Educational analysis only, not tax advice; all figures reflect tax year 2026 unless a different year is noted inline, and individual outcomes depend on state tax, filing status, and account basis.
TL;DR — Quick Verdict
- A $100,000 Roth conversion for a married couple already reporting $150,000 of taxable income costs $22,000 in federal tax at the 22% and 24% marginal rates; the same conversion stacked on $350,000 of income costs $32,000 to $34,000.
- The 24% bracket for married couples filing jointly runs to $403,550 of taxable income in 2026 (IRS Rev. Proc. 2025-32) — the widest cheap bracket most retirees will ever see.
- Medicare’s first IRMAA tier starts at $109,000 of modified adjusted gross income for single filers and $218,000 for joint filers, and crossing it by one dollar adds $81.20 per month per person to Part B.
- Conversions cannot be undone. The IRS eliminated recharacterization of conversions made in 2018 or later, so a December conversion built on a bad estimate is permanent.
- Converting between retirement and age 73 — after wages stop, before required minimum distributions start — produces the lowest lifetime cost for most six-figure traditional IRA balances.
Roughly 8% of Medicare Part B enrollees pay an income-related surcharge, according to the Centers for Medicare & Medicaid Services — and a mistimed Roth conversion is one of the fastest ways to join them. The conversion itself is simple: move money from a traditional IRA or 401(k) into a Roth, pay ordinary income tax on the pre-tax portion, and never pay tax on that money again. The cost is where people get hurt. Vanguard, Fidelity, and Schwab all process conversions in a few clicks, and none of those clicks tells you that the $120,000 you just converted pushed your modified adjusted gross income past a Medicare threshold that will bill you for the next twelve months.
This analysis breaks down what a conversion actually costs at four income levels using the 2026 bracket schedule published in IRS Revenue Procedure 2025-32, models the IRMAA surcharge that arrives two years later, compares partial bracket-filling against a single large conversion, and identifies the specific window where conversions pay off. Every dollar figure below traces to a named federal source.
What a Roth Conversion Actually Costs in 2026
The conversion amount adds to ordinary income in the year it is executed. There is no separate conversion rate, no capital gains treatment, and no averaging over multiple years. Whatever bracket the converted dollars land in is the bracket you pay.
Married couples get unusual room in 2026. The 22% bracket runs from $100,801 to $211,400 of taxable income, and the 24% bracket extends from $211,401 all the way to $403,550, per IRS Rev. Proc. 2025-32. That means a couple with $150,000 of taxable income can convert roughly $253,000 before touching the 32% rate. Single filers face a tighter path: their 24% bracket tops out at $201,775.
Author calculations applying the 2026 married-filing-jointly bracket schedule to taxable income after deductions. Bracket thresholds: Internal Revenue Service, Revenue Procedure 2025-32, via Tax Foundation 2026 Tax Brackets.
Notice the jump between the third and fourth rows. Adding $100,000 of starting income raises the cost of an identical conversion by $8,314 — a 35% increase in tax for the same transaction. That gap is the entire argument for timing.
The Hidden Cost Nobody Quotes: IRMAA and the Two-Year Lookback
Federal income tax is the visible bill. Medicare’s income-related monthly adjustment amount is the one that arrives by mail two years later, unexpected.
CMS set the standard 2026 Part B premium at $202.90 per month. Above $109,000 of modified adjusted gross income for single filers, or $218,000 for joint filers, surcharges apply on a five-tier sliding scale — $81.20 to $487.00 per month for Part B, plus $14.50 to $91.00 per month for Part D. These are cliffs, not phase-ins. One dollar over a threshold triggers the full tier for the entire year, and for both spouses if both are enrolled.
Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles, released November 14, 2025 (verify at cms.gov). Part D surcharges apply separately and range from $14.50 to $91.00 monthly.
Consider a 66-year-old couple with $190,000 of MAGI who convert $40,000 in 2026. Their MAGI reaches $230,000, clearing the joint threshold. Two years later, both spouses pay $81.20 extra per month for Part B — $1,948.80 for the couple across twelve months, plus Part D surcharges on top. On a $40,000 conversion, that is roughly five additional percentage points of cost that no bracket table shows. Anyone within a decade of enrollment should read the IRMAA surcharge impact on retirement income before selecting a conversion amount.
Partial Annual Conversions vs. One Large Conversion: Which Is Better?
