.

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This article is educational and does not constitute personalized tax, legal, or investment advice. The hypothetical example is for illustration only. Tax, health coverage, and Medicare rules depend on individual circumstances and may change. Review decisions involving your own return with your advisor and tax professional before acting.