The world of retirement planning is a complex and ever-changing landscape, and one strategy that has gained traction among retirees is the Roth conversion. This strategy involves moving money from a traditional 401(k) to a Roth IRA, which can potentially save retirees tens of thousands of dollars in taxes. But when is the best time to make these conversions? The answer lies in the window between ages 62 and 70, a period that offers retirees a unique opportunity to reshape their retirement finances. In this article, I'll delve into the details of this strategy, explore its implications, and offer my personal perspective on why it's a smart move for retirees.
The Roth Conversion Window
The period between ages 62 and 70 is a critical time for retirees, as it's the only stretch of life when most retirees control their taxable income with precision. During this time, wages have stopped, Social Security has not yet started, and required minimum distributions from the 401(k) don't begin until age 73 under SECURE 2.0. This means that every dollar of income in these years is voluntary, making it the single best opportunity to reshape a six- or seven-figure 401(k) before the IRS forces the issue.
For a married couple filing jointly in 2026, the 12% federal bracket runs up to $100,800 of taxable income, and the 22% bracket runs to $211,400. A couple both over 65 with no wages claims a standard deduction that, with the new senior bonus, can reach roughly $46,700. This means that the first $147,500 of gross income before Social Security falls inside the 12% bracket.
On a $1.4 million traditional balance, converting $100,000 a year to a Roth from 64 to 70 moves $600,000 out of the pre-tax pile at a blended federal cost in the low teens. The same dollars pulled after 73, on top of Social Security and a full RMD, frequently land in the 22% or 24% bracket. The difference on $600,000 of lifetime conversions is real money: ten percentage points of tax on each dollar moved at the right time.
The IRMAA Cliff
However, the trap in this strategy is Medicare. The IRMAA (Income-Related Monthly Adjusted Amount) uses a two-year lookback, so 2026 income drives 2028 premiums. For a couple, MAGI (Modified Adjusted Gross Income) above $218,000 triggers Tier 1, adding $2,297 a year in combined Part B and Part D surcharges. Crossing $274,000 jumps the surcharge to $5,772, and $342,000 pushes it to $9,240. These tiers are hard cliffs: one extra dollar of conversion can cost thousands.
The planning move is to size each conversion to land just under a bracket line. A 65-year-old couple already on Medicare with $40,000 of pension and dividend income has roughly $178,000 of headroom before the first IRMAA cliff. Convert $175,000, not $225,000. Bracket creep is a real risk if conversions get layered on top of inflation-adjusted Social Security in later years.
Delaying Social Security
Every year a retiree delays Social Security past full retirement age adds roughly 8% to the lifetime benefit, fully inflation-indexed. Claiming at 70 instead of 67 raises a $3,200 monthly benefit to about $3,968. That higher base is permanent and shifts more lifetime income into the tax-favored 85%-taxable-Social-Security structure rather than fully taxable IRA withdrawals.
The delay also keeps provisional income low during the conversion years. With Social Security off the books, a 67-year-old can run a clean $150,000 Roth conversion without dragging benefits into taxation. Start Social Security at 62 and that same conversion causes up to 85% of benefits to become taxable, which can push the effective marginal rate near 40% once IRMAA layers on.
The Current Environment
The current environment helps. Ten-year Treasuries yield almost 5% and 30-year yields sit near 5%, which makes a partially de-risked Roth account productive while it grows tax-free. The Fed funds rate has eased from 4.5% a year ago to 3.75%, supporting equity valuations inside the converted balance.
Three Moves Before December 31
- Pull a draft 2026 tax return now and calculate exactly how much room sits between projected MAGI and the $218,000 IRMAA cliff for joint filers. That figure is your conversion ceiling for the year.
- If you are 60 to 63 and still earning, fund the SECURE 2.0 super catch-up of $11,250 on top of the $24,500 base, for a $35,750 total. Anyone who earned more than $150,000 in 2025 must route catch-ups to a Roth 401(k), which doubles as a conversion substitute.
- File Form SSA-44 the year you retire if a one-time conversion pushes you over an IRMAA tier. The Social Security Administration will recalculate premiums based on actual lower income, sparing you the surcharge.
The 62-to-70 window closes once. Income that stays in a traditional 401(k) past 73 is no longer voluntary, and the tax cost compounds alongside the balance. In my opinion, this strategy is a smart move for retirees who are looking to maximize their retirement savings and minimize their tax burden. However, it's important to carefully consider the potential risks and implications before making any decisions.
