The Roth Conversion Window Most Pre-Retirees Miss

The years between the day you stop working and the day required minimum distributions begin at age 73 are usually the cheapest stretch of your life to move traditional IRA money into a Roth. Most pre-retirees let that window close unused and pay more tax on the same dollars than they ever needed to.

The Bracket-Filling Math

Retire at 62 and delay Social Security to 70 and your taxable income can drop sharply. A modest pension plus some portfolio interest may leave you well inside the 12% or 22% federal bracket with room to spare.

In 2026, the 22% bracket for married filers runs up to roughly $206,700 of taxable income (after the standard deduction of around $30,000 for a couple both over 65). A couple with $40,000 in other income could convert close to $135,000 in a single year and never leave that bracket. Repeat for five or six years and $600,000 or more has moved into Roth at a rate almost certainly below what RMDs would force in your 70s.

Two Tripwires: ACA Subsidies and IRMAA

Retired but not yet on Medicare, your household likely buys coverage through the ACA marketplace. Premium tax credits phase out as your modified adjusted gross income rises above 100% of the federal poverty level, and for a couple in their early 60s that line sits somewhere around $22,000 to $24,000. A large conversion can wipe out thousands of dollars in subsidies, pushing the real marginal cost well above 22%.

IRMAA, the Medicare surcharge on Part B and Part D premiums, creates a similar tripwire two years later. A conversion that pushes 2026 income above $212,000 for a married couple will raise your 2028 Medicare premiums by roughly $750 per person per year. That's not a reason to avoid conversions; it's a reason to size them carefully.

How State Taxes Change the Answer

Some states, including Pennsylvania and Illinois, exempt retirement income from state tax entirely, and converting while you live in one permanently avoids state tax on that growth. If you're in California or New York today but plan to retire somewhere with no income tax, it may pay to wait: converting $100,000 in California costs an extra $9,300 in state income tax versus the same conversion in Nevada or Florida.

The Takeaway

The fact that decides your answer is not your IRA balance. It is how much taxable income you already have in those first retirement years, and which state you expect to be living in when the money finally comes out.

The people who get hurt here are rarely the ones who ignored conversions. They are the ones who sized a conversion correctly for the federal bracket and forgot the same dollars also set their ACA subsidy this year and their Medicare premium two years out. The bracket math was right and the all-in cost still landed higher than planned.

How conversion size, subsidies, IRMAA, and your state of residence interact across a multi-year schedule is worth a conversation before you convert a dollar this year.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Consult with qualified professionals for guidance specific to your situation.