North County San Diego
How much should I convert to a Roth this year?
There is a right number, and it is not a guess. Four ceilings decide it, and three of them have nothing to do with your tax bracket.
There is a right number, and it is not a guess. Four ceilings decide it, and three of them have nothing to do with your tax bracket.
Convert the largest amount that does not push you past the nearest ceiling. In 2026 there are four of them: the top of your tax bracket, the Medicare IRMAA threshold, the ACA subsidy cliff if you retired before 65, and the point where more of your Social Security becomes taxable. Whichever one you reach first is your number.
Most articles on this question stop at the tax bracket. That is the ceiling least likely to hurt you, because a bracket is a gradual thing. The other three are cliffs. Cross one by a single dollar and the full penalty lands.
A married couple, both 65 or older, can hold $148,300 of income in 2026 and still be entirely inside the 12% bracket. That same couple crosses the first IRMAA threshold at $218,000, and going one dollar past it costs them $2,296.80 in Medicare premiums two years later.
Every conversion decision is the same shape. You are filling a container, and the container has a lid. The only question worth answering is which lid is closest.
The one everybody knows. It is also the gentlest, because going over costs you only the higher rate on the dollars above the line.
A Medicare surcharge set by your income from two years earlier. It is a cliff, not a slope, and it applies per person.
Only if you retired before 65 and buy your own health insurance. The most expensive ceiling on this page, and the one almost nobody writes about.
Conversion income raises the figure that decides how much of your benefit is taxable. The thresholds have never been adjusted for inflation.
Brackets apply to taxable income, which is what is left after your deductions. In 2026 a retiree's deductions are larger than most people realize, because three separate amounts stack on top of each other.
The standard deduction for married filing jointly in 2026.
The additional standard deduction for being 65 or older. It is $1,650 per qualifying spouse, so $3,300 when both of you qualify.
The new senior deduction, $6,000 each, available for tax years 2025 through 2028. It stacks on top of the other two rather than replacing them, and you can claim it whether or not you itemize.
Which means $148,300 of total income still lands you exactly at the top of the 12% bracket.
A single filer 65 or older stacks $16,100, $2,050 and $6,000 for $24,150 of deductions, which puts the top of the 12% bracket at $74,550 of total income. Figures from IRS Revenue Procedure 2025-32 and IRS Publication 6142.
Taxable income. The cheapest conversion space you will ever have.
The step up from 12% is 10 points, the largest single jump in the table.
Only 2 points above 22%, which is why the 22% to 24% band is often worth filling.
Single filers: 12% to $50,400, 22% to $105,700, 24% to $201,775.
IRMAA is a surcharge added to Medicare Part B and Part D for higher income beneficiaries. Two things about it catch people out, and both of them matter enormously for conversions.
It runs on a two year delay. Your 2026 Medicare premiums are set by the income on your 2024 tax return. A conversion you do this year shows up on your Medicare bill in 2028.
It is a cliff, not a slope. Every official table assigns one flat premium to each income band. There is no proration anywhere in the formula. Exceed a threshold by one dollar and you owe the entire tier.
$109,000 single. The standard premium of $202.90 a month, no surcharge.
$109,001 to $137,000 single. Adds $81.20 a month to Part B and $14.50 to Part D, each.
$137,001 to $171,000 single. Adds $202.90 a month to Part B and $37.50 to Part D, each.
A married couple on Medicare has 2024 income of exactly $218,000. A conversion adds one more dollar. They have now crossed into the first tier, and the surcharge applies to each of them.
$81.20 a month in Part B surcharge, for twelve months, for two people.
$14.50 a month in Part D surcharge, for twelve months, for two people.
The cost of that single dollar, payable across the whole of 2026.
2026 figures from the CMS fact sheet on Medicare Parts A and B premiums and deductibles, cross-checked against SSA POMS HI 01101.020. The standard 2026 Part B premium is $202.90 a month and the annual deductible is $283.
Social Security will reduce an IRMAA determination if your income dropped because of a life changing event. Form SSA-44 lists exactly eight of them: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income producing property, loss of pension income, and an employer settlement payment.
A Roth conversion is not on that list, and the form has no catch all category. Neither is any other voluntary increase in income. If a conversion pushes you over a threshold, the surcharge stands.
Anyone who stops working before Medicare starts has to buy health insurance somewhere, and for most people that means the ACA marketplace. The premium tax credit that makes it affordable is calculated from your income for the year.
From 2021 through 2025, a temporary rule removed the hard eligibility limit. That rule expired at the end of 2025. For 2026 coverage the original cliff is back: earn one dollar more than 400% of the federal poverty level and the entire credit disappears.
