Roth conversions are one of the best tools in retirement tax planning. Tax-free growth. No lifetime required minimum distributions. Tax-free inheritance for your heirs. The benefits are real and well documented.
But there is a version of Roth conversion advice that keeps showing up in financial media -- "fill your bracket" -- that is dangerously incomplete. It treats the federal income tax bracket as the only cost of a conversion. It is not.
In 2026, a Roth conversion can trigger costs that sit entirely outside the bracket table: a Medicare premium surcharge that arrives two years later, and a deduction that shrinks as your income rises. Neither shows up on the return you file next April. Both are real money.
The Medicare piece has a wrinkle almost nobody models correctly. IRMAA runs on a two-year lookback, so the income you report for 2026 determines your 2028 premiums, and the 2028 IRMAA thresholds have not been published. You are aiming at a line that has not been drawn yet.
Here is what the "fill your bracket" crowd is leaving out, and how to plan around a cliff whose exact location is still unknown.
Why Roth Conversions Still Make Sense
Before we talk about what can go wrong, a quick reminder of why this strategy matters.
A $100,000 Roth conversion growing at 7% for 25 years becomes $542,743 of completely tax-free money. No taxes on withdrawals. No required minimum distributions forcing you to take income you do not need. And when your heirs inherit that Roth IRA, they pay zero federal income tax on distributions under the 10-year inherited IRA rule -- compared to the full ordinary income tax hit they would face on an inherited traditional IRA of the same size.
The math works. The question is not whether to convert. It is how much to convert in any given year without triggering costs that erode the benefit.
The OBBBA Changed the Math
The One Big Beautiful Bill Act made the Tax Cuts and Jobs Act brackets permanent. For Roth conversion planning, this is mostly good news. Before the OBBBA, advisors had to guess whether rates would rise after the 2025 sunset. That uncertainty made precise multi-year planning difficult. Now, you can model a five-to-ten-year conversion ladder with confidence in the rate structure.
The 2026 federal brackets for married filing jointly:
| Rate | Taxable Income Range |
|---|---|
| 10% | Up to $24,800 |
| 12% | $24,801 to $100,800 |
| 22% | $100,801 to $211,400 |
| 24% | $211,401 to $403,550 |
| 32% | $403,551 to $512,450 |
| 35% | $512,451 to $768,700 |
| 37% | Above $768,700 |
Standard deduction for married filing jointly: $32,200.
These brackets are now predictable. That predictability is only valuable, though, if you account for the three costs that sit outside the bracket structure.
Hidden Cost #1: The IRMAA Cliff
Income-Related Monthly Adjustment Amounts -- IRMAA -- are Medicare premium surcharges applied to higher-income beneficiaries. They affect both Part B (medical insurance) and Part D (prescription drug coverage). IRMAA is technically a premium, not a tax. But it functions exactly like a tax on income.
And it is a cliff, not a slope. Exceeding a threshold by a single dollar triggers the full surcharge for the entire year. There is no gradual phase-in.
Here is the 2026 premium year, married filing jointly. Read the first column carefully: these thresholds apply to the 2024 tax return, because IRMAA runs on a two-year lookback.
| 2024 MAGI (MFJ) | Part B Monthly (per person) | Part D Monthly (per person) | Annual Surcharge (couple, B+D) |
|---|---|---|---|
| $218,000 or less | $202.90 (standard) | standard | $0 |
| Over $218,000 to $274,000 | $284.10 | +$14.50 | $2,296.80 |
| Over $274,000 to $342,000 | $405.80 | +$37.50 | $5,769.60 |
| Over $342,000 to $410,000 | $527.50 | +$60.40 | $9,240.00 |
| Over $410,000 to under $750,000 | $649.20 | +$83.30 | $12,710.40 |
| $750,000 or more | $689.90 | +$91.00 | $13,872.00 |
Annual surcharge = (Part B adjustment + Part D adjustment) x 12 months x 2 people. Source: CMS 2026 Medicare Parts A and B premiums and deductibles fact sheet.
Two things make IRMAA particularly awkward for Roth conversion planning.
First, the two-year lookback, and what it actually means for planning. Your 2024 return set your 2026 premiums. A conversion you do in 2026 shows up on your 2028 premiums. So the table above is not the ruler you measure a 2026 conversion against. CMS has not published the 2028 thresholds and will not until late 2027. The conversion is irrevocable long before you learn where the line was.
