When Linda Cheng retired from her school district job at 62, she had $480,000 in a traditional IRA, a modest pension, and no plans to touch Social Security until 70. She fell into the 12 percent federal bracket in her first year of retirement. By the time required minimum distributions would kick in at 73, her own projections showed RMDs and Social Security stacking together to push her well into the 22 percent bracket, possibly the 24 percent. Her CPA suggested she start converting chunks of her IRA to a Roth each year while her income was low. “I’m paying tax now at a rate I’ll probably never see again,” Cheng said. “That was the pitch, and the math backed it up.”
Her situation is not unusual. Millions of retirees in their early-to-mid 60s are sitting in a temporary low-tax window, and a growing number of financial planners say it is the single best time to execute Roth conversions. The concept is simple: move money from a traditional IRA to a Roth IRA, pay income tax on the converted amount at today’s rate, and never pay tax on that money or its growth again. There is no age limit and no income cap on conversions, a rule that has been in place since the Tax Increase Prevention and Reconciliation Act of 2005 eliminated the old $100,000 income restriction effective in 2010. The mechanics are laid out in IRS Publication 590-B: converted dollars are added to ordinary income for the year, taxed at the marginal rate, and then they grow tax-free inside the Roth permanently.
For retirees with six-figure traditional IRA balances, the potential savings are substantial. A retiree who converts $50,000 to $80,000 per year over a five- to eight-year window before RMDs begin can save $20,000 to $50,000 or more in lifetime federal taxes compared to letting the money sit and taking forced distributions, according to retirement projection models commonly used by fee-only financial planners. The exact figure depends on IRA size, other income sources, investment returns, life expectancy, and future tax rates. But the core principle holds: filling lower brackets now beats being forced into higher ones later.
Why the years between retirement and RMDs are so valuable
Under the SECURE 2.0 Act, signed into law in December 2022, required minimum distributions begin at age 73 for people born between 1951 and 1959, and at age 75 for those born in 1960 or later. Once RMDs start, the IRS dictates how much must come out each year based on account balances and life expectancy tables published in Publication 590-B. That money is taxed as ordinary income whether you need it or not.
The years between leaving full-time work and hitting the RMD age are often the lowest-income stretch a retiree will ever experience. Paychecks have stopped. Social Security may not have started yet or is only partially claimed. Pension income, if any, may be modest. During this window, a retiree can deliberately “fill up” the 10 percent, 12 percent, and even 22 percent federal tax brackets with Roth conversion income, paying a known, relatively low rate on money that would otherwise be taxed at a higher rate down the road.
Consider a married couple, both 63, with $800,000 in traditional IRAs and $40,000 in combined Social Security benefits starting at 65. If they convert $80,000 per year from ages 63 to 72, they move the full $800,000 into Roth accounts over a decade, paying tax on each conversion at rates that stay mostly in the 12 percent and 22 percent brackets. Without conversions, their RMDs starting at 73 could exceed $30,000 in the first year alone, stacking on top of Social Security and pushing them into the 24 percent bracket or higher. The cumulative tax difference over a 20-year retirement varies significantly based on portfolio growth, sequence of returns, and future bracket adjustments.
Vanguard’s BETR research, published in July 2025, suggests that simple before-and-after bracket comparisons can overstate the benefit because they ignore the opportunity cost of paying conversion taxes from outside the IRA. For a couple with this profile, tens of thousands of dollars in lifetime federal tax savings is realistic, but the precise figure depends on how those variables play out in practice.
The Medicare surcharge most people overlook
Federal income tax is only part of the equation. Medicare Part B and Part D premiums are adjusted upward for higher-income beneficiaries through the Income-Related Monthly Adjustment Amount, known as IRMAA. The Centers for Medicare & Medicaid Services publishes updated premium tables annually. For 2026, the standard Part B premium is $202.90 per month, but beneficiaries with modified adjusted gross income above $109,000 (single) or $218,000 (married filing jointly) pay surcharges that can more than double that amount. Because IRMAA applies in five surcharge brackets, surcharges scale upward to a maximum total Part B premium of $689.90 a month for single filers earning above $500,000.
Here is the detail that catches people off guard: IRMAA is calculated using your tax return from two years prior. A large Roth conversion in 2026 would affect Medicare premiums in 2028. A retiree who converts $150,000 in a single year to “get it over with” might trigger thousands of dollars in extra Medicare costs 24 months later. Spreading conversions across multiple years keeps annual MAGI lower and can help avoid crossing IRMAA thresholds entirely.
Some retirees assume they can appeal the surcharge. The Social Security Administration does allow IRMAA reconsideration after qualifying life-changing events, such as retirement, the death of a spouse, marriage, divorce, work stoppage or reduction, loss of pension income, or loss of income from income-producing property due to disaster, through the process described on the SSA’s IRMAA reduction page. But a voluntary Roth conversion does not qualify as a life-changing event. If a conversion spikes your income, you pay the higher premium with no avenue for relief.
The pro-rata rule and other mechanical traps
Retirees who made nondeductible contributions to a traditional IRA sometimes believe they can convert just those after-tax dollars and owe nothing. The IRS does not allow cherry-picking. Under the pro-rata rule, detailed in the instructions for Form 8606, the taxable portion of any conversion is calculated based on the ratio of pre-tax to after-tax money across all of your traditional IRA accounts, not just the one you convert from.
Example: if you have $200,000 total in traditional IRAs and $20,000 of that is nondeductible (after-tax) basis, only 10 percent of any conversion is tax-free. Convert $50,000 and $45,000 of it is taxable. The workaround is to roll pre-tax IRA money into an employer 401(k) plan that accepts incoming rollovers, isolating the after-tax basis for a cleaner conversion. Not every employer plan allows this, so check plan documents before executing the strategy.
