Mayfair Retirement & Investment Perspectives
Joe Petry, Ph.D., CFP®, EA, CRPC® | Updated October 2026
A Roth conversion strategy starts with a target — the tax rate, or the Medicare threshold, you are willing to pay up to. You set it by comparing the rate you pay today against the rate you will pay later, and the one you would pay alone. How much that target allows in any given year is a separate calculation.
Two questions that get run together
Whether to convert at all is usually settled quickly. If you are retired, not yet taking required distributions, and sitting on a large pre-tax IRA, you are in the lowest-income years you will ever have, and that money is going to be taxed at some point regardless.
What follows is really two questions, and most conversations blur them. The first is strategic: how far up are we willing to go? That answer changes only when your life or the law does. The second is arithmetic and gets answered every November: given that target, how much room is actually left this year? This piece is about the first.
The rate you are comparing to is mostly your own
There are four reasons a dollar converted today may be taxed less than the same dollar later. The first two are about you.
• You, later, with much larger required distributions. The pre-tax balance keeps compounding while the distribution divisor keeps shrinking. Nothing has to happen — nobody has to die, no law has to change — for a couple in the 12% bracket today to be pulled into the 22% or 24% bracket in their seventies or eighties by an account they are forced to draw down. For most households this is the single largest driver, and it is entirely predictable.
• You, alone, filing as a single taxpayer. When the first spouse dies, the survivor keeps the larger Social Security check and loses the smaller one, but the IRA is unchanged and the required distribution barely moves. Meanwhile the standard deduction roughly halves, the brackets narrow, and the Medicare surcharge thresholds drop by about half. This is still you, paying more on less.
• Rates you do not control. Today’s rates are low by historical standards. The top rate is 37%, against 39.6% as recently as 2017, 50% in the mid-1980s, and between 63% and 94% from the 1930s through 1981. Federal debt, meanwhile, is near its highest ever — about 100% of the economy, on track to pass the post–World War II record by 2030 and reach about 120% by 2036— and interest on it is already at a record share of the economy. Something has to give: spending, growth or taxes, and very likely some of each. The 2017 rates are no longer scheduled to expire, so there is no date on the calendar to convert ahead of. But low rates and high debt are a combination history rarely leaves alone, and a dollar converted at today’s rates is one that higher rates later can’t reach.
• Your children. Most inherited IRAs must now be emptied within ten years, often during your children’s highest-earning years and at their tax rates, not yours. For families who want to leave as much as possible after tax, this can be the deciding reason — and it adds to the case built on your own rates rather than replacing it.
The first two reasons are about you, and they hold even if leaving money to the next generation isn’t a priority. For families where it is, the fourth makes the case stronger still.
Table of twelve tax, Medicare and investment-income-tax ceilings for a retired couple at 66, in dollar order, showing conversion room from $130,400 to $734,000 and how the Medicare surcharge tiers fall in between the tax brackets.
What the ceilings look like on a real return
Take a couple, both 66, filing jointly. They have retired, they are delaying Social Security to 70, and their required distributions don’t begin until 75, on IRAs worth about $1.5 million. For now they live on savings in the bank. Their taxable investment account throws off $6,000 of interest and $10,000 of qualified dividends, but they aren’t selling anything from it to live on, so there are no capital gains in the picture. the standard deduction, the extra deduction for being over 65, and temporary senior deduction — $47,500 in all — their taxable income is zero, with $31,500 of deductions going unused. Their modified adjusted gross income is $16,000.
These are the years conversions are made for. Every ceiling above those numbers is a candidate target, and they are much further apart than people expect.
One caution before the numbers: this is one couple in one situation. What makes their window so wide is that they can live on savings for years without touching their IRAs. Many retirees can’t. They need withdrawals from an IRA — or must take distributions from an inherited IRA — to pay the bills, and that income fills the low brackets before any conversion does. The method that follows is the same; the room is smaller.
