Roth Conversion Strategies for 2026

A Roth conversion involves moving money from a traditional IRA or 401(k) to a Roth IRA. While you'll pay taxes on the conversion now, your future withdrawals—including all growth—will be tax-free. Here's what to consider for 2026.

Why Consider a Roth Conversion in 2026?

With potential tax law changes on the horizon and current rates still relatively favorable, 2026 presents a strategic window for Roth conversions. If you expect to be in a higher tax bracket in retirement or want to reduce required minimum distributions (RMDs), converting now could save you significant taxes over your lifetime.

Key Factors to Evaluate

Current vs. Future Tax Rates

The fundamental question is whether you'll pay less tax now or later. If your current marginal tax rate is lower than what you expect in retirement, converting makes sense. This is often the case for retirees in their early 60s before Social Security and RMDs begin.

Tax Bracket Management

Strategic partial conversions can "fill up" your current tax bracket without pushing you into the next one. For example, if you're in the 22% bracket, you might convert just enough to stay within that bracket each year.

Medicare Premium Considerations

Roth conversions increase your modified adjusted gross income (MAGI), which can trigger higher Medicare Part B and D premiums through IRMAA surcharges. Plan your conversions carefully if you're near Medicare enrollment age.

The 2026 Conversion Strategy

Consider spreading conversions over multiple years to manage the tax impact. A well-planned multi-year conversion strategy can minimize the total tax paid while maximizing the benefits of tax-free growth in your Roth account.

Don't Forget State Taxes

If you live in a high-tax state now but plan to retire in a state with lower or no income tax, it may be worth waiting. Conversely, if you're moving to a higher-tax state, converting before the move could save on state taxes.