The most common question a retiree asks about Roth conversions is “how much should I convert?” It is an understandable starting point, but it is the wrong one. The better question is “which thresholds am I near?” — because the right conversion amount is not a fixed number. It is whatever fills the gap between projected MAGI and the most relevant threshold without crossing it. A conversion that stays cleanly inside the headroom is a structural tax move. A conversion that crosses a threshold by a few thousand dollars — especially an IRMAA cliff or a Social Security taxation trigger — can cost the household more than it saves. The difference between the two is not the conversion itself. It is the modeling underneath.
Most conversion decisions are sized against a single variable — typically the next ordinary-income bracket. That is necessary but not sufficient. In 2026, a Roth conversion interacts with at least four thresholds simultaneously, and crossing any one of them can change the math materially. Understanding all four before converting is the difference between a deliberate structural decision and an expensive surprise two years later.
Why Threshold Awareness Matters More Than Conversion Amount
Roth conversion sizing is a sequencing problem, not a yes-or-no question. The retiree is trying to recognize taxable income at a rate that is favorable now in exchange for tax-free withdrawals later — without crossing the bracket, IRMAA tier, or phase-out threshold that would erase the advantage. To do that well requires knowing where current-year income is likely to land, and how close it already sits to the thresholds that matter most for the household.
Current-year income depends on a handful of inputs: pension income, Social Security gross benefits, RMD distributions if they have begun, investment income, and capital gains distributions. The prior-year tax return establishes the actual MAGI from two years prior — the figure that drives the current year’s IRMAA premiums via the lookback. The more actual data a household has when it sizes a conversion, the more precise the headroom calculation can be. A projection grounded in real income data produces a materially more reliable number than a projection built on last year’s figures alone.
The gap between projected MAGI and the most relevant threshold is the conversion headroom. A household that knows its headroom with confidence can use 80–90% of the available space without crossing a threshold. A household that is guessing tends to either over-convert and trigger a consequence it did not model, or under-convert and leave tax-free growth on the table. Threshold awareness is what separates the two.
The Four Thresholds That Actually Matter
Conversion sizing is rarely a single-variable problem. The conversion amount has to be modeled against several interacting thresholds simultaneously, because crossing any one of them can change the math materially. The four that drive most retirement-year conversion decisions:
The ordinary-income bracket boundaries. A conversion that pushes the last few thousand dollars from the 22% bracket into the 24% bracket creates a real but limited drag — the additional tax is 2% on the portion in the higher bracket, not on the whole conversion. A conversion that pushes from the 24% bracket into the 32% bracket is a much larger jump and warrants more caution. The brackets themselves are wide; the harm comes from crossing them by a meaningful amount.
The IRMAA bracket thresholds. Unlike the ordinary-income brackets, IRMAA tiers operate as cliffs. Crossing a tier by even one dollar moves the entire Part B and Part D premium calculation into the higher tier — for the full year, two years after the income event. The lowest 2026 IRMAA threshold is $109,000 MAGI for single filers and $218,000 MAGI for married filing jointly; the highest tier begins at $500,000 single / $750,000 MFJ. A conversion that pushes a household across a tier can add several hundred dollars per month in premiums two years later, which can easily exceed the tax savings the conversion was designed to capture.
The Social Security taxation thresholds. For retirees not yet at the full taxation point, a conversion that raises provisional income can shift the percentage of Social Security benefits included in taxable income from 0% to 50%, or from 50% to 85%. The thresholds are not indexed for inflation and have not changed in decades; a household sitting just below them before a conversion can find itself just above them if the conversion is mis-sized.
The OBBBA Senior Deduction phase-out. New for tax years 2025 through 2028, the OBBBA Senior Deduction provides up to $6,000 per qualifying individual age 65 or older. It phases out for MAGI above $75,000 for single filers and $150,000 for married filing jointly. A conversion that pushes MAGI above these phase-out points can reduce or eliminate the deduction, raising the effective cost of the conversion. The phase-out is gradual rather than a cliff, but it represents real money for qualifying households — up to $2,220 in federal tax savings for a married couple at the top of the 22% bracket.