Two strategies dominate the field. The first converts a fixed amount each year, sized to fill the current bracket and stop. The second converts a large lump sum in a single low-income year — typically the year someone retires mid-year or takes a sabbatical.
Model a 62-year-old couple with a $600,000 traditional IRA and $60,000 of taxable income from a pension. Filling the 22% bracket means converting up to $151,400 annually (reaching the $211,400 ceiling). Four years of that clears the balance at 22% blended, before growth — roughly $132,000 of federal tax on $600,000 converted, an effective rate near 22%.
The lump-sum alternative converts $600,000 at once. Taxable income hits $660,000, pushing dollars through the 24%, 32%, and 35% brackets and into the 37% bracket above $768,700. Federal tax on the conversion lands near $190,000 — an effective rate above 31%. The difference exceeds $58,000, and the lump sum also triggers the top IRMAA tier two years out.
Verdict
Partial annual conversions win for balances above roughly $200,000. The only scenario favoring a lump sum is a genuinely one-off low-income year — an unpaid leave, a business loss, or a gap year between employment and Social Security — where a single conversion still fits inside the 22% or 24% bracket. Below that, spreading conversions across four to eight years reduces the effective rate by 8 to 10 percentage points and keeps modified adjusted gross income under the IRMAA cliffs. Anyone weighing this against the underlying account choice should also review Roth vs traditional IRA by tax bracket.
What Determines Your Real Conversion Cost
Five variables drive the number, and only one of them is the amount converted.
Pro-rata aggregation. Under IRC §408(d)(2), the IRS treats all traditional, SEP, and SIMPLE IRAs as one pool. If 20% of that pool is after-tax basis tracked on Form 8606, then 80% of any conversion is taxable — regardless of which account the money leaves. A converter with $500,000 of pre-tax IRA money cannot cherry-pick the $10,000 nondeductible slice and convert it tax-free.
Where the tax payment comes from. Paying conversion tax out of the IRA itself shrinks the converted balance and, under age 59½, triggers a 10% penalty on the withdrawn portion. Paying from taxable savings preserves the full conversion. That distinction changes the break-even math more than a two-percentage-point bracket difference does — a point that also governs early withdrawal penalties and full tax cost.
State income tax. A conversion is ordinary income at the state level too. Someone converting $150,000 in a state with a 5% flat rate adds $7,500 to the federal bill. Retirees planning to relocate to a no-income-tax state have a strong argument for waiting.
Social Security taxation. Conversion income raises provisional income, which can push a larger share of Social Security benefits into taxable status — producing marginal rates well above the stated bracket. This interaction is central to Social Security claiming age and lifetime income decisions.
The five-year clock. Each conversion carries its own five-year holding period under IRC §408A(d)(2), starting January 1 of the conversion year. Withdraw converted principal before that clock finishes while under 59½, and the 10% early distribution penalty applies.
What Most People Get Wrong About Conversion Timing
Four errors account for most of the money lost.
Mistake 1: Converting while still earning peak wages. A 55-year-old at $280,000 of household income converts into the 24% and 32% brackets. Waiting until retirement at 63 often means converting into 12% and 22% instead. Correct action — build the conversion plan around the income gap between the last paycheck and the first required minimum distribution, using retirement withdrawal strategy comparison to sequence accounts.
Mistake 2: Converting in December on an estimate. Year-end bonuses, mutual fund capital gains distributions, and Schedule K-1s arrive late. A conversion sized on a November projection can overshoot a bracket or an IRMAA threshold by thousands. Because IRS Publication 590-B confirms that conversions made in 2018 or later cannot be recharacterized, there is no correction available. Correct action — convert in two tranches, one mid-year and one in late December after actual figures are known.
Mistake 3: Ignoring the two-year Medicare lookback. Someone converting at 63 sets their Medicare premium at 65. Converting at 71 sets premiums at 73, when required minimum distributions have already started. Correct action — treat age 62 to 63 as the last fully clean conversion window before Medicare enrollment consequences attach.
Mistake 4: Converting the entire balance. A fully Roth retiree loses the ability to absorb deductions — medical expenses, charitable gifts — against ordinary income, because there is no ordinary income left. Correct action — leave enough in traditional accounts to cover the standard deduction each retirement year, which is $32,200 for joint filers in 2026 plus $1,650 per spouse aged 65 or older.
Who Should Convert, and Who Should Not
Conversions favor a specific profile. Run the conditions.
