Roth Conversion Strategy: The Advisor’s Complete 2026 Guide

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Your client is 62, just retired, and sitting on $1.2M in a traditional IRA. They won’t take Social Security until 67. They have no earned income.

For the next five years, their taxable income is essentially zero.

This is the Roth conversion window. For most retirees, it’s the single most valuable tax planning opportunity they’ll ever have. The question for this client isn’t whether to convert. It’s how much, in which years, and how to avoid triggering costs that eat into the benefit.

This guide covers the full strategy: when the window opens, how to size conversions year by year, how to avoid IRMAA surprises, and how to present the multi-year plan to clients in a way that builds confidence and drives action.

What Is a Roth Conversion?

A Roth conversion moves money from a pre-tax retirement account (traditional IRA, 401(k), 403(b)) into a Roth IRA. You pay income tax on the converted amount now; in return, the money grows tax-free and qualified withdrawals are never taxed again. There is no annual limit on conversion amounts, and no income restriction (unlike Roth IRA contributions, which phase out at $242,000-$252,000 MAGI for married couples in 2026).

The math is simple: pay tax now at a known rate to eliminate tax later at an unknown rate.

The 2026 landscape: what changed

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently extended the TCJA tax rate structure. For a full breakdown of every OBBBA change that affects retirement plans, see our TCJA sunset and OBBBA advisor guide. The 10/12/22/24/32/35/37% brackets are no longer scheduled to sunset.

What this means for advisors: The “convert now before rates go up in 2026” urgency narrative is gone. Tax rates at the federal level are staying where they are. But that doesn’t make Roth conversions less valuable. It shifts the conversation from “rates are going up” to three stronger arguments:

1. Your client’s personal rate is going up. RMDs at 73 (or 75 for those born 1960+) will push them into higher brackets whether federal rates change or not.
2. The new OBBBA senior deduction creates a hidden planning wrinkle that adds an effective 6% surtax in certain income ranges (more on this below), but it also increases the size of the “0% bracket” for the next few years.
3. Tax-free compounding over 20-30 years is enormously valuable regardless of rate changes. A $100,000 conversion growing at 7% for 25 years becomes $542,743 of completely tax-free money.

Key rules every advisor should know

• No annual limit on how much you can convert. Unlike Roth contributions ($7,500 for 2026, $8,500 for 50+, $11,250 for ages 60-63 under SECURE 2.0 super catch-up), conversions have no dollar cap.
• Conversions are irrevocable. Once converted, you cannot undo it.
• The 5-year rule: If the Roth owner is under age 59.5, each conversion has its own 5-year clock for withdrawals of the converted funds to be free from a 10% penalty. (The 5-year rule blocks investors from using Roth conversions as a way to get funds out of traditional retirement accounts penalty free.) For clients over 59.5, the early withdrawal penalty rule is moot. There’s still a 5-year rule on getting Roth earnings out penalty free if the client has never had a Roth: earnings aren’t tax-free until 5 years after the first Roth account is opened. This is a good reason to open a small Roth as soon as reasonable.
• The pro-rata rule: You can’t cherry-pick which dollars to convert. See the worked example below.
• Backdoor Roth is still permitted. OBBBA did not restrict nondeductible contributions followed by conversion, despite earlier House proposals that would have closed this door.

The pro-rata rule: a worked example

All traditional, SEP, and SIMPLE IRA balances are aggregated by the IRS. The formula uses December 31 balances of the conversion year.

Scenario: Your client has a $300,000 traditional IRA (all pre-tax) and a $50,000 traditional IRA from nondeductible contributions (after-tax basis of $50,000). They want to convert $100,000.

• Total traditional IRA balance: $350,000
• After-tax basis: $50,000
• Tax-free percentage: $50,000 / $350,000 = 14.3%
• Of the $100,000 conversion: $14,286 is tax-free, $85,714 is taxable

They can’t just convert the $50,000 after-tax IRA and pay zero tax. The IRS treats it as one pool.

When to Do a Roth Conversion: The Retirement Gap Window

For many clients, the best time to do a Roth conversion is during the years between retirement and the start of Required Minimum Distributions (age 73 for those born 1951-1959, age 75 for those born 1960+), when taxable income is at its lowest and the most bracket space is available.

For most clients, this gap is 5-12 years. During this window:

• Earned income is gone or reduced
• Social Security may not have started yet
• RMDs haven’t kicked in
• The client is in the lowest tax brackets they’ll see for the rest of their life

The mistake most advisors make: waiting too long. Once RMDs start, they push the client into higher brackets, and the conversion window effectively closes. Every year that passes without conversions is bracket space permanently lost.

