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How Much Should You Convert to a Roth IRA Each Year?
As we move into the back half of the year, investors begin to ask, “How can I optimize my tax situation when it comes to retirement accounts?” More specifically, how to size a Roth conversion without creating an unwelcome tax surprise. A conversion moves money from a traditional IRA into a Roth IRA. You pay ordinary income tax on the amount converted today, then enjoy tax-free growth and withdrawals later—plus the meaningful advantage of no required minimum distributions. There is no IRS limit on how much you can convert in a given year. That flexibility is both the opportunity and the risk. Convert too little and you may leave long-term tax savings unrealized. Convert too much and you can push yourself into a higher bracket or trigger higher Medicare premiums.
Start with the Timing Opportunity
Many of our clients find the most efficient window occurs in the years after they stop working full-time but before Social Security benefits begin and before RMDs start (age 73 for those born 1951–1959, or age 75 for those born in 1960 or later). Income is often at its lowest during these “gap years,” giving greater control over taxable income and more room to convert at favorable rates.
Size the Conversion to Fill Your Current Bracket
The IRS treats the converted amount as ordinary taxable income in the year of the conversion. The practical approach most of us recommend is to convert only enough to fill your current marginal tax bracket without spilling into the next higher one.For 2026, begin by projecting your taxable income from all sources, then subtract your standard or itemized deduction. The standard deduction this year is $16,100 for single filers and $32,200 for married couples filing jointly. Next, identify the top of your current bracket and calculate the remaining room.Consider a single filer with $80,000 of gross income. After the $16,100 standard deduction, taxable income is $63,900—placing the individual in the 22% bracket, which runs up to $105,700. That leaves roughly $41,800 of capacity. Converting approximately that amount keeps the entire conversion taxed at 22%.
Watch the IRMAA Thresholds
Higher-income households need an extra layer of care. Roth conversions increase modified adjusted gross income, and Medicare looks at MAGI from two years earlier when setting Part B and Part D premiums. For 2026 premiums, the first IRMAA threshold begins above $109,000 for single filers and $218,000 for joint filers (based on 2024 MAGI). Crossing those lines can raise monthly premiums for two years, so the conversion math must include this cost.
Remember the Five-Year Rule
Each conversion carries its own five-year holding period. To withdraw the converted principal and earnings both tax- and penalty-free, the five-year clock must be satisfied and you must be at least 59½. Early withdrawals of converted amounts can trigger a 10% penalty plus ordinary income tax on earnings.
Putting the Pieces Together
The right conversion amount depends on your current versus expected future tax rates, Medicare situation, other income sources, and overall plan. Conversions tend to work best when you anticipate higher rates later or simply want greater flexibility and the absence of RMDs. Because every conversion is permanent, we model the numbers carefully for clients—looking at multi-year tax projections, IRMAA exposure, and cash-flow needs so the strategy supports the broader financial plan rather than standing alone. If you are evaluating a Roth conversion for 2026 or the years ahead, we are glad to run the projections with you and help quantify both the opportunity and the trade-offs. A well-timed, carefully sized conversion can meaningfully improve the after-tax efficiency of a retirement portfolio.
