2026 Roth Conversion Guide
Tax Planning Series · Strategy · 2026 Edition
Voluntarily pay tax on pre-tax retirement dollars today to lock in tax-free growth, shrink future required distributions, and build flexibility for retirement.
The Core Idea
A Roth conversion moves pre-tax retirement dollars — from a Traditional IRA or an eligible workplace plan — into a Roth account. You pay ordinary income tax on the converted amount this year, in exchange for qualified withdrawals that are tax-free for life. Done thoughtfully, a conversion is a tax-timing decision: pay now at a rate you know to avoid paying later at a rate you don’t.
Why Consider a Conversion
No income limit to convert
Unlike Roth contributions, anyone with pre-tax retirement dollars can convert — regardless of how much they earn.
Fill up your bracket
Convert just enough to reach the top of a target bracket (often 12%, 22%, or 24%) without spilling into the next one.
Shrink future RMDs
Pre-tax balances drive required minimum distributions starting at age 73 (or 75 if you were born in 1960 or later). Converting now reduces the base that’s later forced out as taxable income.
Build tax-diversified buckets
A mix of pre-tax, Roth, and taxable brokerage gives you withdrawal flexibility in retirement to manage your bracket, Medicare premiums, and Social Security taxation year by year.
2026 Bracket Fill-Up Reference
| Top of Bracket | Single (taxable income up to) | Married Filing Jointly (up to) |
|---|---|---|
| 12% | $50,400 | $100,800 |
| 22% | $105,700 | $211,400 |
| 24% | $201,775 | $403,550 |
| 32% | $256,225 | $512,450 |
Illustrative example. A married couple with $150,000 of taxable income sits in the 22% bracket. They could convert roughly $61,000 more before crossing into the 24% bracket in 2026. Hypothetical — for illustration only and not a recommendation; your specific situation may differ.
Who Often Benefits Most
Pre-retirees in a “gap” year
After paychecks stop but before Social Security and pensions start, taxable income can drop sharply — creating room to convert at a lower rate.
Early retirees before Medicare
Medicare premium surcharges (IRMAA) use a two-year income lookback. Conversions completed before age 63 don’t yet affect Medicare premiums.
High earners shut out of direct Roth contributions
When income exceeds the Roth contribution phase-out, conversion becomes a path to building Roth balances. (Mind the pro-rata rule — see below.)
Anyone building tax diversification
Future tax rates are uncertain. Holding pre-tax, Roth, and taxable buckets hedges that risk and gives you levers to pull in retirement.
A Simple Decision Framework
| 1 | Estimate this year’s bracket vs. retirement Conversions tend to pay off when your current rate is the same as or lower than your expected future rate. |
| 2 | Pick a target ceiling and size the conversion Choose a bracket top (commonly 12%, 22%, or 24%) and convert just enough pre-tax to reach it — no more. |
| 3 | Watch IRMAA once you’re age 63 or older A single dollar over a Medicare income threshold can trigger a full surcharge tier two years later. |
| 4 | Pay the tax from outside money Using taxable brokerage dollars to cover the tax bill preserves the full converted balance for tax-free growth. |
| 5 | Mind the 5-year clock on conversions Each conversion starts its own five-year period before earnings can be withdrawn tax-free (separate from the contribution clock). |
| 6 | Beware the pro-rata rule All your Traditional, SEP, and SIMPLE IRAs are aggregated when calculating the taxable portion of a conversion. Workplace 401(k)s and inherited IRAs are not. |
| 7 | Revisit annually Income, tax law, and goals shift. A conversion plan is a multi-year exercise, not a one-time event. |
Conversion math gets specific fast — brackets, IRMAA, state taxes, time horizon, and where the tax bill comes from. We can model your situation and build a multi-year conversion plan.
Questions about how a Roth conversion fits into your retirement plan?
Reach out to your CLF advisor — we’re always happy to talk through what’s on your mind.
This material is provided by CLF Asset Management, Inc., a fee-only registered investment adviser, for informational and educational purposes only. It does not constitute personalized financial, legal, or tax advice, and it is not a recommendation to pursue any particular tax strategy or to buy, sell, or hold any security. No client or potential client should assume that any information presented constitutes personalized financial planning or investment advice. A Roth conversion is a taxable event and is not appropriate for every investor; the right answer depends on your income, current and expected future tax brackets, time horizon, state of residence, and other facts specific to you. Tax brackets, contribution limits, and required minimum distribution rules are set by the IRS and by federal law and are subject to change; the 2026 figures cited are believed accurate as of the date of publication and should be independently verified. Examples are hypothetical, are provided for illustration only, and are not a guarantee of future results. Personalized advice can only be rendered after engagement of the firm, execution of required documentation, and receipt of required disclosures. Additional information about CLF Asset Management, Inc. is available on the SEC’s website at www.adviserinfo.sec.gov. Please consult your advisor and your tax professional regarding your individual circumstances.
