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Most people spend their entire careers believing they're winning at retirement. They max out their 401(k). They watch the balance grow. They think they've done everything right.
Then they retire, and the IRS shows up wanting to collect their taxes.
A 65-year-old couple I worked with recently had $2.3 million sitting in traditional 401(k) and IRA accounts. On paper, they looked set. But once we ran the numbers, Social Security income, Required Minimum Distributions starting at age 73, Medicare IRMAA surcharges, and the possibility of one spouse dying and the other filing as a single taxpayer, they were staring down a decades-long tax bill they never planned for.
Every dollar in a traditional retirement account is pre-tax money. That means the IRS has a claim on every single dollar sitting in your 401(k) or traditional IRA. And when the RMDs start, you're pulling out money whether you want it or not, at whatever tax rates exist in the future.
The Roth conversion is one of the most powerful tools available to counter this. But it's also one of the most misunderstood. Here's what you actually need to know, at every income level, to use it correctly.
A Roth conversion is the act of taking money out of a traditional IRA or 401(k), money that has never been taxed, and moving it into a Roth IRA, paying the income tax today in exchange for tax-free growth and tax-free withdrawals forever.
Once money is in a Roth IRA, it grows tax-free. You never owe taxes on the gains. You're not forced to take Required Minimum Distributions during your lifetime. And when you leave it to your heirs, they can stretch those tax-free withdrawals over 10 years.
The word you'll often hear is "never", as in, you'll never pay taxes on that money again. That is an extraordinary deal. The question is just whether the math works in your favor today.
The key insight: a Roth conversion is a bet on your future tax rate versus your current tax rate. If you believe your effective tax rate will be higher in the future, because of RMDs, a second Social Security check, a spouse's income, or rising tax policy, then paying taxes today at a lower rate is a smart trade.
Let me be direct about what the 2026 federal tax landscape looks like.
The Tax Cuts and Jobs Act provisions are now fully expired, meaning the 2026 brackets have reverted to pre-2018 levels. The 28% bracket now begins at approximately $100,525 for single filers and $168,400 for married filing jointly (indexed for inflation). The 33% bracket kicks in around $190,150 (single) and $306,175 (MFJ). These are meaningful changes that affect conversion math in a real way.
If you're earning $75,000–$100,000 (single) or $150,000–$200,000 (married):You are in the sweet spot for aggressive Roth conversion. You likely have room to convert meaningful chunks, potentially $30,000 to $60,000 per year, before pushing into the 28% or higher bracket. Every dollar converted below the 22% threshold is a fantastic deal relative to the taxes you'd owe in retirement when RMDs force income on top of Social Security.
If you're earning $200,000–$400,000 (married):You're in the 28%–33% range. Conversion still makes sense, but size matters. Here, the strategy shifts from converting as much as possible to converting strategically, filling up lower brackets, avoiding IRMAA cliffs, and potentially doing smaller conversions over more years. The goal is tax-bracket flattening: minimizing the peak tax rate you'll ever pay, rather than zero-sum arbitrage.
If you're earning over $400,000: Your immediate conversion capacity is limited by the fact that any dollar you convert gets taxed at 35% or 37%. But this is not a reason to avoid Roth planning, it's a reason to look at Roth 401(k) contributions, after-tax 401(k) contributions with in-plan Roth conversions (the "mega backdoor Roth"), and building a tax diversification strategy that gives you flexibility in retirement. High earners with multiple accounts, taxable brokerage, traditional 401(k), and Roth, have the most powerful retirement income flexibility.
There are three windows in most people's lives where Roth conversion math looks its best. Miss them, and you've paid a permanent tax premium.
Window 1: The Early Retirement Gap (Ages 60–72)This is the single most valuable conversion window for most people. You've stopped working (no earned income), Social Security hasn't started yet (or you're deferring it), and RMDs haven't begun. For two to seven years, your taxable income can be almost entirely controlled. This is when I've seen clients convert $100,000–$200,000 per year at 12% or 22% effective rates, dramatically reducing the traditional IRA balance before the RMD clock starts.
Window 2: The RMD Acceleration Years (Ages 73–80) Once RMDs begin, you lose control. The IRS tells you how much to withdraw, and that income stacks on top of everything else. But you can still convert, you just can't use RMD funds for the conversion (you must take the RMD first, then convert additional funds separately). For people who didn't use Window 1, smaller annual conversions during this phase can still flatten lifetime tax exposure.
Window 3: After a Major Income Drop Job loss, sabbatical, business sale (with installment payments), or a divorce settlement year, any year where your income drops significantly is a conversion opportunity. I've seen clients in the middle of a career transition convert $80,000 in a single year because they were temporarily in the 12% bracket, locking in a tax rate they won't see again for decades.
If you're on Medicare, your Part B and Part D premiums are based on your income from two years prior. This is called IRMAA, Income-Related Monthly Adjustment Amount, and it creates hard dollar cliffs that can cost you thousands per year.
In 2026, for a married couple filing jointly, crossing the $212,000 MAGI threshold means your combined Medicare premiums jump by approximately $1,400 per year. Cross $266,000, and you're paying an extra $3,500 per year. These aren't taxes in the traditional sense, but they're real money, and a careless Roth conversion can push you over one of these thresholds for two full years.
I always run IRMAA analysis alongside any conversion recommendation. The goal isn't to avoid converting, it's to convert just below the cliff, not push past it carelessly. Sometimes that means converting $178,000 instead of $220,000. The discipline pays off.
