Roth Conversions in 2026: A Practical Guide

A Roth conversion moves money from a pre-tax retirement account, such as a traditional IRA, into a Roth IRA. You pay income tax on the amount converted now, and in exchange the money grows tax-free and qualified withdrawals are tax-free later. Conversions must be completed by December 31 to count for the tax year, which is why they come up every autumn. This guide explains how conversions are taxed, who benefits and what to check first. The bracket room calculator helps you size a conversion. This is general information, not a recommendation.

How the tax works

The amount you convert from pre-tax money is added to your ordinary income for the year. It is not subject to the 10% early withdrawal penalty and is not subject to payroll tax, and the 3.8% net investment income tax does not apply to it. It is, however, included in your adjusted gross income, which affects other parts of your return. If you convert $30,000 and your taxable income was $70,000 before the conversion, the extra $30,000 is stacked on top and taxed at whatever brackets it covers.

Conversions cannot be undone

Since 2018, you cannot recharacterize (undo) a Roth conversion. If markets fall after you convert, you still owe tax on the amount converted. That is why people often convert in pieces, not all at once.

Why convert?

• You expect higher taxes later. If you are in a low bracket now, such as in a year between jobs, early in retirement before Social Security and RMDs begin, or in a year with large deductions, converting can lock in the lower rate.
• No required minimum distributions. Roth IRAs have no RMDs for the original owner, which may help with planning and estate goals.
• Tax diversification. Having both pre-tax and Roth money gives you choices about which to withdraw in retirement to manage brackets.
• Heirs. Most non-spouse heirs must empty an inherited account within 10 years, and a Roth account passes that tax-free, while a traditional account passes it as taxable income.

When it may not make sense

• If you expect a lower tax rate in retirement, converting now can mean paying more.
• If you have to take money from the conversion to pay the tax, you lose some of the benefit and may owe penalties if you are under 59½.
• If the conversion pushes you into a bracket that triggers other costs (see below).

Fill the bracket

A common approach is to convert enough to fill your current bracket without spilling into the next one. Using the 2026 brackets, a married couple with $90,000 of taxable income before conversion has $10,800 of room in the 12% bracket (which ends at $100,800), so they might convert about that much. A single filer in the 24% bracket needs to compare whether converting at 24% now is better than withdrawing the money at an expected lower rate later. Our calculator shows how much room remains in each bracket after your deductions. Be careful, because the bracket thresholds are applied to taxable income, not gross income.

The pro-rata rule

If you have made non-deductible contributions to a traditional IRA, part of a conversion is tax-free, but the IRS does not let you pick which dollars you convert. Instead, all your traditional, SEP and SIMPLE IRAs are treated as one pot as of December 31. If $10,000 of a $100,000 total balance is after-tax basis, then 10% of any conversion is tax-free. This is the pro-rata rule, tracked on Form 8606. It is the reason some people with large pre-tax balances find the “backdoor Roth” strategy less effective. Rolling pre-tax IRA money into an employer plan before year-end can sometimes change the calculation, but check that your plan accepts rollovers.

Effects beyond the tax rate

• ACA premium tax credits. Marketplace subsidies depend on modified AGI, and a conversion raises it. With the enhanced subsidies expired, a conversion that pushes income above 400% of the federal poverty level can eliminate the credit entirely. See the EnrollWise site for subsidy planning.
• Medicare premiums. Income-related monthly adjustment amounts (IRMAA) are based on your MAGI from two years earlier, so a 2026 conversion can raise premiums in 2028.
• Taxable Social Security. Higher income can make more of your benefit taxable.
• Phase-outs. Credits and deductions with income limits, including the extra deduction for seniors, may shrink.
• State taxes. Most states tax conversions, but a few exempt retirement income.

The five-year rules

Two different five-year rules apply. First, to withdraw earnings from a Roth IRA tax-free, the account must have been open at least five years (counting from January 1 of the first year you contributed or converted) and you must be 59½ or meet another exception. Second, each conversion has its own five-year clock for the 10% penalty on withdrawing converted amounts: if you are under 59½ and withdraw converted principal within five years, you may owe the penalty on the portion that was taxable when converted. These rules matter mostly to people who might need the money soon.

How to pay the tax

Ideally you pay the tax from cash outside the retirement accounts, so the full amount converted continues to grow. Because the tax is due with your return, you may need to increase withholding or make an estimated payment to avoid an underpayment penalty. Withholding from an IRA distribution is treated as paid evenly through the year, so using withholding in the last weeks of the year can help.

An example

Consider a married couple, both 66, with $85,000 of taxable income and a $180,000 traditional IRA. They have retired and will start RMDs at 75, so they have several years of low income ahead. Converting $15,000 this year would add $15,000 of income taxed at 12% up to $100,800, costing $1,800 federal tax. It would also reduce the balance that later grows into RMDs. If they instead converted $60,000, part would be taxed at 22% and the larger income could raise Medicare premiums in two years. The right amount is the one where the tax cost today is clearly lower than what they expect to pay later, and that is a judgment, not a formula.

Step-by-step

1. Estimate your 2026 taxable income before any conversion.
2. Decide a target ceiling, such as the top of a bracket or an ACA or IRMAA threshold.
3. Check your IRA balances and basis (Form 8606) for the pro-rata effect.
4. Ask your custodian for the process and its deadlines; many want the request earlier than December 31.
5. Set aside cash for the tax.
6. Keep the confirmation and report the conversion on Form 8606 and Form 1040 next spring.

Roth conversions are powerful but permanent, and a mistake can be expensive. If your situation involves large balances, ACA subsidies, or an inherited account, consult a qualified tax professional first.