Roth conversions, IRMAA, and the low-bracket years you shouldn’t waste
The years between your last paycheck and your first required distribution can be the least expensive time you’ll have to move money into a Roth. Medicare’s two-year lookback helps decide how far to go.
Key takeaways
- The years between the last paycheck and RMDs are often the lowest-bracket years you’ll have — and each one expires on December 31.
- IRMAA looks back two years, so conversions from age 63 can raise Medicare premiums at 65.
- Size conversions year by year against the bracket, the IRMAA cliff and other income-tested items — not all at once.
- The year of a big vest, exercise or sale is usually the wrong year to convert.
The short answer
Often, the best years for a Roth conversion are the lower-income years after your paychecks stop and before Social Security and required minimum distributions (RMDs) begin. Converting then can fill lower tax brackets at a cost you choose. The catch is Medicare: IRMAA looks back two years, so conversions from age 63 onward can raise premiums. Size each year’s conversion to both.
When to act
The first year without a paycheck
Salary and vesting stop; Social Security and RMDs haven’t started. The lower brackets open up — often for several years.
Age 63
IRMAA’s two-year lookback starts to matter: this year’s income can set your Medicare premiums at 65.
December 31, each year
The deadline for a conversion to count this year. There’s no extension to April, and it can’t be undone.
Age 73 or 75
RMDs begin, depending on your birth year. Required withdrawals usually close the low-bracket window.
The window: after the paychecks, before the RMDs
For most of a career, pre-tax savings make sense: you deduct contributions in high-income years and plan to withdraw in lower ones. The question is which lower years. Left alone, the answer can be the wrong ones — RMDs start, Social Security is layered on top, and withdrawals land in higher brackets than expected.
In between is a stretch that’s easy to waste. Salary has stopped, benefits haven’t started, and taxable income may be the lowest it will be for the rest of your life. Each of those years has room in the lower brackets. Unused, that room expires on December 31.
For equity-comp professionals and founders, the window can open early and unevenly: the year after the last vest, a sabbatical between roles, or the year after a sale closes. It’s rarely the year of the vest or the sale itself.
What a conversion does — and what it costs
A Roth conversion moves money from a pre-tax IRA or plan into a Roth. The converted amount is taxed as ordinary income in the year you convert. In exchange, future qualified withdrawals are tax-free, a Roth IRA has no required distributions during your lifetime, and heirs generally inherit it income-tax-free — though most non-spouse heirs must still empty it within 10 years.
The trade works only if the rate you pay now is lower than the rate that money would otherwise face — yours later, or your heirs’. It tends to work best when the tax is paid from savings outside the IRA, so the full amount keeps compounding in the Roth.
A few mechanics shape the timing. A conversion counts in the calendar year it’s completed. It can’t be reversed. And each conversion starts its own five-year clock for penalty-free access to the converted amount before age 59½.
One argument has changed. Under the One Big Beautiful Bill Act, today’s individual brackets are permanent under current law, so “convert before rates rise in 2026” no longer applies on its own. The case now rests on your own bracket path over time.
IRMAA: the two-year lookback
Medicare Part B and Part D premiums rise with income through the Income-Related Monthly Adjustment Amount, or IRMAA. It’s generally based on modified adjusted gross income — your AGI plus tax-exempt interest — from the tax return two years earlier. A Roth conversion counts in full.
That lookback changes the calendar. Medicare typically starts at 65, so income from age 63 onward can set your premiums. A conversion at 63 can show up as a surcharge at 65.
IRMAA works in tiers, and each tier is a cliff: go one dollar over a threshold and the higher premium applies for the whole year. For a married couple, it applies to each spouse on Medicare. Two things soften it. It’s recalculated every year, so a one-year spike generally means a one-year surcharge. And if your income fell because you stopped working, you can ask Social Security to use a more recent, lower year.
Sometimes the arithmetic still favors crossing a tier for a year. The point is to decide that on purpose.
An illustrative example
Consider a hypothetical married couple who leave their tech roles at 60. Their last RSUs have vested, they plan to claim Social Security at 70, and most of their savings sit in pre-tax accounts. Left alone, their taxable income would stay modest for several years — then climb once Social Security and RMDs arrive together. Instead, they model converting part of their IRA each year: sized to fill a lower bracket and, from 63 on, to stay under the IRMAA tier that would apply two years later. By the time RMDs begin, the pre-tax balance — and the required withdrawals — are smaller, and more of their savings sits in a Roth. This is a hypothetical illustration, not a projection or a guarantee; the right amount in any year depends on income, rates, state of residence and the law at the time, and may be zero.
Hypothetical and simplified, for illustration only — not a prediction or a guarantee. Real outcomes depend on your facts and on current law, which can change.
Sizing each year’s conversion
The right amount is rarely “all of it” or “none.” It’s a number set each year against a few lines:
Because the year’s other income isn’t fully known until late in the year, the final number is often set in the fourth quarter — once vests, bonuses, dividends and capital gains are visible — leaving time to complete the conversion before December 31.
- The top of the bracket you’re trying to fill
- The next IRMAA threshold, two years out
- How much of your Social Security becomes taxable, once you’ve claimed
- The 3.8% net investment income tax — a conversion isn’t investment income, but it can push the investment income you do have over the threshold
- Under current law, the temporary deduction for people 65 and older (2025–2028), which phases out as income rises
- State tax — California taxes conversions as ordinary income, so where you live the year you convert matters
When converting may not make sense
A conversion is a decision about rates — yours now against yours, or your heirs’, later. Sometimes the timing argues against it:
None of these is a rule. Each is a reason to model the year before you act, and to coordinate with your CPA, who will report the conversion on your return.
- In a year with a large vest, bonus, option exercise or sale — the conversion stacks on top of that income
- When the tax would have to come out of the IRA itself, especially before 59½
- When you plan to leave pre-tax savings to charity, directly or through qualified charitable distributions from age 70½ — charities don’t pay income tax on it
- When you, or your heirs, are likely to be in a lower bracket later than you are today
Common questions
Does a Roth conversion raise my Medicare premiums?
It can. The converted amount counts toward the modified adjusted gross income Medicare uses for IRMAA, generally with a two-year lookback — so a conversion at 63 can affect premiums at 65. Because IRMAA tiers are cliffs, a slightly smaller conversion can sometimes avoid a full year of surcharge.
What’s the deadline for a Roth conversion?
December 31 of the year you want it to count. Unlike IRA contributions, there’s no extension to the April filing deadline, and since 2018 a conversion can’t be reversed. That’s why the final amount is often set late in the year, once the rest of the year’s income is known.
Can I still convert once RMDs have started?
Yes, but that year’s required distribution has to come out first, and it can’t itself be converted. With RMD income already on the return, there’s usually less room in the lower brackets — one reason the years before RMDs tend to be the more valuable ones.
Find your
low-bracket years.
In a free Tax X-Ray, we map your income year by year — paychecks, vests, Social Security, RMDs and Medicare — and show where a conversion may fit, and where it may not. About 30 minutes, no obligation.
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The strategy behind this answer.
Keep reading.
The step-up, inherited-IRA rules and Prop 19 on the family home.
Ordinary income at vesting, capital gains after — and why your withholding is often too low before the vest date.
Educational only. This article is general information based on federal and California law as of September 2026, which may change. It is not tax, legal or investment advice, and the example is hypothetical and illustrative, not a guarantee of any result. Roth conversions are taxable and cannot be undone — consult your CPA or attorney, and review your full tax picture, before acting.