A 401k is often one of the largest assets for retirees. A Roth conversion is one strategy some retirees consider to help manage future taxes and Medicare premiums.
What is a Roth conversion?
Money moves from a traditional 401k or IRA to a Roth IRA. Taxes are paid on the converted amount in the year of conversion. Future qualified withdrawals and growth can be tax-free in the Roth IRA.
Why some retirees discuss it for 2026?
Roth withdrawals generally do not count toward MAGI for Medicare IRMAA surcharges. 2026 IRMAA thresholds start around $109k (single) / $218k (joint). Conversions in lower-income years may help control long-term Medicare costs.
Key 2026 notes (rules can change):
• No limit on conversion amounts
• RMD age is 75 for those born after 1959
Example: Converting $150,000 in the 2026 calendar year means paying taxes now on that amount. It may or may not reduce lifetime taxes and Medicare premiums depending on tax rates, longevity, and other factors. Results vary widely.
Common considerations
- Convert only up to the top of the current tax bracket.
- Evaluate during lower-income years.
- Pay taxes from non-retirement assets when possible.
- Spread conversions over multiple years.
Bottom line: Roth conversions are one tool some retirees evaluate. They are not right for everyone and carry no guarantees. Individual results depend on personal circumstances.