That does not make planning impossible. It makes the honest approach a range rather than a number. IRMAA thresholds are indexed to inflation and have moved up most years. If the first MFJ threshold rises at roughly 2% to 3% a year from $218,000, the 2028 threshold lands somewhere around $227,000 to $231,000. That is an estimate, not a published figure. Treat $218,000 as a conservative floor, model the range, and leave headroom rather than converting right up to a line you cannot see.
Second, the first cliff sits inside the 22% bracket. For 2026, the 22% bracket runs to $211,400 of taxable income, which is roughly $243,600 of MAGI for a couple taking the standard deduction. The first IRMAA threshold is well below that. So there is a wide band where you are still in a modest federal bracket and already paying IRMAA surcharges. That collision zone is what "fill your bracket" advice ignores.
A Worked Example: Crossing the First Threshold
Consider a hypothetical married couple, both 67, both enrolled in Medicare, with $160,000 in combined pension and Social Security income. They are considering a $70,000 Roth conversion to "fill the 22% bracket."
Stated assumptions. Married filing jointly. 2026 standard deduction of $32,200. Both spouses qualify for the senior deduction. Marginal federal rate of 22% across the conversion. And, critically, we assume the 2028 first IRMAA threshold equals the published 2026 figure of $218,000. That last assumption is conservative and unverifiable today. If the 2028 threshold indexes upward, the crossing point moves and so does the answer.
Without the conversion, MAGI is $160,000. With it, MAGI is $230,000. Under our assumed threshold, $12,000 of the conversion sits above the line.
Here is the cost of that last $12,000, step by step:
| Component | Math | Cost |
|---|---|---|
| Federal income tax | $12,000 x 22% | $2,640.00 |
| Senior deduction lost | Combined deduction falls 12 cents per dollar: $12,000 x 12% = $1,440 of deduction, taxed at 22% | $316.80 |
| IRMAA surcharge (2028) | Full Tier 1 surcharge, one year, two people | $2,296.80 |
| Total | $5,253.60 |
Effective rate on those last $12,000: 43.8%.
Stopping at $58,000 of conversion instead, so MAGI lands at $218,000, costs 22% federal plus 2.64 points from the deduction phaseout, or about 24.6%, with no IRMAA at all.
The gap between 24.6% and 43.8% is the entire argument for sizing a conversion deliberately rather than filling a bracket.
Why the Cliff Has No Single "Rate"
You will see articles quote a specific effective rate for the IRMAA trap. Be skeptical of any single number, including one from us. IRMAA is a fixed dollar surcharge, not a rate, so the effective rate depends entirely on how far past the threshold you go.
Same couple, same assumed $218,000 threshold, base MAGI of $216,000:
| Conversion | Amount above threshold | Federal + deduction cost | IRMAA | Total | Effective rate |
|---|---|---|---|---|---|
| $4,000 | $2,000 | $985.60 | $2,296.80 | $3,282.40 | 82.1% |
| $12,000 | $10,000 | $2,956.80 | $2,296.80 | $5,253.60 | 43.8% |
| $40,000 | $38,000 | $9,945.60 | $2,296.80 | $12,242.40 | 30.6% |
The $40,000 row carries a slightly higher federal cost per dollar because the senior deduction is fully gone by $250,000 of MAGI and the last slice of income crosses into the 24% bracket. The surcharge, though, is the same $2,296.80 in all three rows. Spread over $4,000 it is 57 percentage points. Spread over $40,000 it is 5.7. This is why "do not cross the line" and "if you are going to cross it, cross it decisively" are both correct advice, and why a headline rate is close to meaningless without the conversion size attached.
These are hypothetical examples for educational purposes and are not a projection of any individual result. Your situation will differ based on your income sources, filing status, Medicare enrollment, state of residence, and the 2028 thresholds when they are eventually published. Consult your financial advisor and CPA before making conversion decisions.
Hidden Cost #2: The Senior Bonus Deduction Phaseout
The OBBBA created a new senior bonus deduction for taxpayers age 65 and older: $6,000 per qualifying individual, or $12,000 for a married couple filing jointly where both spouses qualify. This deduction is available for tax years 2025 through 2028. It is separate from the existing additional standard deduction for age.
Here is the catch, and here is where most write-ups get the mechanics wrong.