Convert if you are between retirement and age 73 with a traditional balance above $400,000, because required minimum distributions on that balance will force taxable income you do not need. At the age-73 Uniform Lifetime Table divisor of 26.5 (IRS Publication 590-B, Appendix B, Table III), a $1,000,000 balance produces a first-year distribution of $37,736 whether or not you want it, and the divisor shrinks every year afterward — the mechanics of RMD calculation and tax costs.
Convert if your current marginal rate is at or below 24% and you expect a higher rate later — from a surviving spouse filing single, from an inheritance, or from pension income starting. The widow’s penalty is real: a surviving spouse’s income lands in single-filer brackets that are half as wide.
Convert if you can pay the tax from taxable savings and will not need the converted dollars for at least five years.
Do not convert if you are in a peak earning year at 32% or above and expect retirement income in the 22% bracket. Do not convert if the tax must come out of the IRA and you are under 59½. Do not convert if you are within two years of Medicare enrollment and the conversion would clear $218,000 of joint modified adjusted gross income for a modest benefit. And do not convert if you plan to leave the account to charity, which pays no income tax on inherited traditional IRA assets. Households still building balances should confirm they are on track using retirement savings benchmarks and catch-up costs before diverting cash to conversion taxes rather than to 401(k) contribution limits and maxing-out value.
Frequently Asked Questions
Is there an income limit on Roth conversions?
No. The $100,000 modified adjusted gross income cap on conversions was removed effective 2010, and any taxpayer may convert any amount in any year regardless of income. Income limits still apply to direct Roth contributions — for 2026, IRS Publication 590-A phases out contributions starting at $153,000 of modified adjusted gross income for single filers and $242,000 for joint filers.
Can I undo a Roth conversion if the market drops?
No. IRS Publication 590-B states that a conversion made in a tax year beginning after December 31, 2017 cannot be recharacterized back to a traditional IRA. The Tax Cuts and Jobs Act eliminated that option. Recharacterization of ordinary contributions — not conversions — remains available before the filing deadline.
Does a conversion count toward my required minimum distribution?
No. Once you reach the required beginning date, the distribution must be taken first and cannot be converted. Only amounts above the required minimum distribution are eligible. The excise tax for a missed distribution is 25% of the shortfall, reduced to 10% if corrected within the statutory window, per IRS Publication 590-B.
How much IRA money should I leave unconverted?
Enough to absorb annual deductions. For 2026, joint filers aged 65 and older can shelter $32,200 of standard deduction plus $1,650 per qualifying spouse, plus the OBBBA senior deduction of $6,000 per taxpayer that phases out above $150,000 of income for joint filers. Leaving roughly 8 to 12 times that annual figure in traditional accounts preserves the shelter without creating oversized required distributions.
How We Researched This Article
Every tax threshold in this analysis comes from Internal Revenue Service Revenue Procedure 2025-32, the official inflation-adjustment guidance for tax year 2026 issued in October 2025, which incorporates the statutory changes made by Public Law 119-21. Bracket boundaries, standard deduction amounts, and the additional deduction for taxpayers aged 65 and older were read directly from that guidance as reproduced in the Tax Foundation’s 2026 bracket tables, which cite the Revenue Procedure by section.
Conversion mechanics — the prohibition on recharacterization, the pro-rata aggregation requirement, the separate five-year holding period for each conversion, and Form 8606 basis tracking — were verified against IRS Publication 590-A and IRS Publication 590-B. Required minimum distribution ages and the statutory schedule for the increase to age 75 in 2033 were confirmed through the Congressional Research Service analysis of SECURE 2.0. Medicare premium and surcharge figures come from the Centers for Medicare & Medicaid Services 2026 Parts A and B premium release dated November 14, 2025 (verify at cms.gov).
The dollar amounts in both tables are modeled, not measured. They apply published statutory rates to hypothetical taxable income figures and assume the taxpayer has no nondeductible basis, no state income tax, no Social Security benefits in provisional income, and no alternative minimum tax exposure. Real conversions almost always involve at least one of those complications, and each one raises the effective rate above what this model shows. Effective rates are calculated on the converted amount only, not on total income.
Limitations worth naming: IRMAA thresholds for 2028 — the year a 2026 conversion would affect — have not been published, so the 2026 tiers are used as a directional proxy and will differ. State tax treatment varies substantially and was excluded entirely. Research was last conducted July 2026. All figures were verified against named primary sources before publication.