Three client scenarios

Scenario A: The typical retiree couple
– Ages 63 and 62, both recently retired
– $1.4M in traditional IRAs, $200K taxable, $300K Roth
– Social Security at 67: $48,000/year combined
– No pension, no earned income

Conversion window: 10 years (ages 63-72) before RMDs at 73.
Without conversions: RMDs start at ~$54,000/year. Combined with $48,000 Social Security, that’s $102,000+ taxable income, firmly in the 22% bracket.
Optimal strategy: Convert $85,000-$100,000/year, filling through the top of the 22% bracket. 10-year tax savings: approximately $52,000. Lifetime benefit with tax-free growth: $120,000+.

Scenario B: The single high earner
– Age 66, recently retired
– $650,000 traditional IRA, $150K taxable, $100K Roth
– Social Security at 70: $38,000/year
– Small pension: $12,000/year

Conversion window: 7 years (ages 66-72). Shorter window, but the pension eats bracket space.
Key constraint: The $12,000 pension plus standard deduction ($18,150 for single 65+) leaves less room in lower brackets.
Optimal strategy: Convert $50,000-$65,000/year, staying within the 22% bracket ($105,700 for single filers). IRMAA threshold for single filers is $109,000; this client must be careful not to breach it.

Scenario C: The high-net-worth early retiree
– Ages 58 and 56, both retired (tech industry)
– $3.2M in traditional IRAs/401(k), $800K taxable, $400K Roth
– No Social Security for 9+ years, no pension

Conversion window: 15-17 years. Longest window, largest IRA.
Challenge: The sheer size of the traditional balance. Even aggressive conversions up to certain brackets won’t eliminate RMDs entirely.
Optimal strategy: Convert $150,000-$200,000/year, filling through the 24% bracket ($403,550 MFJ). Under 59.5, so the 5-year penalty rule applies to converted amounts, but the couple can fund living expenses from the $800K taxable account. Over 15 years, this converts $2.25-$3M to Roth, dramatically reducing future RMDs.

How to Determine the Right Conversion Amount Per Year

The right Roth conversion amount fills the current tax bracket to its upper limit without spilling into the next bracket or crossing an IRMAA cliff (if age 63+). For a married couple with no other income in 2026, the conversion capacity in the 12% bracket alone is approximately $133,000.

Several factors make the calculation complex:

1. Current year income: W-2, 1099, pension, or Social Security occupies bracket space first
2. State taxes: California (13.3% top rate) vs. Texas or Florida (0%) changes the optimal amount
3. IRMAA brackets: Medicare surcharges are based on MAGI from two years prior
4. Capital gains interaction: Large conversions can push capital gains from 0% to 15%+
5. The OBBBA senior deduction phaseout (new for 2025-2028)

The bracket-filling approach

Start with the 2026 standard deduction: $32,200 for married filing jointly ($35,500 with both spouses 65+, adding $1,650 each). This is tax-free income space. Then fill upward:

2026 brackets for married filing jointly:

Bracket	Taxable income range	Tax rate	Conversion sweet spot?
10%	$0 to $24,800	10%	Fill this first
12%	$24,801 to $100,800	12%	Primary target for most clients
22%	$100,801 to $211,400	22%	Worth filling if IRMAA allows
24%	$211,401 to $403,550	24%	Only for high-NW clients with long windows
32%	$403,551 to $512,450	32%	Rarely optimal

2026 brackets for single filers:

Bracket	Taxable income range	Tax rate	Conversion sweet spot?
10%	$0 to $12,400	10%	Fill this first
12%	$12,401 to $50,400	12%	Primary target
22%	$50,401 to $105,700	22%	Watch IRMAA at $109,000
24%	$105,701 to $201,775	24%	Only if warranted

For a married couple with zero other income, the total conversion in the 12% bracket: $32,200 (standard deduction) + $100,800 (top of 12%) = $133,000 at a blended rate of about 10%. That’s an extraordinary amount of money moving to tax-free status at a very low cost.

The OBBBA senior deduction: the hidden rate increase

Here’s something almost no one is accounting for yet. The OBBBA created a new above-the-line deduction for taxpayers 65+: $6,000 per qualifying person ($12,000 for a married couple both 65+). It’s available whether you itemize or take the standard deduction.

