Roth Conversions Before RMDs: A 2026 Guide for $500K-$5M Retirees

A Roth conversion is easy to describe: move money from a pre-tax IRA or eligible retirement plan into a Roth account, include the taxable portion in income now, and create a source of potentially tax-free retirement money later.

The difficult question is not whether Roth accounts are attractive. It is whether paying tax today improves your lifetime result.

For retirees and pre-retirees with $500,000 to $5 million invested, that answer usually depends on five moving parts: your current marginal tax rate, future required minimum distributions, Medicare IRMAA, Social Security timing, and the tax consequences for a surviving spouse. A conversion can coordinate those pieces—or make several of them more expensive at once.

This guide explains how to evaluate Roth conversions before RMDs, how much to consider converting each year, and the situations where a conversion can backfire. The goal is not to convert the largest possible amount. The goal is to deliberately buy future tax flexibility at a price that makes sense.

What a Roth conversion actually changes

A Roth conversion moves dollars from a traditional IRA, SEP IRA, SIMPLE IRA after applicable holding requirements, or eligible employer plan into a Roth account. The IRS generally includes previously untaxed converted dollars in gross income for the conversion year. IRA conversions are reported on Form 8606.

The trade is straightforward:

- You give up tax deferral on the converted amount today. - Future qualified Roth withdrawals can be tax-free. - Roth IRAs do not require lifetime RMDs for the original owner. - The smaller pre-tax balance can produce smaller future RMDs. - You gain another account to draw from when managing future tax brackets, capital gains, and Medicare premiums.

A conversion is not an all-or-nothing decision. Partial annual conversions are often more useful than one large conversion because they let you manage bracket space, Medicare thresholds, and changing markets year by year.

One rule deserves special attention: a Roth conversion completed in 2018 or later cannot be recharacterized. In plain English, you generally cannot undo it because the market falls or the tax bill is larger than expected. That makes careful sizing essential.

Why the years before RMDs can be valuable

The best conversion window often appears after work income stops but before Social Security, pensions, and RMDs are all running at full speed. Taxable income can temporarily fall even though the household remains financially secure.

Under current IRS rules, traditional IRA owners generally begin RMDs at age 73. The first IRA RMD is normally due by April 1 of the following year, although delaying the first distribution can bunch two RMDs into one tax year. Roth IRAs do not require distributions while the original owner is alive.

That creates a planning window for someone who retires at 62, 65, or 68. During those years, a retiree may be able to recognize pre-tax IRA income intentionally instead of waiting for the IRS to force it later.

The opportunity is not simply “convert before age 73.” The real opportunity is to compare the marginal cost of a conversion now with the marginal cost of leaving the dollar in the traditional account. That future cost may include:

- Federal and state income tax on RMDs - More Social Security becoming taxable - Medicare Part B and Part D IRMAA surcharges - Higher rates for a surviving spouse filing as single - Compressed distributions for non-spouse heirs - Less control over taxable income during large spending years

If today’s conversion rate is lower than the rate likely to apply to those dollars later, converting can be attractive. If today’s rate is higher, deferral may still be the better asset.

Start with the 2026 tax brackets—but do not stop there

For tax year 2026, the IRS says the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. The 22% bracket for joint filers ends at $211,400 of taxable income, and the 24% bracket runs from there through $403,550. For single filers, the 22% bracket ends at $105,700 and the 24% bracket continues through $201,775.

These thresholds are useful guardrails, not automatic conversion targets. Taxable income is not the same as gross income or Medicare MAGI, and a conversion can affect other parts of the return. Capital gains, deductions, pension income, business income, tax-exempt interest, and Social Security can all change the calculation.

A practical annual process is to project the full tax return before choosing a conversion amount. Then model several amounts instead of one:

1. No conversion 2. A conversion that stays inside the current marginal bracket 3. A conversion that fills the next bracket 4. A conversion that approaches an IRMAA threshold 5. A larger conversion that knowingly crosses a threshold because the lifetime benefit may justify it

The best choice is sometimes the largest number, but often it is a measured amount that uses low-cost bracket space without stacking avoidable side effects.

Roth conversions and Medicare IRMAA

IRMAA is where otherwise sensible conversion plans frequently go wrong. Medicare uses modified adjusted gross income to determine income-related surcharges for Part B and Part D. Those surcharges behave more like steps than smooth tax brackets: crossing a threshold by a small amount can move a beneficiary into a higher premium tier.

CMS lists the 2026 standard Part B premium at $202.90 per month. For 2026, the first IRMAA tier begins above $109,000 for an individual or $218,000 for a married couple filing jointly. At the first tier, the total Part B premium is $284.10 per person per month, and Part D also carries an additional $14.50 per person per month. Higher tiers increase from there.

