One of our advisors was meeting with a couple last month. Both had just retired at 63. They had a healthy 401(k), some savings, and a plan to start Social Security at 67. When the advisor asked what they planned to do about taxes between now and then, they looked at each other and said, "We figured we'd just wait and deal with it later."
That four-year gap between retiring and claiming Social Security? It might be the single best tax-planning window you'll ever get. And most people let it pass without doing a thing.
Here's the concept. When you retire but haven't yet turned on Social Security, your taxable income often drops significantly. You're no longer earning a paycheck. You might be living off savings or a pension, but your tax bracket is likely lower than it's been in decades. That's exactly when a Roth conversion can work hardest for you.
What a Roth Conversion Actually Does
A Roth conversion moves money from a traditional IRA or old 401(k) into a Roth IRA. You pay income tax on the amount you convert in the year you do it. But once it's in the Roth, it grows tax-free and comes out tax-free for the rest of your life.
Think of it like prepaying your taxes at a discount. If you're in a lower bracket now than you expect to be later, you're locking in today's rate. And once Social Security kicks in, your income rises. Required minimum distributions start at 73. Suddenly you're back in a higher bracket, and the window is closed.
The real question is: how much should you convert each year?
The "Fill Up the Bracket" Strategy
This is where it gets practical. Your advisor looks at your current income, identifies the top of your tax bracket, and calculates how much room you have before you'd jump to the next one. Then you convert just enough to fill that space.
Say you're married filing jointly and your taxable income after deductions is $60,000. The 12% bracket for married filers tops out at $96,950 in 2025. That means you could convert roughly $36,000 and stay in the same bracket. No surprise tax bill. No jumping to 22%.
Do that for three or four years in a row, and you've moved a significant chunk of your retirement savings into a Roth, all at a tax rate that's likely lower than what you'll face later. You can explore the current brackets on IRS.gov by searching "tax rate schedules."
But that's not the whole story.
Why This Matters Beyond Your Own Tax Bill
There's a second reason high-net-worth retirees should think about Roth conversions, and it has to do with what you leave behind.
Under current rules, when your children inherit a traditional IRA, they have to empty it within 10 years. That inherited money gets added to their income, often during their peak earning years. Depending on how much is in the account, it could push them into the 32% or 37% bracket.
A Roth IRA changes the math. Your heirs still have the 10-year window, but the distributions come out tax-free. You've already paid the tax. They get the full value.
One of our advisors put it this way to a client: "You can pay the tax now in the 22% bracket, or your kids can pay it later in the 35% bracket. Your call." That's the kind of clarity that makes the decision feel obvious.
Two Things to Watch Out For
Roth conversions aren't a blank check. Two things can trip you up if you don't plan carefully.
1. IRMAA surcharges. If your modified adjusted gross income crosses certain thresholds, your Medicare Part B and Part D premiums go up for two years. For 2026, that threshold is $109,000 for individuals and $218,000 for married couples. A large conversion in one year could temporarily push you over the line. The fix: spread conversions across multiple years and stay aware of the income triggers. You can check the current IRMAA brackets on Medicare.gov.
2. Provisional income. If you're already collecting Social Security, a Roth conversion adds to your provisional income and could make more of your benefits taxable. That's exactly why the window between retirement and Social Security is so valuable. You can do the conversion before the benefit income stacks on top.
What to Do Next
- Know your current bracket. Pull last year's tax return and look at your taxable income line. That's your starting point.
- Map your income timeline. When does Social Security start? When do RMDs kick in at 73? Those are the bookends of your window.
- Talk to your advisor and CPA together. Roth conversions sit at the intersection of tax planning and retirement income. Both perspectives matter.
If you've already retired and you're sitting in a lower tax bracket than usual, that window is open right now. It won't stay open forever. The best time to explore a Roth conversion is before your income climbs back up.
That's exactly the kind of planning we help people think through at American Retirement Advisors. No pressure, no pitch. Just a clear look at the numbers and what they mean for your situation. Give us a call.
Easy Eddie's Take
Here's what I tell folks when they ask about Roth conversions. Think of your traditional IRA like a barn full of hay. Right now, the tax on that hay is low because you're not earning a big paycheck anymore. But once Social Security starts, and then required distributions at 73, the tax rate on that hay goes up. A Roth conversion is like moving hay from the taxed barn to the tax-free barn while the price is cheap. You can move a little each year, stay in the same bracket, and end up with a nice chunk of money that grows and comes out completely tax-free. Your kids will thank you too, because they won't have to pay tax on what they inherit from a Roth. The window between retirement and Social Security is the sweet spot. If that's where you are right now, it's worth a conversation with your advisor.