But it phases out at 6% of MAGI above $150,000 (MFJ) or $75,000 (single).

What this means in practice (MFJ, both 65+):

MAGI	Senior deduction remaining	Lost deduction	Effective rate in 22% bracket
$150,000	$12,000 (full)	$0	22.0%
$200,000	$9,000	$3,000	23.3% (22% + ~1.3% from lost deduction)
$250,000	$6,000	$6,000	23.3%
$300,000	$3,000	$9,000	23.3%
$350,000	$0 (fully phased out)	$12,000	22.0% (phaseout complete)

The phaseout adds an effective 1.3 percentage points to the marginal rate throughout the $150K-$350K MAGI range (6% phaseout rate x 22% tax rate on the lost deduction). In the 24% bracket, the effective addition is 1.4 points.

This may not sound dramatic, but over a 10-year conversion strategy, the cumulative impact on a couple converting $100,000/year in this range is $2,600-$2,800 in additional taxes they weren’t planning for. More importantly, it may shift the optimal conversion amount for clients near the $150,000 or $350,000 thresholds.

This deduction is temporary (2025-2028 only). For clients 65+ during these four years, conversion sizing requires extra precision. For clients turning 65 after 2028, this doesn’t apply.

IRMAA Bracket Management: The Hidden Cost Most Advisors Miss

IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare surcharge based on modified adjusted gross income from two years prior. For the full bracket tables and planning strategies, see our complete 2026 IRMAA brackets guide. Roth conversions count as income for IRMAA purposes, and the brackets are cliffs, not graduated: crossing a threshold by even $1 triggers the full surcharge for the entire year. How you coordinate conversions with your client’s Social Security claiming strategy compounds the complexity. For those age 63+ who will have Medicare at age 65+, this is an important consideration. This also makes Roth conversions before age 63 all the more valuable.

2026 IRMAA brackets (based on 2024 income):

Single	Married filing jointly	Part B premium (monthly, per person)	Part D surcharge (monthly, per person)	Annual cost increase (couple)
Up to $109,000	Up to $218,000	$202.90 (standard)	$0.00	$0
$109,001-$137,000	$218,001-$274,000	$284.10	$14.50	$3,902
$137,001-$171,000	$274,001-$342,000	$405.80	$37.50	$7,306
$171,001-$205,000	$342,001-$410,000	$527.50	$60.40	$10,694
$205,001-$499,999	$410,001-$749,999	$649.20	$83.30	$14,098
$500,000+	$750,000+	$689.90	$91.00	$15,074

The “Annual cost increase (couple)” column is what matters for planning. Going from the standard tier to the first surcharge tier costs a married couple $3,902 per year in additional premiums.

The IRMAA planning sequence:

1. Determine the client’s base MAGI without conversions (Social Security, pension, investment income)
2. Identify which IRMAA tier they fall in
3. Calculate the maximum conversion that keeps them in the current tier
4. Compare the tax savings from converting MORE (and accepting the IRMAA hit) versus converting LESS (and staying below the cliff)

When to accept the IRMAA cost: If the conversion is large enough and the client is young enough, the long-term tax-free growth can outweigh the IRMAA surcharge. A $200,000 conversion that triggers $3,902 in IRMAA costs but saves $12,000 in future taxes is worth it. A $60,000 conversion that triggers the same $3,902 but only saves $2,000 in future taxes is not.

How Roth Conversions Are Taxed

Roth conversions are taxed as ordinary income in the year of conversion, at your client’s marginal tax rate. The converted amount is added to all other income, and tax should be paid from outside funds (not from the converted amount) to maximize the tax-free growth benefit.

Clients need to understand three things:

1. The converted amount is ordinary income.
If a client converts $80,000, that’s $80,000 added to their taxable income. It’s taxed at the marginal rate, not a special capital gains rate.

2. Pay the tax from outside the Roth.
If a client converts $80,000 and uses $18,000 from the conversion to pay the tax, only $62,000 actually grows tax-free. That $18,000 used for taxes represents $97,500 of lost tax-free growth over 25 years (at 7%). Best practice: pay the conversion tax from a taxable brokerage account.

3. The 5-year rule depends on age.
For clients already over 59.5, the conversion penalty rule is moot; they can access converted principal anytime. The 5-year rule on earnings still applies: earnings on contributed or converted amounts aren’t tax-free until 5 years after the first Roth account is opened. This is a good reason to open a small Roth as soon as reasonable.

