Roth Conversion Strategies: Is 2026 the Right Year to Convert?

A Roth conversion involves moving money from a Traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but the funds then grow tax-free and qualified withdrawals in retirement are also tax-free. The strategy makes the most sense when you expect your future tax rate to be higher than what you pay on the conversion today.

Why 2026 May Be a Strategic Year

Tax rates and brackets are subject to legislative change. If you are in a lower tax bracket now than you expect to be later, or if you are between retirement and the start of Social Security and Required Minimum Distributions, you may have a window to convert at a relatively low tax cost. The years between 62 and 72 are often called the Roth conversion sweet spot for exactly this reason.

Partial Conversions and Tax Bracket Management

You do not have to convert everything at once. A partial conversion strategy involves converting just enough each year to fill up your current tax bracket without pushing into a higher one. Over five to ten years, this approach can significantly reduce the size of your traditional IRA and the resulting Required Minimum Distributions, all while keeping the tax cost manageable.

Key Factors to Evaluate

• Can you pay the tax bill from non-retirement funds? Using IRA money to pay the tax defeats much of the benefit.
• How will the conversion affect your Medicare premiums? IRMAA surcharges are based on income from two years prior.
• What is your projected tax rate in retirement versus today?
• How long until you need the funds? Roth conversions benefit from time to compound tax-free.
• Will the conversion push you into a higher capital gains bracket or affect other income-based thresholds?

A Multi-Year Approach Wins

The most effective Roth conversion strategies are rarely one-year decisions. They are multi-year plans that account for your income trajectory, Social Security timing, RMD projections, and estate planning goals. Working with a financial advisor who can model these variables together is the best way to determine whether and how much to convert each year.