“Roth conversion sizing is a sequencing problem, not a yes-or-no question. The right amount depends on which thresholds matter most for this household, in this year, with this year’s actual numbers — not last year’s estimate.”
What the OBBBA Senior Deduction Did to the Math
Before OBBBA, the structural case for Roth conversion through the post-retirement, pre-RMD window was largely about the eventual TCJA sunset — the assumption that brackets would revert to higher pre-2018 levels in 2026 and beyond. OBBBA made the TCJA individual rates permanent, which removed the “convert before rates rise” urgency from the calculation. The structural case for Roth conversion did not disappear — the Tax Kraken™ still grows in tax-deferred accounts, RMDs still arrive on the government’s schedule, and Roth dollars still operate outside the IRMAA and Social Security taxation calculations that drag on retirees with large pre-tax balances. But the case is now structural rather than urgent.
The Senior Deduction added a new variable. For households where one or both spouses are 65 or older and current-year MAGI sits below the phase-out thresholds, the deduction is up to $6,000 per qualifying person, on top of the standard deduction. A conversion that pushes MAGI into the phase-out range can reduce that deduction, raising the effective tax cost of the conversion by potentially $1,000 to $2,200 depending on bracket and filing status. For qualifying households, this is a new threshold to model. For non-qualifying households, it does not change the math.
What the Modeling Actually Looks Like
The modeling exercise is not particularly complicated. The retiree (or, more often, the advisor) projects current-year MAGI based on actual income data to date plus a reasonable estimate of the remaining months. The projection is compared against the relevant thresholds for the household — the next ordinary-income bracket boundary, the next IRMAA tier, the Senior Deduction phase-out point, and the Social Security taxation threshold if applicable. The gap between projected MAGI and the most binding threshold is the conversion headroom. The household decides how much of that headroom to use, depending on its bucket mix, future RMD exposure, and risk tolerance.
The quality of the projection determines the quality of the conversion decision. A projection built on actual income data is materially more reliable than one built on assumptions from the prior year. Some households execute a conversion in a single tranche once the projection feels solid. Others convert in two parts — an initial conversion based on the best available projection, and a smaller adjustment later in the year once the picture has tightened. The second conversion is then a true-up, not the first attempt at the math.
What to Consider Before Converting
If You’re Evaluating a Roth Conversion
- Pull your prior-year MAGI and your current-year projection. Prior-year MAGI is the 2024 figure that determines your 2026 IRMAA premiums via the two-year lookback. Your 2026 income determines your 2028 IRMAA premiums. Both matter and they are not the same number.
- Identify which threshold is most binding for your household. For some households it is the next ordinary-income bracket. For others it is the next IRMAA tier. For households where one or both spouses are 65+, the Senior Deduction phase-out adds a new layer. The most relevant threshold determines the headroom.
- Ground your projection in actual income data, not last year’s estimate. Current-year pension, Social Security, RMD, and investment income data produces a materially more accurate MAGI projection than the prior year’s figures carried forward. The conversion size that emerges from a data-grounded model is more durable.
- Consider whether a single conversion or a phased approach makes more sense. A conversion in two parts — an initial tranche based on the best available projection, and a smaller true-up later in the year — lets the household adjust as the income picture tightens. It also reduces the chance of a single oversized conversion crossing a threshold the household did not anticipate.
- Model against state tax as well as federal. Federal-only modeling misses meaningful state tax exposure in some jurisdictions. A conversion that is right at the federal level can be wrong when state tax is added to the math.
The Principle Underneath
The Roth conversion is not, fundamentally, a product decision. It is a sequencing decision — about which dollars are recognized as taxable income in which year, and at what effective rate. Sequencing decisions made with a clear picture of where income is likely to land, and which thresholds are closest, tend to be more precise than sequencing decisions made with incomplete data or against a single variable. The same conversion done at the same dollar amount can be a thoughtful structural move or an expensive miscalculation, depending on the quality of the modeling underneath. The dollars do not know the difference, but the household’s after-tax outcome often does.
A Roth conversion may not be suitable for every situation. The interaction with the OBBBA Senior Deduction, IRMAA thresholds, Social Security taxation, and state tax exposure should be modeled with a qualified tax professional before any conversion is initiated.