Schedule 1-A computes the phaseout per qualifying person, not per return. Line 35 reduces $6,000 by 6% of MAGI above the threshold. Lines 36a and 36b each pick up that reduced amount, one for you and one for your spouse, and line 37 adds them. So for a couple where both spouses are 65 or older, the combined $12,000 deduction falls by 12 cents per dollar of MAGI above $150,000, and it reaches zero at $250,000 of MAGI, not $350,000. If only one spouse qualifies, the reduction is 6 cents per dollar and the deduction is gone at $250,000 as well, because the single $6,000 is exhausted at the same point.
The second correction matters more. A lost deduction is not a surtax. Losing 12 cents of deduction does not cost you 12 cents of tax. It costs you 12 cents times your marginal rate. In the 22% bracket that is 2.64 cents per dollar. In the 24% bracket, 2.88 cents. Meaningful, but nothing like the 6% or 12% figure you will see quoted.
What That Looks Like in Practice
A hypothetical married couple, both 66, with $140,000 of other income from Social Security and a pension. Both qualify for the senior deduction. They consider a $100,000 Roth conversion, moving MAGI from $140,000 to $240,000.
At $140,000 MAGI they are below the $150,000 threshold, so the full $12,000 deduction is intact and their taxable income is $95,800, which puts them in the 12% bracket. At $240,000 the deduction has fallen to $12,000 minus 12% of $90,000, or $1,200. The conversion cost them $10,800 of deduction along the way.
Layer by layer, on the conversion income:
| Slice of conversion | MAGI range | What applies | Cost of the slice | Cost per dollar |
|---|---|---|---|---|
| First $10,000 | $140,000 to $150,000 | Straddles the 12% and 22% brackets; deduction still intact | $1,700.00 | 17.0 cents |
| Next $68,000 | $150,000 to $218,000 | 22% federal plus 12 cents of deduction lost at 22% | $16,755.20 | 24.6 cents |
| Last $22,000 | $218,000 to $240,000 | Same 24.6 cents, plus the one-time Tier 1 IRMAA surcharge of $2,296.80 landing on these dollars | $7,717.60 | 35.1 cents |
| Total | $26,172.80 | 26.2 cents |
The blended cost across the whole $100,000 conversion is 26.2%, against a headline bracket of 22%. The marginal cost on the last slice is 35.1%. Both numbers are useful, and they answer different questions: the blended rate tells you whether the conversion was worth doing, and the marginal rate tells you where to stop.
Note what is not in that table: a "6% surtax." The phaseout adds 2.6 percentage points at a 22% marginal rate, not 6 or 12.
The senior deduction phaseout is temporary. It expires after 2028. The IRMAA cliffs are permanent. Plan for both, but know which one goes away.
The Golden Window: Converting Before Medicare
The two costs above -- IRMAA and the senior deduction phaseout -- share a common trait: they only hit you after age 65. That makes the years between early retirement and Medicare eligibility the most valuable Roth conversion years many people will ever have.
Ages 60 to 63: Maximum Conversion Capacity
If you retire at 60, you have four tax years (ages 60 through 63) to convert without any Medicare consequence. The two-year lookback means income at age 63 determines premiums at age 65 (your first Medicare year), but conversions at 60 and 61 have no IRMAA exposure at all. And since you have likely not started Social Security or RMDs, your taxable income is probably at its lifetime low.
The math for a couple with $50,000 in base income (small pension, some dividends):
Standard deduction (MFJ): $32,200. Top of 22% bracket: $211,400 taxable income. Total MAGI capacity before hitting 24%: approximately $243,600. Available conversion headroom: roughly $193,600 per year. Over four years: approximately $774,000 moved to Roth. The blended federal rate on that path is roughly 18% under these assumptions. That is an illustration built on a static bracket structure and a single base-income figure, not a projection of anyone’s actual result.
Compare that to leaving $774,000 in a traditional IRA until RMDs force distributions at age 73 or later, when Social Security, RMDs from remaining balances, and other income push the marginal rate to 32% or higher -- and trigger IRMAA on top.
The pre-Medicare window does not last. Every year you wait, RMDs get closer and the window gets smaller.
Ages 65 to 72: Convert With Precision
Once Medicare starts, conversions are still valuable but require careful sizing.
There is no published "safe zone" for a 2026 conversion, because the threshold that will govern it is a 2028 figure CMS has not released. What you can do is use the 2026 first threshold of $218,000 as a conservative working floor and hold a deliberate buffer beneath it. If your base income from pensions, Social Security, and investments is $150,000, that implies roughly $68,000 of conversion space, and prudence argues for using less than all of it.
