How Much Should You Convert to Roth This Year?
A Roth conversion is a bet: pay tax on retirement money now, at a rate you know, instead of later, at a rate you don't. The size of that bet has a ceiling — and it's usually not where people think it is.
- A Roth conversion only pays off if your tax rate today is lower than your likely tax rate later. That makes low-income years — early retirement, before Social Security and Required Minimum Distributions start — the highest-value window to convert in.
- The classic move is "fill the bracket": convert just enough to use the room left in your current federal tax bracket without spilling into the next one. But the bracket often isn't what stops you first — the ACA subsidy cliff (under 65) or an IRMAA Medicare surcharge (65+) can bite at a lower dollar amount and cost more per dollar than the bracket ever would.
- You can check your own numbers against all three constraints at once below — free, no signup, nothing leaves your browser.
The bet you're making
Every dollar in a traditional IRA or 401(k) carries an unpaid tax bill. You don't know the rate yet — it depends on your income the year you eventually withdraw it, which for most people means the year you're forced to withdraw it, via Required Minimum Distributions starting in your 70s. A Roth conversion lets you settle that bill early, on your terms, at today's known rate, in exchange for every dollar of growth after that point being permanently tax-free.
That's a genuinely good trade in some years and a genuinely bad one in others. It's good when your current marginal rate is lower than your projected future rate — most commonly in the gap between retiring and claiming Social Security, when earned income has stopped but the forced-withdrawal years haven't started yet. It's a bad trade in a normal working year, when you'd be paying tax at your regular rate for no benefit — you're not filling any cheap bracket space, you're just paying the same bill earlier than you had to.
The part that trips people up isn't whether to convert. It's how much. Converting too little in a low-income year leaves cheap bracket space on the table, permanently. Converting too much in the same year can trigger costs that have nothing to do with the tax bracket itself — and those costs are often larger, per dollar, than the bracket.
The classic play: fill the bracket
The standard strategy is converting just enough to use up whatever room is left in your current federal tax bracket, without spilling a single dollar into the next one. Every dollar inside that room gets converted at the cheapest rate you're likely to see again. Every dollar past it jumps to a materially higher marginal rate — money you'd have been better off leaving in the account for another year.
In practice this means knowing exactly where the line sits once your other income, your filing status, and the standard deduction are all accounted for — not a round number you eyeball from a tax table. That's arithmetic a calculator can do precisely and a spreadsheet guess usually gets wrong by a few thousand dollars in either direction, which matters exactly at the margin where the strategy lives.
Two cliffs that bite before the bracket does
Here's the part most conversion advice skips: the federal tax bracket is rarely the binding constraint for anyone under 65 or on Medicare. Two other thresholds sit in front of it, and both work as hard cliffs rather than gradual slopes — cross them by a single dollar and the cost jumps all at once, not gradually.
If you're on Medicare (65+): IRMAA
Medicare Part B and Part D premiums are priced off your Modified Adjusted Gross Income from two years earlier. Cross an IRMAA income threshold — even by one dollar — and a surcharge applies to your entire premium, not just the income over the line. A conversion that looks perfectly reasonable on this year's 1040 can quietly cost thousands in higher Medicare premiums two years from now, and by the time the bill arrives it's too late to undo the conversion that caused it.
If you're under 65 and on ACA marketplace coverage: the subsidy cliff
If you're bridging the years before Medicare eligibility with an ACA marketplace plan, your premium tax credit is calculated from your MAGI. Push that number over the subsidy threshold and the credit doesn't taper — it can shrink sharply or disappear, turning a modest conversion into a much larger effective cost once the lost subsidy is counted. For a lot of early-retiree households doing exactly the kind of low-income-year conversion this strategy is built for, this is the real ceiling, not the tax bracket.
"Fill the bracket" is the right instinct. It's just answering the wrong question if IRMAA or the ACA cliff sits closer than the bracket does.
