Converting $600,000 in $75,000 annual Roth IRA slices locks in sub-22% tax rates before RMDs stack with Social Security at 73.
Spreading conversions below the $218,000 IRMAA threshold avoids Medicare surcharges reaching $6,900 per person, since any overage triggers the full cliff penalty.
Delaying Social Security to 70 adds 8% yearly to the benefit while keeping taxable income low, maximizing Roth conversion headroom during the window.
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A 63-year-old couple with $1.5 million in a traditional 401(k) and no earned income has just entered the most valuable tax planning window of their lives. From now until age 73, when required minimum distributions begin, they get to decide exactly how much taxable income to show each year. Most people fill that window with a few small IRA withdrawals and a delayed Social Security claim. That decision costs tens of thousands of dollars in avoidable taxes.
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The strategy: convert roughly $75,000 a year from the traditional 401(k) to a Roth IRA over eight years. Total moved: $600,000. Done right, the tax bill on that $600,000 lands well below what the IRS will extract once RMDs stack on top of Social Security after 73.
Filling the 12% and 22% Brackets on Purpose
For a married couple filing jointly in 2026, the standard deduction is $32,200. The 12% bracket runs to $100,800 of taxable income, and the 22% bracket runs to $211,400. A couple with no other income can convert about $133,000 and stay entirely inside 12%, or convert $243,600 and stay inside 22%.
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Let RMDs stack on top of two Social Security checks after age 73, and the same couple often pushes income into the 24% bracket, which starts at $211,400 for joint filers and runs to $403,550. The marginal rate is only two points higher, but the surcharges attached to that bracket are worse than they look on paper.
The IRMAA Trap Kills Aggressive Conversions
Medicare uses a two-year lookback on modified adjusted gross income. Convert too much at 63, and the surcharge hits at 65. The standard 2026 Part B premium is $202.90 per month, but joint filers with MAGI above $218,000 pay $284.10, with surcharges climbing across five tiers to more than $6,900 per person at the top.
This is why $600,000 split into eight $75,000 slices beats a single $300,000 conversion. Concentrate the income and IRMAA turns a smart move into a five-figure penalty. Spread it, and the surcharge either does not trigger or triggers at the lowest tier for a single year. IRMAA tiers are cliffs, so being $10 over the line costs the same as being $10,000 over.
Every year a benefit is delayed past full retirement age adds roughly 8% to the check up to age 70. Delaying Social Security to 70 keeps taxable income low during the conversion years, which means more headroom under the bracket ceilings. It also means a larger check for life, indexed by the 2026 COLA of 2.8% and each year’s adjustment thereafter.
Once benefits start, up to 85% of that Social Security becomes taxable when combined income crosses the thresholds. Roth withdrawals do not count toward combined income. Every dollar in a Roth at 73 is a dollar that stays out of the provisional income formula that pulls Social Security into taxation.
Why 2026 Is a Rare Setup
The rate environment favors conversions. The Fed funds target upper bound sits at 3.75%, and the 10-year Treasury yields nearly 5%, near a 12-month high. Bonds held inside a traditional 401(k) throw off taxable interest at those higher rates, which compounds the RMD problem. Move that bond sleeve into a Roth now, and the interest grows tax-free for the rest of the account’s life.
Inflation is nudging brackets higher each year, and core PCE at 130.08 sits in the 90th percentile of the past year. Bracket ceilings will keep lifting, giving each successive conversion slightly more room at the same marginal rate.
Three Actions Before Year-End
Set the ceiling, then convert to it. Add up projected pension, part-time work, taxable dividends, and interest. Subtract that total from $243,600 (top of the 22% bracket plus the joint standard deduction). The result is the maximum conversion this year without leaving 22%.
Verify the IRMAA line before submitting the transfer. If MAGI will exceed $218,000 for joint filers, stop one dollar below the tier boundary. Two years from now, that discipline is worth roughly $1,000 per spouse in Part B and Part D surcharges avoided.
Convert in late fall rather than early in the year. By November, the year’s dividends, mutual fund capital gains distributions, and any wages are known. Guessing in January routinely creates a five-figure overshoot into the next tax or IRMAA tier that cannot be undone under current law.
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