Those are 2026 Medicare figures, not permanent targets. Medicare normally looks back two years, and future thresholds are not yet known when you make today’s conversion. A 2026 conversion would generally influence 2028 Medicare premiums, using the thresholds applicable then. Build in a buffer rather than converting to the last dollar of a currently published line.

Crossing an IRMAA tier is not automatically a mistake. A household might rationally pay one year of higher Medicare premiums to avoid years of larger RMDs at higher tax rates. But it should be a conscious trade, measured alongside the conversion tax—not a surprise two years later.

How much should you convert before RMDs?

There is no universal percentage. The useful number is the amount that produces the strongest projected after-tax result across the household’s lifetime.

Use this five-step sizing framework.

Step 1: Estimate future pre-tax pressure

Project the traditional IRA and 401(k) balance to age 73 using conservative, base, and strong-return assumptions. Estimate the first RMD using the applicable IRS life-expectancy divisor, then layer in Social Security, pensions, interest, dividends, and recurring capital gains.

Do not judge the future tax rate from the RMD alone. The marginal rate is created by everything that lands on the return around it.

Step 2: Map your current conversion window

List each year before RMDs and note when the following begin:

- Retirement or a reduction in earned income - Social Security for each spouse - Pension income - Medicare enrollment - Deferred compensation payouts - Business or property sales - Charitable distributions from IRAs

The lowest-income years are often the best candidates, but a low-income year can be deceptive if it contains a large capital gain or if an ACA health-insurance subsidy is at risk before Medicare.

Step 3: Set tax and Medicare guardrails

Choose the highest marginal bracket you are willing to pay deliberately. Separately choose whether you want to stay below an estimated IRMAA tier, approach it with a buffer, or cross it intentionally.

Tax-bracket planning and IRMAA planning are not the same calculation. A conversion can fit comfortably inside a federal bracket and still raise Medicare costs.

Step 4: Decide how the tax will be paid

Conversions tend to work better when the tax can be paid from cash or a taxable account, leaving the full converted amount invested in the Roth. Paying the tax from the IRA reduces the amount that reaches the Roth and can create additional problems for anyone under age 59½.

Keep enough liquidity for estimated taxes and normal spending. A conversion should not force you to sell investments at an inconvenient time or drain the cash reserve that protects the retirement plan.

Step 5: Compare the lifetime scenarios

Measure more than cumulative federal tax. A useful comparison includes:

- Federal and state taxes through life expectancy - Medicare Part B and Part D premiums - After-tax portfolio value - Sustainable spending - The survivor’s tax return after the first spouse dies - Heir outcomes and charitable goals - Flexibility during market declines or large purchases

If the result only works under one precise return or tax-rate assumption, it is fragile. Partial conversions can reduce that forecast risk.

An illustrative $2.7 million household

Consider Mark and Elena, both 64, with $1.8 million in traditional IRAs, $700,000 in a taxable brokerage account, and $200,000 in Roth IRAs. They need $110,000 per year from their portfolio until Social Security begins.

Their first instinct is to spend the taxable account and avoid IRA taxes entirely. That keeps the current tax bill low, but it lets the $1.8 million pre-tax balance keep growing. By their 70s, RMDs could overlap with two Social Security benefits and portfolio income. If one spouse dies, the survivor may face single-filer tax brackets and single IRMAA thresholds while owning most of the same assets.

A staged strategy might look different:

- Use taxable cash flow and selected tax lots for spending. - Project the return each fall rather than guessing in January. - Convert a measured amount from the traditional IRA annually. - Keep projected MAGI below a chosen Medicare guardrail unless the long-term benefit clearly supports crossing it. - Delay the higher earner’s Social Security when appropriate for the broader plan. - Recalculate after market moves, tax-law changes, or major spending.

Suppose their projected MAGI before conversion is $85,000. A $100,000 conversion would bring estimated MAGI to roughly $185,000 before final tax adjustments. That may fit inside their chosen tax and Medicare range, but the advisor and tax professional still need to model capital gains, deductions, state tax, and future thresholds.

The right lesson is not that $100,000 is the magic number. It is that the conversion is sized from a coordinated income budget. A $25,000 conversion may leave valuable low-rate space unused; a $300,000 conversion may create a tax and IRMAA bill that the future savings cannot justify.

When Roth conversions tend to work well

Roth conversions before RMDs deserve serious consideration when several of these conditions are present:

- You retired before RMD age and have temporarily low taxable income. - A large share of the portfolio is held in traditional IRAs or 401(k)s. - Future RMDs are likely to overlap with pensions and Social Security. - You expect the surviving spouse to face higher marginal rates. - You can pay the conversion tax from outside the IRA. - You want tax-free flexibility for healthcare, home projects, or market downturns. - You expect your future state tax rate to be similar or higher. - You have a long time horizon for the Roth assets. - Your heirs may otherwise inherit a large taxable account with compressed distribution timing.