Bracket tops are converted from taxable-income thresholds to MAGI by adding back the $32,200 married standard deduction — a simplification (no other above/below-the-line adjustments), same as the calculator above. ACA cliff is 400% of the 2026 federal poverty line for a household of two ($86,560); IRMAA Tier 1/2 are the real 2026 MFJ MAGI thresholds. This is one illustrative household, not your numbers — the calculator above runs your actual filing status and income.
The long game: why converting less can mean owing less, forever
The payoff from a conversion isn't just this year's tax return. Every dollar you convert out of a traditional account is a dollar that never generates a Required Minimum Distribution later — which means smaller forced withdrawals in your 70s and 80s, which in turn means less income pushing against future tax brackets, future IRMAA tiers, and future Social Security taxability thresholds. A conversion done today can quietly lower a whole chain of downstream numbers you won't personally calculate for another decade or two.
That's the case for converting in every low-income year you get, not just once. It's also the case for staying disciplined about the ceiling each year rather than converting as aggressively as possible in a single shot — a series of right-sized conversions across several low-income years beats one oversized conversion that trips a cliff and gives some of the benefit back.
A worked example
Take a married household, filing jointly, with one spouse retired at 62 and the other easing into part-time work — two years from Medicare, currently covered through an ACA marketplace plan, with a Modified Adjusted Gross Income of $75,000 before any conversion.
Run that household through the sweet-spot check and three lines get evaluated at once:
| Constraint | What it checks | Typically binds when |
|---|---|---|
| Federal bracket | Room left before spilling into the next marginal rate | No ACA plan and not yet on Medicare |
| ACA subsidy cliff | MAGI room before the premium tax credit shrinks or disappears | Under 65, buying marketplace coverage — like this household |
| IRMAA Tier 1 | MAGI room before a Medicare premium surcharge applies (using MAGI from two years prior) | Age 65 or older, on Medicare |
For a pre-Medicare household on marketplace coverage, it's common for the ACA subsidy cliff to sit closer than the federal bracket line — meaning the household's real conversion ceiling this year is set by preserving their premium tax credit, not by the next tax bracket up. Two years later, once that same household ages onto Medicare, the binding constraint flips entirely: the ACA cliff stops applying and IRMAA becomes the number to watch instead. The "right" amount to convert isn't fixed — it changes with age, coverage, and income every single year, which is exactly why checking all three at once, instead of eyeballing the bracket alone, is the difference between a clean conversion and an expensive surprise.
What this doesn't capture
The calculator above runs a single-year, deterministic check — no simulation needed, since bracket, IRMAA, and ACA thresholds are fixed schedules, not something with market variance. It conservatively keeps any suggested conversion inside your current federal bracket; it doesn't model deliberately filling a higher bracket (a legitimate strategy some FIRE-community households use when they expect materially higher future rates — that calls for the full app's Roth Strategies card). It doesn't account for how a conversion can shift how much of your Social Security becomes taxable, doesn't model state income tax, and doesn't account for itemized deductions. It's also a single-year answer — coordinating a conversion ladder across your whole bridge period, where this year's conversion changes next year's starting point, is a multi-year optimization the standalone calculator isn't built for.
How this is calculated
The check above uses the current year's federal tax brackets and standard deduction, IRMAA Tier 1 thresholds, and the ACA subsidy cliff, applied to your filing status, age, and current MAGI — the same constraint logic that powers the full app's Roth Strategies analysis. It reports which of the three limits binds first and how much room you have before it does. For coordinating a conversion schedule across multiple years of a bridge period — including gain harvesting and ACA-exposure-aware ladders — the full app's Bridge Optimizer runs the multi-year search. Full assumptions and methodology are documented in the methodology.
Common questions
This article checks one year against three constraints. The full app coordinates a conversion schedule across your entire bridge period — flat and year-shaped ladders, ACA-exposure aware, alongside your complete tax-and-withdrawal plan.
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