Between $150,000 and $250,000 of MAGI, factor in the senior deduction phaseout through 2028. For a couple where both spouses qualify, the effective rate on conversion income in that band is your bracket rate plus about 2.6 to 2.9 percentage points, depending on whether you are in the 22% or 24% bracket. Above $250,000 the deduction is gone and the phaseout stops mattering.
Ages 73 and Beyond: The Window Narrows
Once required minimum distributions begin, they must be taken before any Roth conversion in a given year. RMDs push up MAGI, which reduces available conversion headroom below IRMAA thresholds and may trigger IRMAA regardless of whether you convert.
This is why the window between retirement and age 73 is so critical. Every year of inaction is a year of conversion capacity you cannot get back. For a deeper look at how Roth conversions interact with OBBBA bracket strategy, see our companion piece.
A Framework for Sizing Your 2026 Conversion
There is no universal right answer for how much to convert. But there is a checklist of inputs that matter. Before sizing a 2026 Roth conversion, you or your advisor should calculate:
Income and thresholds:
Projected 2026 MAGI from all sources (Social Security, pensions, dividends, capital gains, rental income). Distance to the next IRMAA cliff (and remember: 2026 income affects 2028 premiums). Distance to the senior deduction phaseout threshold ($150,000 MFJ) and to the $250,000 point where it is fully gone. Current marginal tax bracket and headroom to the next bracket.
Future projections:
Projected RMD amounts at age 73 if no conversion is done. Projected marginal rate at age 73-plus with RMDs. Whether your tax rate in retirement will genuinely be lower than your conversion rate today.
Practical constraints:
Source of funds to pay the conversion tax (use taxable account funds, not the converted IRA itself). Five-year rule implications (do you need access to the converted funds within five years?). State tax implications (Florida has no state income tax, but this matters if you are relocating from an income-tax state).
When Conversions Clearly Make Sense
Retirees ages 60 to 63, pre-Medicare, with low base income should fill the 22% bracket aggressively. No IRMAA risk exists. Retirees ages 65 to 72 with MAGI below the IRMAA threshold should convert with a deliberate buffer beneath the projected first IRMAA threshold rather than up to it, accounting for the senior deduction phaseout through 2028. Large traditional IRA balances where projected RMDs at 73 will push into the 32% bracket or higher make converting now at 22% to 24% a clear win even with some IRMAA exposure. And for legacy planning, leaving tax-free Roth assets to heirs in high tax brackets who face the 10-year inherited IRA rule can save the next generation significant money.
When to Pause or Reduce
MAGI within roughly $15,000 of a projected IRMAA threshold is a danger zone, and the buffer should be wider than it would be if the threshold were known, because it is not. At 2026 levels the annual surcharge runs from $2,296.80 to $13,872.00 per couple, and a small conversion that crosses a line can cost more than it saves. In the senior deduction phaseout band ($150,000 to $250,000 MFJ where both spouses qualify), the effective rate of roughly 24.6% to 26.9% may not be low enough relative to your projected future rate. Converted amounts withdrawn before the five-year holding period may face a 10% early withdrawal penalty for those under 59 and a half. And if you expect to be in the 12% bracket in retirement with modest income, converting at 22% today may not be the right trade.
The Permanent Brackets Are a Gift -- If You Use Them Right
The OBBBA gave retirement planners something they rarely get: predictability. Federal tax brackets are now stable, which means multi-year conversion strategies can be modeled with confidence.
But predictability only helps if you are looking at the complete picture, and the picture is not fully drawn. Federal brackets are stable. The senior deduction phaseout is knowable and expires after 2028. The IRMAA threshold that will govern a 2026 conversion is a 2028 figure that does not exist yet.
"Fill your bracket" is a starting point, not a strategy. The strategy is knowing which costs are fixed, which are cliffs, which are still unpublished, and sizing the conversion so that being wrong about the unpublished one does not cost you more than the conversion was worth.
That is the kind of planning that turns a good idea into an actual outcome.
Todd Sensing is SVP and Wealth Advisor at FamilyVest, a practice of Farther Finance Advisors, LLC. He holds the CFA charter and CFP certification and works with families along the Emerald Coast and nationwide on retirement planning, investment management, and special needs financial planning.
This article is for educational purposes only and does not constitute personalized investment, tax, or financial advice. Roth conversion decisions depend on your individual circumstances, including current and projected income, tax filing status, Medicare enrollment, and estate planning goals. Consult your financial advisor and CPA before implementing any conversion strategy.
