Should High Income Earners Do Roth Conversions?

Not while you're in the 37% bracket, and often yes in the lower-income windows around your peak years. Converting at 37% to dodge a possible 22% later is a losing trade; converting at 22% or 24% in early retirement, before required minimum distributions (RMDs) and Social Security stack up, is usually a winning one. There is no income limit on conversions, so the decision comes down to picking the right year.

Why "Lower Bracket Later" Often Fails

A Roth conversion is a bet on the spread between your rate now and your rate later, and for high earners that spread is rarely as wide as it looks.

Required minimum distributions start at age 73 (75 for those born in 1960 or later), and a 30-year career of maxed 401(k)s, employer matches, and rollovers can produce a pre-tax balance of $2M to $4M. At a 4% RMD rate on $3M, that's $120,000 forced out as ordinary income every year, before Social Security or any pension. The "lower bracket later" story collapses under what has accumulated. The planning work is finding the years when paying the tax now wins.

The Rules and the Traps

Anyone, at any income, can convert pre-tax retirement assets to a Roth individual retirement account (IRA) by paying ordinary income tax on the converted amount that year. That part is simple. The traps are subtler.

IRMAA. Medicare premiums are means-tested through the Income-Related Monthly Adjustment Amount (IRMAA), with a two-year lookback. For 2026 premiums, the first surcharge starts above $109,000 (single) and $218,000 (married filing jointly), so a large conversion the year you turn 63 can show up as a Medicare surcharge at 65.

The 5-year rules. One clock governs tax-free withdrawal of earnings. A second applies to each individual conversion: converted principal cannot come out penalty-free for five years unless you are 59½ or older. It matters if you plan to touch the money soon.

Where the tax comes from. The math works in your favor when the tax is paid from outside the account. Withholding it from the conversion shrinks the balance that compounds tax-free, which is one of the most common ways the benefit gets eroded.

State tax. Converting while resident in a high-tax state, then retiring to a no-tax state, adds a cost a future withdrawal would not have carried.

An Illustrative Example: When the Window Opens

Consider a hypothetical couple, late 50s, earning around $750,000 combined while working. They retire at 62, and until Social Security starts at 70 their taxable income drops to roughly $120,000. In 2026, the 22% bracket (married filing jointly) tops out at $211,400, which leaves about $91,400 of room a year. Converting up to that line for four years moves roughly $365,000 at 22%, on dollars that could otherwise be taxed at 32% or higher once RMDs begin (at 75 for this couple). The 10-point bracket differential alone is worth roughly $36,500 in tax, before decades of tax-free compounding. One cost belongs in the math: from 63 on, filling the bracket puts modified adjusted gross income (MAGI) near $243,600, above the $218,000 first IRMAA threshold, so those conversions add a first-tier surcharge two years later (about $81 per person per month for Part B in 2026 terms). Their income already sits above the 2026 Affordable Care Act (ACA) subsidy cliff, so the conversions cost them no premium credit. A window like this has to be planned years before it opens.

How This Connects to Roth Conversions Broadly

Whether to convert is the easy part. Knowing when the window will appear, sizing conversions across multiple years, and avoiding the side effects (IRMAA, ACA subsidy cliffs, state tax) is the design problem, and it's covered in the parent pillar: Roth Conversion: A Practical Guide for High Earners and Pre-Retirees. This is tax planning work, laid years before you need it.

Frequently Asked Questions

Is there an income limit on Roth conversions in 2026?

No, conversions have no income limit. The 2026 phase-out for married filing jointly ($242,000 to $252,000 of MAGI) applies only to direct Roth IRA contributions.

If I'm in the 37% bracket, does a Roth conversion ever make sense?

Rarely during a high-income working year. It works in transition years, early retirement, or a year when income temporarily drops, converting at 22% or 24% ahead of a 32-37% future.

What happens if I convert too much and push into IRMAA?

The surcharge applies for that Medicare year and does not undo the conversion. The two-year lookback means you model it two years ahead.

Should I convert even if I plan to leave the money to heirs?

Often yes, and sometimes this is the strongest argument for converting. Most non-spouse beneficiaries must empty inherited IRAs within 10 years. An inherited Roth falls under the same 10-year rule, but its withdrawals are generally income-tax-free, and a Roth has no RMDs during the original owner's lifetime.

What to Do Next

1. Pull your current pre-tax retirement balance and estimate what your first RMD (at 73 or 75, depending on birth year) would look like under current law. If it would push you above the 24% bracket, you have a conversion case worth modeling.
2. Identify any gap years between your planned retirement date and RMD onset or Social Security commencement. Those are the years to examine first.
3. Before converting, check IRMAA thresholds for the year you turn 65 and work backward two years. Size conversions with that ceiling in mind.
4. If you want a second opinion on whether the math works in your specific situation, the next step is a conversation about fit.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Tax law changes frequently, so verify current rules before acting. Consult with qualified professionals for guidance specific to your situation.