Another trap worth knowing: the five-year rule. Each Roth conversion starts its own five-year clock. Withdraw converted funds before five years have passed and before age 59½, and a 10 percent early withdrawal penalty applies to the converted amount. For most people over 60, this is not a practical concern since they have already cleared the age threshold. But it matters for anyone converting before 59½ or for those who might need the funds on short notice.
Coordinating with Social Security, state taxes, and ACA subsidies
The timing of Social Security benefits interacts directly with conversion planning. Delaying Social Security past full retirement age increases the monthly benefit by 8 percent for each year of delay, up to age 70, according to the Social Security Administration, and it also keeps MAGI lower during the prime conversion years. Some planners recommend using taxable savings or small Roth withdrawals to cover living expenses while converting aggressively and delaying benefits. Others prefer starting Social Security earlier and converting smaller amounts each year. The right approach depends on health, longevity expectations, spousal benefit coordination, and total portfolio size.
For early retirees who are not yet 65 and buy health insurance through the ACA marketplace, conversion income carries an additional cost that is easy to miss. ACA premium subsidies are based on modified adjusted gross income, and a Roth conversion that significantly raises income can reduce or eliminate premium tax credits. The exact phase-out structure has changed several times in recent years and varies by household composition and state, so the precise impact of a given conversion amount requires modeling against current subsidy rules. A $60,000 conversion could cost a 62-year-old couple several thousand dollars in lost subsidies for that year. Planners who work with pre-Medicare retirees typically model ACA subsidy effects alongside tax brackets before recommending a conversion amount.
State taxes add yet another variable. As of mid-2026, nine states levy no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Several others exempt retirement income or offer partial exclusions. A retiree in Texas pays zero state tax on conversions. A retiree in California or New York could owe an additional 9 percent to 13 percent on the same conversion. For people considering a move in retirement, the state tax landscape can shift the breakeven math significantly. Federal contribution and deduction rules are governed by IRS Publication 590-A, but each state’s department of revenue sets its own treatment of conversion income.
What could change the math?
No tax strategy is permanent. Congress can alter brackets, redefine Roth treatment, or change RMD rules at any time. The SECURE 2.0 provisions that raised the RMD age were themselves a departure from earlier law, and future legislation could push the age higher, lower it, or restructure how distributions are taxed. There is no specific proposal in the current congressional session to eliminate tax-free Roth withdrawals, but the possibility is a background risk in any multi-decade plan.
Inflation adjustments to tax brackets and IRMAA thresholds also matter. If brackets rise faster than a retiree’s income, the urgency to convert diminishes. If brackets stagnate or narrow, the case for converting sooner gets stronger. Because no one can predict these shifts with certainty, most planners recommend converting each year enough to fill current brackets without spilling into the next one: a disciplined annual approach rather than a single large move.
Investment performance inside the Roth after conversion is another unknown. The entire value proposition rests on the idea that tax-free growth over 10, 20, or 30 years will outweigh the upfront tax cost. A prolonged market downturn shortly after conversion could mean you paid tax on a higher balance than the account ultimately holds. Strong growth, on the other hand, magnifies the benefit because every dollar of gain escapes taxation permanently.
The Tax Cuts and Jobs Act of 2017 set the current bracket structure that runs through 12 percent, 22 percent, 24 percent, 32 percent, and 35 percent. The One Big Beautiful Bill Act extended these rates beyond their original 2025 expiration. A future Congress could change them at any time, and the case for converting now hinges partly on the assumption that current rates are unlikely to drop and may eventually rise.
The estate planning angle that seals the deal for many families
One motivator that often tips the decision: what happens to the account after you die. Under the SECURE Act of 2019, most non-spouse beneficiaries who inherit a traditional IRA must empty it within 10 years, and those distributions are taxed as ordinary income to the heir. For adult children in their peak earning years, inheriting a large traditional IRA can mean paying federal tax at the 32 percent or 35 percent bracket on every dollar withdrawn.
Inherited Roth IRAs are subject to the same 10-year distribution rule, but the withdrawals are tax-free. A retiree who converts $400,000 from a traditional IRA to a Roth over several years, paying tax at the 12 percent and 22 percent brackets, effectively locks in those lower rates for the benefit of heirs who would otherwise pay far more. For families where the next generation earns a high income, this transfer of tax burden from a higher-bracket heir to a lower-bracket retiree can be one of the most efficient wealth-transfer moves available outside of formal estate planning tools.
Who should act, and who should wait
The strongest candidates for post-60 Roth conversions share a few characteristics: they have substantial traditional IRA balances, they are in a temporarily low tax bracket, they have cash outside the IRA to pay the conversion tax so the full converted amount stays invested in the Roth, and they expect to live long enough for tax-free compounding to outweigh the upfront cost.
Retirees who are already in a high bracket, who lack liquid funds to cover the tax bill, or who expect to need the money within a few years may find the strategy less compelling. The same goes for anyone whose state imposes a steep income tax and who has no plans to relocate.
Running the numbers with a tax professional or a detailed retirement projection tool is not optional here. The interaction between conversion amounts, Social Security timing, IRMAA thresholds, ACA subsidies, state taxes, and estate planning goals creates too many variables for a rough estimate. A qualified CPA or fee-only financial planner can model multiple scenarios and pinpoint the annual conversion amount that maximizes after-tax wealth without triggering unnecessary surcharges.
The rules are clear, the window is finite, and for retirees in their 60s with the right profile, a well-planned series of Roth conversions remains one of the most effective legal tools available to cut lifetime taxes and shield retirement income from future policy shifts.