The strongest case is usually not “tax rates might rise.” It is a household-specific forecast showing that future income is likely to be taxed more heavily or with less flexibility than income recognized today.

Seven times a Roth conversion can backfire

1. You are converting at a higher rate than you are likely to pay later

A peak earning year is often a poor time to convert. If retirement will create a durable drop in taxable income, waiting may buy the same Roth dollars at a lower rate.

2. The conversion unexpectedly triggers IRMAA

A small amount over a threshold can raise Part B and Part D costs. Model the surcharge for both spouses and remember the normal two-year lookback.

3. You lose valuable health-insurance assistance before Medicare

For retirees using an ACA marketplace plan, conversion income can reduce premium-tax-credit eligibility. The added healthcare cost belongs in the conversion analysis.

4. You must use IRA money to pay the tax

Withholding tax from the converted account leaves less money compounding in the Roth. For someone under age 59½, amounts not successfully converted may also create an early-distribution issue.

5. You plan to move to a lower-tax state soon

Paying state income tax on a conversion today may be unnecessary if the same conversion or future distribution would face a lower rate after a planned move. Residency rules and timing must be handled carefully.

6. Charitable plans make the traditional IRA valuable

For charitably inclined retirees, traditional IRA dollars can fund qualified charitable distributions after age 70½. A QCD can satisfy part or all of an RMD while excluding the eligible distribution from income. Converting dollars intended for charity may mean paying tax that could have been avoided.

7. You ignore basis, the pro-rata rule, or the five-year rules

Nondeductible IRA basis complicates the taxable portion of a conversion. Roth conversions and Roth earnings also have separate five-year considerations. Do not assume every dollar is immediately available tax- and penalty-free.

Can you convert after RMDs begin?

Yes, but the RMD itself cannot be converted. In an RMD year, the required distribution must come out first; only additional eligible dollars can be converted.

This is why pre-RMD planning can be valuable. Before age 73, you may have more control over how much IRA income to recognize. After RMDs begin, the RMD creates a taxable-income floor before the conversion decision starts.

A conversion after RMD age can still make sense, especially for survivor planning or unusually low-income years. The door does not close at 73—it simply becomes narrower.

A practical annual Roth conversion checklist

Before converting, answer these questions in writing:

1. What is our projected federal and state taxable income before the conversion? 2. What marginal rate applies to the first and last conversion dollar? 3. How will the conversion affect Medicare IRMAA or ACA coverage costs? 4. What are our projected RMDs with and without the conversion? 5. Can we pay the tax from cash without weakening our spending reserve? 6. What changes if one spouse dies within the next five years? 7. Are any IRA dollars better reserved for qualified charitable distributions? 8. Do we have nondeductible IRA basis or plan-specific restrictions? 9. What market, tax-law, or life event would cause us to reduce or increase the conversion? 10. Have the advisor and tax professional reviewed the final amount before year-end?

Run the projection again late in the year. Actual dividends, capital gains, charitable gifts, and business income can differ materially from the spring estimate.

How this fits into the larger withdrawal strategy

A Roth conversion is one lever inside a retirement-income plan. It should coordinate with which accounts fund spending, when Social Security begins, how gains are realized in taxable accounts, and how much liquidity is available during a market decline.

Our retirement withdrawal strategy ranking explains how these decisions work together:

Read the complete retirement withdrawal strategy ranking

The key is to avoid optimizing one line of the tax return while making the full retirement plan worse. A conversion that saves future tax but forces an uncomfortable portfolio sale today is not fully optimized. Neither is a conversion that reduces RMDs but creates Medicare costs the household never modeled.

The bottom line

Roth conversions before RMDs can be powerful for retirees with $500,000 to $5 million, especially when retirement creates several lower-income years before age 73. But the strategy works because of disciplined sizing—not because Roth is automatically better than traditional.

The best plan compares the rate paid today with the likely marginal cost of future RMDs, Medicare surcharges, Social Security taxation, and survivor filing status. It uses partial conversions when uncertainty is high, pays the tax from an appropriate source, and updates the amount every year.

You do not need to predict future tax law perfectly. You need a plan that creates flexibility across several reasonable futures.

If you want Grape Wealth Management to model your conversion window, future RMDs, Medicare exposure, and withdrawal sequence as one coordinated decision, schedule a meeting.

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This material is for educational purposes only and is not individualized tax, legal, or investment advice. Tax and Medicare rules change, and Roth conversions generally cannot be reversed. Consult qualified tax and financial professionals before acting.