A year-end review for people nearing or entering retirement
A Roth conversion in 2026 may be useful if paying tax now supports your longer-term plan. It can also be expensive if the added income raises other costs or reduces deductions. Compare the full effect of a conversion with doing nothing and with converting smaller amounts over time before choosing a number.
The decision deserves a fresh calculation after retirement, a change in work, divorce, or the death of a spouse. Your current income and future filing situation may differ from the assumptions behind an older plan.
Understand what a conversion changes
A conversion moves money from a traditional IRA to a Roth IRA. The taxable portion is generally included in income for the conversion year. Any nondeductible basis must be accounted for under the applicable tax rules. The taxable share is generally figured across all of your traditional, SEP, and SIMPLE IRA balances as of December 31 of the conversion year, so you cannot convert only after-tax dollars when your IRAs also hold pretax money. A conversion is different from making a new annual IRA contribution. [1]
The purpose is to change how that money may be taxed in the future. Whether the trade is worthwhile depends on the tax paid now, future withdrawal needs, and the rules for accessing Roth money. Do not assume every dollar becomes available immediately without tax or penalty considerations. Each conversion has its own five-year period for the 10% additional tax if you withdraw converted amounts before age 59½, and a separate five-year rule applies to tax-free withdrawals of earnings.
Use the current 2026 rules
Older articles sometimes describe 2026 as the year the individual federal tax rates were automatically scheduled to rise when earlier provisions expired. The 2025 tax law made that tax rate structure permanent under current law. [3] That removes one blanket argument for rushing a conversion. Your personal tax rate can still change when your income, filing status, or circumstances change.
There is also a temporary additional deduction for eligible people age 65 and older. For 2025 through 2028, the maximum is $6,000 per qualifying person, with a phaseout beginning above modified adjusted gross income of $75,000 for single filers or $150,000 for joint filers. [2] A taxable conversion can affect that income calculation, so the deduction belongs in the analysis.
Calculate the complete cost of added income
Begin with a projection of your income without a conversion. Include earnings, pensions, investment income, and any required retirement distributions. Then calculate the result with several conversion amounts. Ask the reviewer to include the effect on deductions and other income-related costs, as well as federal and state taxes.
Medicare is one example. Social Security generally uses income tax information from two years before the premium year when determining income-related adjustments. [4] A 2026 conversion could therefore affect 2028 premiums under current rules. The eventual dollar thresholds need to be checked when available; do not build a promise around a projected future threshold. If you are under 65 and buy coverage through the Health Insurance Marketplace, conversion income can also reduce premium tax credits for the same year. Added income can also make more of your Social Security benefits taxable.
Compare several amounts before choosing one
Ask for a side-by-side comparison of no conversion, a smaller conversion, and a larger conversion. Use the same investment assumptions and time period in each version so the differences are meaningful.
| Scenario | What to examine |
|---|---|
| No conversion | Current tax savings compared with future taxable withdrawals and your expected filing situation |
| Smaller conversion | Added tax and other costs while preserving more flexibility this year |
| Larger conversion | Immediate cost, effects on deductions and premiums, and whether the long term benefit justifies them |
For an illustration of the method, consider hypothetical conversion amounts of $0, $20,000, and $40,000. Those are comparison points, not recommendations. Ask how much additional total cost each creates and what assumptions would need to hold for the conversion to help. The useful number is the change in the whole plan, not a tax bracket viewed in isolation.
Decide how you would pay the tax
Money used for the conversion tax is money you cannot use for another purpose. Check the cash reserve you would have afterward and the expenses coming due. If paying the tax would weaken your ability to cover housing, care, or an unexpected bill, that is part of the decision.
If withholding is taken from the IRA distribution, less money reaches the Roth account, and the amount withheld can have separate tax consequences. Required minimum distributions cannot be converted. [1] Ask your tax professional and custodian to confirm the sequence, any required estimated payments, and the paperwork.
Leave time to complete the transaction
For a straightforward direct conversion intended for 2026, plan for completion by December 31 and confirm the custodian’s earlier operational cutoff. Do not treat it as an annual IRA contribution with a later filing-season deadline. A conversion made in 2018 or later cannot be reversed through recharacterization. [5]
Once the transfer is completed, retain the confirmation and review the tax documents when they arrive. Record why the conversion amount was selected so next year’s review can begin with the same assumptions.
Your Roth conversion review checklist
☐Project this year’s income before adding a conversion.
☐Compare at least two possible amounts with no conversion.
☐Include senior deduction phaseouts and possible Medicare effects.
☐Confirm nondeductible basis and any required minimum distribution.
☐Identify a tax payment source that leaves an adequate cash reserve.
☐Confirm the completion deadline and understand that the conversion cannot be recharacterized.
Questions people often ask:
Is a Roth conversion automatically a good idea in 2026?
No. Current and future taxes, your spending needs, and other income-related costs determine the tradeoff. A year-end deadline does not, by itself, make a conversion beneficial.
Does the senior deduction make a conversion tax-free?
Not automatically. Eligibility and the phaseout depend on income, and the conversion can change that income. Evaluate the full return rather than subtracting the deduction from a proposed conversion.
Can I convert only part of my IRA?
Yes. A partial conversion is one option for comparison, subject to applicable tax rules. You do not need an all-or-nothing approach.
Review the decision in the context of your life
Steve Hazel and the Magnificent Life Team at Farther can help you organize the retirement planning questions behind a conversion. Schedule a conversation and coordinate any tax decision with your tax professional before authorizing a transaction.
Schedule a conversation with Steve Hazel
Based in Tempe, Arizona, and serving clients nationwide.
Educational information only. This article does not provide personalized investment, tax, or legal advice. Tax treatment depends on individual circumstances and current law. Consult the appropriate professionals before acting.
Sources for the article
Sources checked September 23, 2026. Links open the original publications.
[1] Internal Revenue Service. Publication 590 A for 2025
[2] Internal Revenue Service. Check eligibility for the enhanced deduction for seniors. February 27, 2026.
[3] Internal Revenue Service. Internal Revenue Bulletin 2025 45. Tax rate changes and 2026 inflation adjustments.
[4] Social Security Administration. Modified adjusted gross income for Medicare premiums. December 2, 2025.
[5] Internal Revenue Service. Retirement plans FAQs regarding IRAs
Questions about your own plan?
Talk to the Magnificent Life Team team