400% of the federal poverty level for a household of one.
400% for a household of two. A couple in their early sixties on a marketplace plan is usually this household.
2026 coverage uses the 2025 poverty guidelines, not the 2026 ones, under Treasury regulation 26 CFR 1.36B-1(h). The 2025 guidelines for the 48 contiguous states are $15,650 for one person and $21,150 for two.
Now add the part that makes this different from every other ceiling on this page. The credit is paid in advance, monthly, directly to your insurer. At tax time it is reconciled against what you actually earned. If you go over the line, you repay all of it, and above 400% the repayment is not capped.
So a conversion completed in December, on income you thought was comfortably under the limit, can generate a bill for a full year of health insurance subsidy you have already spent. For a couple in their early sixties in San Diego County, that is frequently more than ten thousand dollars.
This ceiling disappears the moment you both turn 65 and move to Medicare. Until then it usually sits well below your tax bracket ceiling, which means for early retirees it is almost always the binding one.
The reason conversions cluster in the years right after retirement is simple. You have stopped earning a salary and you have not yet been forced to take required minimum distributions (RMDs), so your income is at its lifetime low point and there is space in the low brackets that will never be this cheap again.
Almost every article puts the end of that window at age 73. For most people reading this, that is wrong.
This includes anyone born in 1959, which the final Treasury regulations resolved specifically.
Anyone turning 66 this year or younger. Two additional years of conversion window that most coverage does not mention.
Final Treasury regulations implementing section 107 of the SECURE 2.0 Act, published in the Federal Register on 19 July 2024.
Once RMDs begin, two rules bind. You must take the full required distribution for the year before you convert anything, and the converted amount never counts toward satisfying it. Miss a required distribution entirely and the penalty is 25% of the shortfall, reduced to 10% if you correct it within the window the IRS allows.
What to do with the account itself is a separate question, and we answered it on What do I do with my 401(k) when I retire?
Until 2017 you could recharacterize a conversion, effectively reversing it if the market fell or the tax bill came out wrong. That option was removed for tax years after 2017 and has not returned. A conversion made today is permanent on the day it is made.
Converted money carries a five year holding period before it can be withdrawn without a 10% early distribution penalty, and every separate conversion starts its own. This is a different rule from the five year clock that governs whether earnings come out tax free, and the two are frequently confused.
If you hold both pre tax and after tax money across your IRAs, you cannot choose to convert only the after tax portion. The IRS treats every conversion as coming proportionally from both, calculated across all of your traditional IRAs combined on Form 8606.
Roth contributions have income limits. Roth conversions do not, and have not since 2010. However much you earn, you are allowed to convert.
California does not tax Social Security benefits, which helps. It does tax other retirement income as ordinary income, including the full amount of a Roth conversion, and it taxes capital gains at ordinary rates rather than at the lower federal long term rates.
That matters for conversion sizing in one specific way. If part of your plan is to move to a state with no income tax after you retire, converting before the move means paying California tax on the conversion that you might have avoided. If you intend to stay in North County, which most of the households we work with do, the question is simply where a conversion sits against the four ceilings above.
Everything above is the rulebook. Where your four ceilings sit depends on your accounts, your Social Security timing, whether you are on Medicare yet, and what else is on your return this year. Our planning tool models it against your real numbers.
Our planning tool models your retirement income year by year. Enter what you have and when you plan to stop working, and it shows you where your income actually lands each year, which is the figure every one of the four ceilings is measured against.
It takes about five minutes, it’s free, and nothing is sold to you at the end of it.
Run my numbersThe Retirement Readiness Check is an interactive planning tool provided by MoneyGuide. Results are illustrative estimates based on the information you enter and on assumptions used by the software provider. They will vary with those assumptions, do not constitute a complete financial plan, and are not a prediction or guarantee of any outcome. An adviser must review your complete circumstances before providing any recommendation.
Worth connecting to what you just read: the year you claim Social Security changes where your conversion ceilings sit. A larger benefit is more income. Half of it counts toward the threshold that determines how much of your Social Security is taxable. Starting earlier means a smaller benefit but more years of it, and usually more pressure on your IRA in the meantime. We cover that in detail on do I pay taxes on Social Security?
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Convert the largest amount that keeps you below the nearest ceiling. There are four to check: the top of your current tax bracket, the Medicare IRMAA threshold, the ACA premium tax credit cliff if you retired before 65, and the provisional income level at which more of your Social Security becomes taxable.