If your income is too high to contribute directly to a Roth IRA (in 2026, phase-out starts at $150,000 for single filers and $236,000 for married filers), you still have options.
Backdoor Roth IRA: You contribute to a non-deductible traditional IRA (up to $7,000, or $8,000 if you're 50+), then immediately convert it to a Roth. Because you've already paid taxes on those dollars, the conversion is tax-free (assuming you have no other pre-tax IRA balances, this is critical; look up the "pro-rata rule" before attempting this).
Mega Backdoor Roth:If your employer's 401(k) plan allows after-tax contributions and in-plan Roth conversions (many do, but not all), you may be able to contribute up to $46,000 in additional after-tax dollars and convert them to Roth inside the plan. In 2026, total 401(k) contribution limits (employee + employer + after-tax) reach $70,000 per person. A couple executing the mega backdoor Roth can get $140,000 into Roth-equivalent vehicles in a single year. That is transformative for high earners.
One of the reasons I co-founded ORO (oroworks.com) is that conversion windows open and close based on real-time financial data, and most people miss them because nobody's watching all the variables at once.
ORO is a financial decision engine that connects payroll, retirement account balances, and debt data to surface actionable insights. When a client's income drops unexpectedly, ORO flags it as a potential conversion opportunity. When a client's pre-tax IRA balance crosses certain thresholds, setting up a future RMD problem, ORO surfaces a "conversion urgency" alert tied to projected retirement tax exposure.
The vision is simple: you shouldn't need a $500/hour meeting with a CFP to know that this year is your cheapest window for a Roth conversion. That information should find you. ORO is designed to do exactly that.
I've seen smart, high-earning people blow this strategy in completely avoidable ways. Here are the most expensive mistakes:
1. Converting too much in one year.Pushing into a 33% or 35% bracket to get money into a Roth defeats the purpose. The math only works if you're converting at a rate lower than your projected future rate. Larger conversions spread over more years almost always win.
2. Paying the conversion tax from the IRA itself. If you convert $100,000 and withhold 24% for taxes from the converted amount, you've just converted $76,000, not $100,000. Worse, if you're under 59½, that withheld amount may be subject to a 10% early withdrawal penalty. Always pay conversion taxes from outside funds (a taxable brokerage account or savings), so the full converted amount goes to work in the Roth.
3. Ignoring the pro-rata rule.If you have existing pre-tax IRA money (rollover IRAs, SEP IRAs, SIMPLE IRAs), a backdoor Roth conversion triggers the pro-rata rule. The IRS treats all your traditional IRAs as one pool, so even your "non-deductible" contribution gets partially taxed at conversion. For many high earners, the solution is rolling pre-tax IRA money into a current employer's 401(k) to zero out the IRA balance before executing the backdoor.
4. Forgetting state taxes. California taxes Roth conversions as ordinary income, there is no special treatment, no exemption, and no way around it. A $100,000 conversion for a California resident in the 9.3% state bracket adds $9,300 on top of federal tax. That changes the math significantly. I always run state-specific analysis before recommending a conversion size.
5. Not revisiting the strategy every year.Roth conversion strategy is not "set and forget." Tax laws change (and they've changed dramatically just in the last two years). Your income changes. Your account balances change. Every year should involve a fresh projection, what's your income this year, what are the brackets, how much can you convert at what rate, and what does the 10-, 20-, and 30-year tax picture look like?
The clients I've seen benefit most from Roth conversion strategies are not the ones who converted the most in any single year. They're the ones who converted consistently, strategically, and at the right rate, year after year, during the windows that made sense for them.
At its core, this is about one thing: you have a finite number of years where you can pay taxes at a lower rate than the rate the IRS will eventually impose through RMDs, bracket creep, or widow/widower filing status. Every one of those years is a gift. Use them.
If you're not sure whether a Roth conversion makes sense for your situation, or you want to map out the windows before you miss them, this is exactly the kind of analysis I do with clients at Golden Wealth Capital.
Whether you're a high earner in the thick of your career, approaching retirement, or already in the early retirement gap window, there's a version of this strategy that works for your numbers. But it requires real projections, real tax bracket analysis, and real coordination with your overall financial plan.
Schedule a free consultation at goldenwealthcapital.com/free-consultation. We'll map out your current tax trajectory, identify your best conversion windows, and model the lifetime tax savings of a disciplined Roth strategy. No pressure. No product sales. Just fiduciary advice, built around your goals.
Pamela Rodriguez is a Certified Financial Planner and founder of Golden Wealth Capital (goldenwealthcapital.com), a fee-only, fiduciary financial planning firm serving clients across Sacramento and nationwide. She is also the co-founder of ORO (oroworks.com), a financial decision engine that connects payroll, retirement, and debt data to detect financial stress early and surface actionable guidance. Pamela is a graduate of the University of Chicago Booth School of Business, Board Treasurer of the FPA of Northern California, and has been featured in the Wall Street Journal, CNBC, Fox News, Yahoo Finance, and U.S. News & World Report. Her practice focuses on high earners navigating retirement, divorce, and the intersection of both.
Legal Disclaimer: This blog post is for educational purposes only and does not constitute personalized financial, tax, or legal advice. Tax laws, contribution limits, and income thresholds referenced are based on information available as of the publication date and are subject to change. Consult with a qualified financial advisor, CPA, or attorney before making any conversion or tax planning decisions specific to your situation.
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