A tax-planning opportunity before required withdrawals
The daughter raised the issue over Labor Day weekend, asking why Roth conversions had never been considered since her father retired. He responded that she was "second-guessing a professional." Whether her suggestion makes sense depends on the couple's current taxes, future income and plans for the money, not simply on who raised it.
They are covering living expenses with savings in a taxable brokerage account. That may leave them with relatively low taxable income and room to convert some IRA assets at a lower federal rate than they would pay on withdrawals later.
A conversion transfers money from a traditional IRA to a Roth IRA. Any previously untaxed amount generally becomes taxable income in the conversion year. Moving too much at once can push part of their income into a higher bracket or increase other income-based costs.
For married couples filing jointly in 2026, the 24% federal bracket starts above $211,400 in taxable income. The standard deduction is $32,200, but the couple would need to account for all income and deductions before deciding how much room they have for a conversion.
The tax comparison, and why the decision cannot be reversed
The basic comparison is between the tax rate on a conversion now and the rate that would apply to a later withdrawal. Suppose a $100,000 conversion were taxed entirely at a 22% marginal federal rate: The federal tax would be about $22,000. A later withdrawal of the same amount taxed entirely at 32% would cost about $32,000.
The $10,000 difference is an illustration, not a promised saving. An actual conversion could cross several brackets, future rates could change, and other tax consequences could alter the result. Likewise, converting $100,000 in each of five years would shift $500,000 into a Roth before investment growth, but that does not establish the right target for this couple.
There is no longer a scheduled expiration of the current individual rate structure driving a 2026 decision. As TaxPayers.net explains, the One Big Beautiful Bill Act, P.L. 119-21, signed July 4, 2025, made the Tax Cuts and Jobs Act's individual rate schedule permanent. It removed the December 31, 2025, sunset, leaving the 10%, 12%, 22%, 24%, 32%, 35% and 37% brackets in place indefinitely. A 2026 conversion therefore has no "convert before rates rise" deadline tied to that sunset.
Careful sizing matters because conversions completed in 2018 or later cannot be reversed through recharacterization. The 2017 Tax Cuts and Jobs Act ended that option effective January 1, 2018. A subsequent market decline or an unexpectedly high tax bracket does not undo the conversion tax. Ordinary annual IRA contributions, unlike conversions, can still be recharacterized.
Paying the conversion tax with taxable savings, if feasible, would leave more of the retirement money in the Roth than withholding the tax from the converted funds. The couple would also need to consider investment gains, remaining cash reserves and competing financial goals.
Future RMDs, a surviving spouse and the children
Leaving the money in traditional IRAs allows continued tax-deferred growth, but eventually requires withdrawals. An RMD uses the previous year-end account balance and the applicable IRS distribution period. For example, dividing a $2 million balance by roughly 26.5 produces a required withdrawal of about $75,000. That is not a forecast for this couple; the actual amount depends on the owner's age and account balance when distributions begin.
The husband is roughly five years from age 73, while his wife's schedule must be considered separately. The Congressional Research Service describes the SECURE 2.0 rules: Age 73 applies to people who turn 72 after December 31, 2022, and turn 73 before January 1, 2033, generally those born from 1951 through 1958. The age rises to 75 for people who turn 73 after December 31, 2032, generally those born in 1960 or later. Final IRS regulations specify age 73 for people born in 1959.
Required withdrawals generally add taxable income. Alongside Social Security, a pension or other taxable income, they could put more of the couple's income in higher brackets. Conversions would reduce the traditional IRA balance and could lower those future withdrawals, at the cost of paying conversion tax now.
Roth IRAs have no RMDs during the original owner's lifetime, according to the CRS. Converted money can remain invested and grow tax-free without mandatory withdrawals. Qualified Roth distributions are generally tax-free, though heirs who inherit a Roth still face distribution rules.
The comparison also extends beyond the years when both spouses are alive. A surviving spouse may eventually file as single rather than jointly, exposing a similar amount of retirement income to narrower brackets and potentially a higher tax bill.
For children inheriting traditional IRAs, withdrawals generally add to their own taxable income. Most non-spouse beneficiaries must empty the account within 10 years, with exceptions. The 2026 single-filer 32% bracket begins at $201,775 in taxable income, but an inheritance would not automatically be taxed at that rate. Each child's income, filing status and withdrawal schedule would determine the tax.
There can also be annual withdrawal requirements within that decade. Franklin Templeton's explanation of the final IRS rules notes that, beginning in 2025, many non-spouse beneficiaries covered by the 10-year rule must take annual minimum distributions if the owner died after reaching the required beginning date. They must still empty the account within 10 years. A missed annual distribution can bring a 25% excise tax on the shortfall, reduced to 10% with timely correction.
Medicare adds another income threshold
A tax projection also needs to account for Medicare. Income from earlier tax returns determines whether beneficiaries owe income-related monthly adjustment amounts, known as IRMAA, for Part B and Part D coverage.
For 2026 premiums, the joint-filer threshold is $218,000 in modified adjusted gross income, generally measured using the couple's 2024 return. A conversion in 2026 would generally enter the calculation for 2028 premiums instead. The 2026 threshold should not be treated as the threshold that will apply in 2028.
The current figures illustrate the potential cost. According to IRMAA Group, the standard Part B premium for 2026 is $202.90 a month. Joint filers with 2024 MAGI above $218,000 and up to $274,000 fall into the first IRMAA tier, which adds $81.20 a month for Part B and $14.50 for Part D per person.
Those surcharges total about $1,148 annually for each beneficiary. If both spouses are enrolled, the couple can owe roughly twice that amount. A conversion that appears favorable based only on federal tax brackets could therefore carry additional Medicare costs or affect other income-sensitive provisions.
What the adviser should help them establish
The absence of a conversion recommendation does not, by itself, establish that the adviser failed them. An investment-management engagement may not include comprehensive tax planning; that work may be separate or coordinated with an accountant.
At about $16,000 a year, however, the couple has reason to clarify what the fee covers and whether anyone has evaluated their retirement tax strategy. The firm's Form CRS relationship summary describes its services, fees and conflicts.
They can ask the adviser and their daughter to build a year-by-year comparison of conversion amounts, future RMDs, Medicare premiums and potential estate outcomes. If tax planning is outside the agreed services, they can ask about an additional engagement or obtain another opinion.
A decision for 2026, not a reason to rush
A Roth conversion generally has to be completed by December 31 to count for that tax year. There is still time to evaluate a 2026 conversion, but the calendar alone is not a reason to proceed.
Before authorizing one, the couple and their CPA and adviser should estimate taxable income, determine the remaining room in their preferred bracket and test several conversion amounts against future RMDs and Medicare costs. They also need to identify the source of the tax payment and confirm that enough cash will remain for other needs.