For a married couple both 65 or older in 2026, the top of the 12% bracket sits at $148,300 of total income, because the standard deduction of $32,200, the additional age 65 deduction of $3,300 and the senior deduction of $12,000 stack to $47,500. The first IRMAA threshold for a couple is $218,000. Whichever ceiling you reach first sets your number, and for early retirees on a marketplace health plan it is usually the ACA cliff, which sits at $84,600 for a household of two.
IRMAA is an income related surcharge added to Medicare Part B and Part D premiums. It is calculated from your tax return two years earlier, so your 2026 premiums are set by your 2024 income and a conversion this year affects your 2028 premiums.
It works as a cliff rather than a sliding scale. The first threshold in 2026 is $109,000 for a single filer and $218,000 for a couple filing jointly. Crossing it by one dollar adds $81.20 a month to Part B and $14.50 a month to Part D, per person. For a married couple that is $2,296.80 over the year. The standard 2026 Part B premium is $202.90 a month.
No. Social Security will reconsider an IRMAA determination after a life changing event, but Form SSA-44 lists exactly eight qualifying events: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income producing property, loss of pension income, and an employer settlement payment.
A Roth conversion is not among them and the form provides no general category, so a voluntary increase in income does not qualify. If a conversion pushes you across a threshold, the surcharge applies.
It usually makes the ACA premium tax credit cliff your binding ceiling, well before your tax bracket becomes an issue.
The enhanced credits that were in place from 2021 expired at the end of 2025, so for 2026 coverage the hard limit at 400% of the federal poverty level is back in force. That is $62,600 for a household of one and $84,600 for a household of two, using the 2025 poverty guidelines that apply to 2026 coverage. Credits are paid in advance and reconciled at filing, and above 400% the repayment is not capped, so a December conversion can create a bill for an entire year of subsidy you have already used.
It depends on when you were born. Under the final Treasury regulations implementing the SECURE 2.0 Act, anyone born before 1960 begins at 73, and that includes people born in 1959. Anyone born in 1960 or later begins at 75.
This matters for conversions because the years between retiring and the start of required minimum distributions (RMDs) are usually the cheapest conversion years you will have. If you were born in 1960 or later, that window is two years longer than most coverage suggests. Once RMDs begin, you must take the full distribution for the year before converting anything, and the converted amount does not count toward it.
No. Recharacterizing a conversion, which effectively reversed it, was eliminated for tax years after 2017 and has not been restored. A conversion is permanent from the day you make it, whatever the market does afterward and whatever the tax bill turns out to be.
Two other rules are worth knowing before you convert. Each separate conversion carries its own five year holding period before the converted amount can be withdrawn without a 10% early distribution penalty, which is a different rule from the five year clock governing tax free earnings. And if you hold both pre tax and after tax money in traditional IRAs, the pro rata rule means you cannot convert only the after tax portion.
No. Roth contributions are subject to income limits, but Roth conversions have had no income limit since 2010. Your income does not affect whether you are permitted to convert, only what the conversion costs you.
It can. The taxable portion of your benefit is determined by provisional income, which is your adjusted gross income plus tax exempt interest plus half of your Social Security benefit. A conversion is included in gross income, so it raises that figure directly. Tax exempt municipal bond interest counts as well.
Above $32,000 of provisional income for a couple, or $25,000 for a single filer, up to half the benefit becomes taxable. Above $44,000 and $34,000, up to 85% does. Those thresholds were set in 1983 and 1993 and have never been indexed to inflation. If you are already at the 85% maximum, a conversion cannot push you further, which is why this ceiling matters most in the years before you claim.
Conversion income changes how much of your Social Security is taxed
Whether your Social Security benefit is taxable depends on a figure called provisional income: your adjusted gross income, plus any tax exempt interest, plus half of your Social Security benefit.
A Roth conversion is included in gross income, so it flows straight into that calculation. Tax exempt municipal bond interest counts too, which surprises people who bought those bonds specifically to stay invisible.
Above $32,000 joint
$25,000 for a single filer. Up to half the benefit becomes taxable.
Above $44,000 joint
$34,000 for a single filer. Up to 85% of the benefit becomes taxable, which is the maximum.
Here is the part worth knowing. Those four thresholds were written into law in 1983 and 1993 and have never been adjusted for inflation. Not once. A couple with $44,000 of provisional income in 1993 was comfortably well off. Today that describes a great many ordinary retirees.
For most people already drawing Social Security, a conversion of any size pushes them past both thresholds and they are at the 85% maximum regardless. In that case this ceiling stops mattering, because you cannot go past it. It matters most in the years before you claim, which is precisely the window when conversions are usually cheapest.
We covered how this calculation works in full on Do I pay taxes on Social Security?