The conversation that works

Most clients hear “pay tax now” and flinch. Here’s the framing that gets them past it:

“You’re going to pay tax on this money eventually. Right now you’re in the 12% bracket. When RMDs start in 10 years, you’ll be in the 22% bracket, and that directly affects your retirement paycheck. That’s nearly double the rate. Every $100,000 we convert now saves roughly $10,000 compared to withdrawing it later. And once it’s in the Roth, the growth is never taxed. Over 20 years, that $100,000 becomes over $380,000 of completely tax-free money.”

Show them two scenarios side by side: total lifetime taxes with conversions vs. without. When clients see the specific dollar difference, the decision becomes straightforward.

Presenting the Roth Strategy to Clients

Advisors who convert clients successfully share one trait: they make the multi-year math visible in a single view. Not a 40-page report. Not a Monte Carlo histogram. A clear picture of what happens, when, and why.

What works:

1. Two-scenario comparison. Show the client’s plan with no conversions alongside the recommended strategy. Let them see the cumulative tax difference over 10, 20, and 30 years. The gap between the two lines on a chart is the value of your advice.

2. Year-by-year timeline. “In 2026 we convert $85,000, in 2027 we convert $90,000…” all the way through. The progression from “mostly pre-tax” to “mostly Roth” is powerful when clients can see it unfold year by year.

3. Portfolio composition shift. Show the portfolio going from 70% pre-tax / 30% Roth to 30% pre-tax / 70% Roth over the conversion period. Clients understand pie charts. This visualization often gets the biggest reaction.

4. The expenses view. Show how much they’ll pay in taxes each year under each strategy. The years of higher tax (during conversion) followed by decades of lower tax (after conversion) tells the story clearly. Clients accept short-term cost when they can see the long-term payoff.

Roth Conversion Planning Software: What to Look For

Manual Roth conversion analysis works for a single year. But a 10-year conversion strategy involving tax brackets, IRMAA thresholds, Social Security taxation, state taxes, and now the senior deduction phaseout is not a spreadsheet problem. Finding the best Roth conversion software for advisors matters because of this complexity. The interactions between these variables produce results that are often counterintuitive.

What the right tool gives you:

• Multi-strategy comparison. Run “no conversion” vs “fill 12%” vs “fill 22%” vs “fill 24%” and see total lifetime taxes under each. The optimal strategy is often not the one you’d guess.
• IRMAA cliff modeling. Many planning tools ignore Medicare surcharges entirely. The best ones show IRMAA brackets alongside tax brackets so you can see both cliffs simultaneously.
• OBBBA senior deduction integration. This is new for 2025-2028 and most tools haven’t caught up. Ask your vendor if they model it.
• Social Security taxation. Conversion income can make up to 85% of Social Security benefits taxable. This hidden interaction often changes the optimal conversion amount by $10,000-$20,000.
• Client-ready output. The analysis is only as good as your ability to present it. Look for clear visual comparisons you can walk through in a meeting, not spreadsheet exports.
• Custodial integration. Pulling live balances from Schwab, Fidelity, Orion, and other custodians lets you run scenarios on current data in minutes, not hours.

Income Lab’s Tax Lab handles multi-year Roth conversion analysis with IRMAA bracket management, Social Security interaction, and side-by-side strategy comparison. For advisors comparing retirement tax tools, see our Income Lab vs. Income Solver analysis. Book a 30-minute demo to see how it works with your client scenarios.

Common Roth Conversion Mistakes

The most common Roth conversion mistakes are converting too much in a single year (triggering higher brackets or IRMAA), paying the tax from the IRA itself, and failing to account for the interplay between federal brackets, state taxes, and the new senior deduction.

1. Converting too much in one year.
A client who converts $300,000 in one year instead of $100,000/year for three years pays roughly $15,000 more in federal tax (jumping from 22% to 32% on the excess). Spread the conversions over multiple years to stay in lower brackets.

2. Ignoring IRMAA cliffs.
A $100,000 conversion that saves $3,000 in future taxes but triggers $3,902 in IRMAA surcharges is a net loss of $902. Always check IRMAA thresholds before sizing the conversion. A $95,000 conversion that stays below the cliff saves more in net terms.

3. Paying the tax from the IRA.
A client who converts $100,000 and withholds $22,000 for taxes only grows $78,000 tax-free. The $22,000 used for taxes, if left invested at 7% for 25 years, would have been worth $119,258 tax-free. Using outside funds for the tax bill is one of the highest-value decisions in the entire strategy.

