A retiree with a traditional IRA, a Roth IRA, and a taxable brokerage account has a low-income year before Social Security and Medicare begin. With wages stopped, Social Security delayed until age 70, and no Medicare until 65, required minimum distributions are still years away. Using 2026 single-filer tax brackets and the standard deduction, converting $185,000 from the traditional IRA can place taxable income near the top of the 24% bracket. The conversion triggers about $33,276 in federal tax paid from the brokerage account, leaving the remaining traditional IRA smaller. The converted amount grows over nine years to about $313,000, then becomes tax-free for life. Leaving the amount unconverted results in future withdrawals taxed at higher combined rates, with additional Medicare IRMAA surcharges, producing substantially higher cumulative tax.
"That leaves 2026 as a year with almost no taxable income arriving. The decision is whether to leave the traditional IRA alone or use the empty bracket space to convert a chunk to Roth. This situation is more common than it looks. Retirees in their early sixties routinely face a short window where wages have stopped, Social Security has not started, and required minimum distributions (RMDs) are still nine years away. Coasting through it carries a quantifiable cost."
"The 2026 single-filer brackets create a specific opportunity. The 24% bracket runs from $105,700 up to $201,775 of taxable income, and 32% kicks in above that. The standard deduction for a single filer is $16,100. Converting $185,000 from the traditional IRA lands her taxable income at $168,450, right near the top of the 24% bracket. Federal tax on that conversion: $33,276, paid from the brokerage account so every converted dollar actually reaches the Roth."
"The traditional IRA shrinks to roughly $1.42 million. Assuming 6% annual growth over nine years until RMDs begin, the converted slice grows to about $313,000, tax-free for life. The alternative looks different. The same $185,000 left in the traditional IRA also grows to about $313,000 by RMD time, but every withdrawal is taxed at her future combined rate, which once Social Security stacks on top likely sits at 22% to 24% federally."
"With a median female life expectancy from 73 of 16 to 17 years more, cumulative federal tax on the unconverted path runs $90,000 to $110,000. Add $25,000 to $35,000 of Medicare IRMAA surcharges as her MA"
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