A Roth conversion is one of the few proactive tax strategies available to ordinary savers, not just the wealthy. You pay tax today at your current rate so that your money grows and comes out completely tax-free in retirement. Done in the right year, the math is compelling. Done carelessly, it spikes your tax bill with nothing to show for it. Here is how to do it correctly in 2026.
What changed in 2026
- Tax brackets remain at TCJA levels through 2025; with TCJA extension debates continuing, locking in today's rates still motivates conversions for many planners.
- No income limit to do a conversion — this has been true since 2010 and remains in place, enabling the backdoor Roth for high earners.
- SECURE 2.0 raised the RMD age to 73, extending the "pre-RMD window" during which conversions are most tax-efficient for recent retirees.
- Roth Solo 401(k) conversions and in-plan rollovers are now widely supported at major brokerages, adding more conversion pathways.
The core mechanics
A Roth conversion moves money from a traditional IRA (or rollover IRA, SEP IRA, or pre-tax 401(k)) into a Roth IRA. The converted amount is:
- Added to your taxable income for that year.
- Taxed at your ordinary income rate (not capital gains rates).
- Then in the Roth account, it grows and withdraws tax-free.
There is no annual limit on how much you can convert. But remember: every dollar converted is a dollar of taxable income that year.
When a Roth conversion makes sense
| Situation |
Conversion value |
| Tax rates expected to rise |
High — lock in today's rate |
| Currently in a low bracket (gap year, early retirement) |
High — cheap conversion |
| Large deductions this year offsetting income |
High — deductions reduce net tax |
| Large traditional IRA, worried about RMDs |
High — shrink the future RMD balance |
| Already in the top bracket with no gap |
Low — no rate advantage |
| Need the money in under 5 years |
Low — 5-year rule applies to conversions |
The tax math: how to calculate whether it is worth it
Step 1: Find your current marginal rate and your estimated retirement rate.
Step 2: Estimate how many years the money stays invested.
Step 3: At roughly equal rates, conversion is break-even. If your retirement rate is higher, conversion wins. If lower, keep the traditional.
Simple bracket-fill approach: Convert only up to the top of your current bracket. For example, if you are in the 22% bracket and have $20,000 of room before hitting 24%, convert up to $20,000. This maximizes the conversion without jumping rates.
Use the IRS 2026 tax brackets to find your bracket edge. A conversion calculator at Fidelity or Vanguard handles the arithmetic.
How to execute a Roth conversion: step by step
- Calculate your income for the year before converting — wages, dividends, capital gains, all of it.
- Estimate how much room you have before reaching the next bracket boundary.
- Log in to your brokerage. At Fidelity, Schwab, or Vanguard, look for "Convert to Roth IRA" in your traditional IRA account menu.
- Specify the amount. Choose cash or securities — you can convert specific positions.
- Decide on withholding. Do NOT withhold taxes from the conversion itself. Pay from outside funds. Withholding reduces the converted amount and defeats the purpose.
- The brokerage reports it. You will receive a Form 1099-R at tax time; report it on Form 8606.
- Make estimated tax payments if needed to avoid underpayment penalties.
Partial vs. full conversion
Converting your entire traditional IRA in one year often pushes you into a higher bracket unnecessarily. Spreading conversions over several low-income years — "Roth conversion laddering" — is typically more tax-efficient.
| Strategy |
Best for |
| Full conversion |
Small IRA balance, year with heavy deductions |
| Partial (bracket-fill) |
Larger IRA, multiple years of room |
| Roth ladder |
Early retirees building tax-free income over time |
Common mistakes
Withholding taxes from the converted funds. This reduces the amount that lands in the Roth, and if you are under 59½, the withheld amount may be treated as a distribution with a 10% penalty.
Converting in a high-income year. If you had a bonus, a large capital gain, or a business windfall, check your total income first. A conversion on top of that can push you into 32% or 37%.
Forgetting state taxes. Many states tax conversions as ordinary income too. Factor in your state rate.
Ignoring the 5-year clock. Each conversion has a 5-year clock for penalty-free withdrawal of the converted principal (if under 59½). This matters for Roth ladders.
Not filing Form 8606. This IRS form tracks your basis in non-deductible IRA contributions and conversions. Missing it creates taxable headaches later.
What to skip
- Converting to avoid RMDs if you will need the money before 59½ — early withdrawal from converted funds has a 5-year penalty window.
- Huge one-time conversions purely to "get it over with" — the bracket math usually punishes this severely.
- Paying conversion taxes with IRA funds (via withholding) — always pay from a taxable account.
FAQ
Can high earners do a Roth conversion?
Yes. There is no income limit on conversions — only on direct Roth IRA contributions. This is why the backdoor Roth (contribute to traditional, then convert) works for high earners.
What is the backdoor Roth?
Contribute a non-deductible amount to a traditional IRA, then immediately convert to Roth. The tax due is minimal if you have no other pre-tax IRA funds (the pro-rata rule applies if you do).
Does a Roth conversion affect Medicare premiums?
Potentially. IRMAA surcharges kick in if your modified AGI exceeds certain thresholds (~$106,000 single / ~$212,000 married in recent years). A large conversion can trigger or increase IRMAA with a two-year lag. Plan accordingly.
Can I undo a Roth conversion?
No. Recharacterization of conversions was eliminated in 2018. A conversion is permanent once executed.
Where to go next
See How to start a SEP IRA in 2026, How to open a Solo 401k in 2026, and How to harvest tax losses yourself in 2026.