4. Forgetting state taxes.
A client in California pays 9.3-13.3% on top of federal rates. A $100,000 conversion in the federal 22% bracket costs 22% in California, totaling 31.3-35.3%. The same conversion in Florida costs 22%. The optimal conversion amount differs dramatically by state.

5. Ignoring the new senior deduction phaseout.
For 2025-2028, clients 65+ face an effective 1.3-1.4 percentage point addition to their marginal rate on MAGI between $150K-$350K (MFJ). Over a 4-year conversion window in this range, that’s $2,600-$2,800 in unexpected taxes. Small enough to miss, large enough to matter.

6. Not starting early enough.
Every year between retirement and RMDs that passes without conversions is bracket space permanently lost. A client who retires at 62 and doesn’t start converting until 68 has lost 6 years of 10% and 12% bracket space. At $133,000/year in the 12% bracket, that’s $798,000 of conversion capacity gone.

7. Treating it as a one-year decision.
The optimal conversion amount in year 1 depends on the plan for years 2-10. If you convert too aggressively in years 1-3, you may run out of pre-tax balance before the window closes, leaving bracket space unused in years 8-10. Model the full window, not one year at a time.

The Bottom Line

Roth conversions remain one of the highest-value services an advisor can provide, even with TCJA rates now permanent. The case has shifted from “beat the sunset” to “beat your client’s future RMDs, IRMAA cliffs, and Social Security taxation.” That case is just as strong, and the math often favors larger and earlier conversions than most advisors default to.

The advisors who do this best share three traits: they start planning the year the client retires, they model the full conversion window (not just this year), and they present the comparison in a format clients can see and feel. The gap between “you have an 83% probability of success” and “here’s exactly how much you can convert this year, what it costs in taxes, and what it saves you over the next 20 years” is the gap between average advice and advice that builds trust for life.

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Income Lab’s Tax Lab automates multi-year Roth conversion analysis with IRMAA bracket management, Social Security interaction, and side-by-side strategy comparison. Book a 30-minute demo to see it with your client scenarios.

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Continue Reading

• IRMAA Brackets 2026: The Complete Guide for Financial Advisors
• State Taxes in Retirement: The Complete Advisor Guide
• Income Lab vs. RightCapital: An Honest Comparison
• See how Tax Lab handles multi-year Roth conversion analysis

Frequently Asked Questions

When is the best time to do a Roth conversion?

For many clients, the most valuable Roth conversion window is during the years between retirement and the start of Required Minimum Distributions (age 73 or 75 depending on birth year). During this gap, earned income is gone, Social Security may not have started, and RMDs haven’t kicked in, leaving clients in the lowest tax brackets they’ll see for the rest of their lives. Every year that passes without conversions is bracket space permanently lost.

How much should I convert to a Roth IRA each year?

The right conversion amount fills the current tax bracket to its upper limit without spilling into the next bracket or, for clients age 63+, crossing an IRMAA cliff. For a married couple with no other income in 2026, the conversion capacity in the 12% bracket alone is approximately $133,000 at a blended rate of about 10%. The optimal amount varies based on existing income, state taxes, and the client’s full conversion window.

What is the 5-year rule for Roth conversions?

There are two separate 5-year rules. First, if the Roth owner is under age 59.5, each conversion has its own 5-year clock before the converted funds can be withdrawn penalty-free. Second, there is a 5-year rule on earnings: earnings on contributed or converted amounts aren’t tax-free until 5 years after the first Roth account is opened. For clients over 59.5, only the earnings rule matters. Opening a small Roth early starts the clock.

How does the OBBBA senior deduction affect Roth conversions?

The OBBBA created a new $6,000 per-person deduction for taxpayers 65+ (2025-2028 only). For a married couple both 65+, that’s $12,000 in additional deduction space that creates Roth conversion headroom at zero incremental tax cost. Over the four-year window, that’s up to $48,000 of effectively free Roth conversions. However, the deduction phases out at 6% of MAGI above $150,000 MFJ, adding an effective 1.3 percentage points to the marginal rate in the phaseout range.

Should I pay Roth conversion taxes from the IRA or outside funds?

Always pay the tax from outside the Roth, typically from a taxable brokerage account. If a client converts $100,000 and withholds $22,000 for taxes, only $78,000 grows tax-free. That $22,000, if left invested at 7% for 25 years, would have been worth roughly $119,000 tax-free. Using outside funds for the tax bill is one of the highest-value decisions in the entire strategy.