The Roth Conversion Window

Retirement often brings a welcome change of pace, but it can also create an important tax-planning opportunity. For many retirees, the years between leaving the workforce and beginning Required Minimum Distributions (RMDs) may be some of the best years to consider converting a portion of a traditional IRA or other eligible pre-tax retirement assets to a Roth IRA.

Why? Because once your paycheck stops, your taxable income may temporarily decline. Later, Social Security benefits, pensions and RMDs can push that income back up. Taking advantage of the years in between may help reduce future taxes and potentially reduce exposure to higher Medicare premiums.

The RMD Problem

Traditional IRAs and many employer-sponsored retirement accounts provide tax-deferred growth. That is a valuable benefit while you’re accumulating retirement savings, but eventually the IRS requires you to begin withdrawing money.

Under current law, RMDs generally begin at age 73, although individuals born in 1960 or later generally begin at age 75. The larger your tax-deferred accounts become, the larger your future RMDs may be.

Imagine retiring at 65 with a substantial IRA and not needing much of that money for living expenses. If the account continues growing for another eight or ten years, your eventual RMD could create considerably more taxable income than you actually need.

That additional income can have consequences beyond simply paying income tax.

Enter the Roth Conversion

A Roth conversion involves moving money from a traditional IRA or other eligible pre-tax retirement account into a Roth IRA. The amount converted is generally included in taxable income in the year of conversion.

In exchange for paying taxes today, however, the converted assets can potentially grow tax-free, and qualified Roth IRA withdrawals are tax-free. Perhaps even more important for retirement planning, Roth IRA owners are not required to take RMDs during their lifetime. Therefore, strategically converting portions of a traditional IRA over several years can reduce the balance that will eventually be subject to RMDs.

The goal isn’t necessarily to convert everything. Instead, it may make sense to gradually convert enough each year to take advantage of lower tax brackets without unnecessarily pushing yourself into significantly higher ones.

Don’t Forget About Medicare and IRMAA

Taxes aren’t the only consideration. Higher income can also increase what you pay for Medicare Part B and Part D through the Income-Related Monthly Adjustment Amount, commonly known as IRMAA.

Medicare generally looks back two years when determining whether IRMAA applies. For example, your 2026 Medicare premiums are generally based on your 2024 Modified Adjusted Gross Income (MAGI).

For 2026, the Medicare Part B IRMAA brackets are:

IRMAA can also add a surcharge to Medicare Part D prescription drug coverage.

This is especially important because IRMAA works more like a series of steps than a gradual tax bracket. Crossing a threshold—even by a relatively small amount—can move you into the next premium tier.

Roth Conversions Can Help IRMAA—But They Can Also Trigger It

Here’s where careful planning becomes important.

A Roth conversion increases taxable income in the year of the conversion. Therefore, converting too much at once can potentially push your MAGI into a higher IRMAA bracket two years later.

But the opposite can also be true over the long term.

Converting strategically during your lower-income retirement years may reduce the size of your traditional IRA. That can mean smaller RMDs later, which could help keep future income—and potentially future Medicare premiums—lower.

In other words, you may intentionally recognize some taxable income today to potentially reduce taxable income later.

The Single-Survivor Issue

Married couples should pay particular attention to the difference between the single and married-filing-jointly IRMAA thresholds.

For 2026, a married couple filing jointly can have MAGI of up to $218,000 before IRMAA begins. For a single taxpayer, that threshold is only $109,000.

This can become especially important after the death of a spouse. The surviving spouse may eventually file as a single taxpayer while still owning much of the couple’s retirement assets. RMDs that were manageable while filing jointly could suddenly represent a much larger percentage of the survivor’s available IRMAA and income-tax brackets.

This potential “survivor’s penalty” is another reason married couples may want to evaluate Roth conversions while both spouses are alive and filing jointly.

Finding the Sweet Spot

Roth conversion planning isn’t about simply converting as much as possible. The real question is: How much should you convert, and when?

A thoughtful strategy considers your current tax bracket, projected future RMDs, Social Security income, pensions, investment income, Medicare enrollment date, IRMAA thresholds and whether you have outside funds available to pay the conversion tax.

For someone retiring at 65 with RMDs beginning at 73 or 75, there could be eight to ten years available for a series of carefully planned partial conversions. Spreading conversions over multiple years may be much more tax-efficient than waiting until large RMDs begin.

It is also important to remember that tax laws, Medicare premiums and IRMAA thresholds can change over time.

Retirement planning shouldn’t end when you retire. In many cases, the first several years of retirement present some of the most valuable tax-planning opportunities you’ll have. Working with a CERTIFIED FINANCIAL PLANNER® professional and tax professional can help you evaluate whether Roth conversions fit into your overall retirement strategy—and determine how much to convert without allowing today’s tax solution to inadvertently create tomorrow’s Medicare problem.

A Roth IRA conversion—sometimes called a backdoor Roth strategy—is a way to contribute to a Roth IRA when income exceeds standard limits. The converted amount is treated as taxable income and may affect your tax bracket. Federal, state, and local taxes may apply. If you’re required to take a minimum distribution in the year of conversion, it must be completed before converting. To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions. This material is for informational purposes only and does not constitute tax, legal, or investment advice. Please consult a qualified tax professional regarding your individual circumstances.

Grace S. Yung, CFP®, CEO & Founder | Wealth Advisor – Midtown Financial Group, LLC. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA / SIPC. For more information, visit midtownfg.com.