This is part two of The Gap Years. In part one we looked at the window itself: the stretch between your last paycheck and age 73, when your taxable income is often the lowest it will ever be, and you have rare control over your own tax bracket. Today we get to the single most useful thing you can do with that window. It has an intimidating name, the Roth conversion, but the idea behind it is simple, and once you see it you cannot unsee it.
What is a Roth conversion, and why do it during the gap years?
A Roth conversion means moving money from a traditional IRA, where it has never been taxed, into a Roth IRA, where it will never be taxed again. You pay ordinary income tax on the amount you move in the year you move it. The reason to do it during the gap years is timing: with your income temporarily low, you can convert at a low tax rate now instead of letting that money sit until 73, when required withdrawals may force it out at a higher rate. You are choosing to pay the tax on your terms, while the rate is cheap.
Filling the bracket, explained
Here is the picture that makes it click. The tax system is built in layers, and each layer is taxed at its own rate. In 2026, a married couple filing jointly sits in the 12 percent layer until their taxable income reaches about 100,800 dollars, then the 22 percent layer up to about 211,400 dollars, and the 24 percent layer above that. During the gap years, many retirees land near the bottom of one of those layers, which means there is empty space between where their income lands and the top of the bracket. That empty space is the opportunity. You can convert just enough traditional IRA money to fill the rest of that layer, paying the lower rate on every dollar, and stop before you spill into the next one up. That is what people mean by filling the bracket. It is not converting everything at once. It is converting the right amount, on purpose, each year the window is open.
Why doing it now beats waiting
Three things make the now-versus-later math work in your favor. First, you control the rate: paying 12 or 22 percent during the gap years can beat paying 24 percent or more once big required distributions stack on top of Social Security later. Second, a Roth IRA has no required minimum distributions during the original owner's lifetime, so money you convert is money the IRS can never force out, which keeps your future taxable income lower and quieter. Third, everything inside the Roth grows tax-free from then on, and if it eventually passes to your children, they generally inherit it income-tax-free as well, though non-spouse heirs are typically required to distribute inherited Roth funds within ten years under current law. You are not avoiding the tax so much as paying it at the best possible price and never paying on the growth.
The catches to respect
This is powerful, but it is not a free lunch, and an honest article has to name the trade-offs. Pay the tax from money outside the IRA if you possibly can, because using the IRA itself to cover the bill shrinks the very thing you are trying to grow. Watch the pro-rata rule: if you hold both pre-tax and after-tax dollars across your traditional IRAs, the taxable share of a conversion is figured proportionally across all of them, not just the slice you meant to move. Mind the ripple effects of the extra income, because a conversion raises your reported income for the year, and that can reach into your Medicare premiums two years later and can also reduce the temporary senior deduction available to those 65 and older through 2028, which begins to phase out above roughly 75,000 dollars in income for single filers and 150,000 dollars for married couples filing jointly. And remember that a conversion is a one-way door, because recharacterization of conversions is no longer permitted under current tax law, so the amount and the timing genuinely matter. None of these are reasons not to do it. They are reasons to size it carefully, which is exactly the kind of thing worth modeling for your specific accounts before you act.
Can you do a Roth conversion after 60 or in retirement?
Yes. Unlike contributing to a Roth IRA, converting to one has no income limit and no age limit, so being retired and in your sixties is no barrier at all. In fact, the early retirement years are often the best time to convert, precisely because your income, and therefore your tax rate, tends to be at its lowest. Whether it makes sense, and how much, depends on your full picture.
How much should you convert in a year?
The common approach is to convert only up to the top of your current tax bracket, so every converted dollar is taxed at today's lower rate and none spills into the next bracket up. The right number depends on your other income, your Medicare situation, and your goals, and it can change year to year as the window stays open. Because the moving parts interact, this is the kind of figure worth modeling with someone before you pull the trigger, rather than guessing.
Do Roth IRAs have required minimum distributions?
No. A Roth IRA has no required minimum distributions during the original owner's lifetime. That is a large part of what makes conversions so useful during the gap years: every dollar you move into a Roth is a dollar the government can never force you to withdraw, which keeps your future taxable income lower and gives you more control for the rest of your life.
That is the biggest lever the gap years offer. Used thoughtfully, filling the bracket can shrink the tax bill waiting for you at 73 and leave you with a pool of money that grows and passes on tax-free. But notice how many times the word income came up in the catches, because raising it on purpose has consequences that reach into other corners of your retirement. The nearest of those is your Medicare premium, through a surcharge with an unfriendly name and a two-year memory, and that is exactly where we are headed tomorrow in part three. If you want to look at your own brackets and what a sensible conversion plan might look like for you, you can reach our team at American Retirement Advisors at 602-281-3898. Tomorrow, part three: do not let Irma visit.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.