Line chart of a retired couple’s taxable income from age 66 to 95 against the 12%, 22% and 24% bracket bands and the first Medicare surcharge threshold, showing near-zero income until required distributions begin at 75 and the bands halving when the first spouse dies.
If you file as a single taxpayer, the shape is identical but every ceiling sits at almost exactly half: 12% bracket ends at $50,400, the 0% capital-gains rate at $49,450, and the first Medicare surcharge tier at $109,000. Less room, reached faster — which is the same arithmetic a surviving spouse inherits.
The brackets and the Medicare tiers do not line up
This is the part that gets missed. Tax brackets are measured on taxable income; Medicare surcharges are measured on modified adjusted gross income, which counts your income before deductions. The Medicare thresholds fall in between the brackets, so a target set in brackets doesn’t tell you where you’ll land on the Medicare ladder. That depends on your deductions and on your mix of income: dividends and capital gains count in full toward Medicare’s measure but sit above the ordinary brackets, so two couples with the same taxable income can land in very different places.
Converting to the top of the 24% bracket — a common recommendation, and often the right one — takes this couple through four Medicare surcharge tierson the way. That is roughly $10,700 a year in additional Part B premiums for the two of them, with Part D surcharges on top. It may still be worth it. But it should be a decision, not a discovery.
The surcharges are cliffs, not ramps: one dollar over the first threshold costs this couple about $1,949 for the year. What makes that bearable is that a surcharge lasts one year, while a bracket you avoided lasts as long as the money stays in the IRA — so accepting a tier deliberately is very different from tripping over one in December.
One ceiling on that list is temporary. The extra $6,000 per person for those over 65 runs only through 2028, and for joint filers it starts shrinking once modified adjusted gross income passes $150,000 — so crossing that line costs deduction as well as tax, and the whole ceiling disappears in three years.
One caution about that table: the room column doesn’t climb in a straight line, because the brackets and the Medicare and senior-deduction lines are measured on different income figures. How much room each ceiling leaves depends on your deductions and on what else is on your return. Tax-exempt municipal interest, a qualified business income deduction, and Social Security that is not yet fully taxable each move the two figures apart by different amounts. The ladder above is a method, not a fixed answer.
The picture that actually sets the target
Deciding how far to go is easier to see than to explain. Estimate your taxable income for each year ahead if you make no conversions — as Social Security starts, required distributions begin and grow, and one spouse eventually files alone — then lay the tax brackets behind it, as in the chart below for our couple. The answer usually becomes clear.
Step chart of the top federal income tax rate from 1913 to 2026, showing today’s 37% near the low end of its history, with notes on federal debt near its 1946 record.
Four things show up in that picture that a single year never reveals. The window is short: taxable income sits near zero until 75, even after Social Security starts at 70. Then required distributions carry this couple past the 12% bracket in a single year, with no decision made. At the first death the bands drop by half while the income barely moves — the survivor lands in the 24% bracket and above the Medicare threshold without changing anything about their finances. And throughout, the Medicare threshold runs below the top of the 22% bracket, so for a target in that bracket it is the line that binds first.
Looked at that way, the target stops being a preference about rates and becomes a question about which years you would rather pay in. The low years are finite, and the room you do not use in them does not carry forward.
How the target actually gets set
We estimate your income for the rest of retirement if nothing changes — how the required distributions grow, what the survivor’s return would look like — and then pick the highest rate we are willing to pay today, on purpose, because it is lower than the rate those dollars would otherwise face. For a couple with a large IRA and a meaningful age gap, that target is usually higher than the one they arrived with. A large IRA means required distributions that will push income up on their own, so today’s low brackets are worth more by comparison. An age gap means the younger spouse is likely to spend more years as a survivor — filing single on much the same income, at narrower brackets and lower Medicare thresholds. Once set, the target usually holds for several years, until something changes it: an inheritance, the death of a spouse, a change in tax law, a large sale, or a move to another state. What it allows in any single year is a separate calculation, and its own meeting in November.
Frequently asked questions
Is there a rule of thumb for how far to convert?
No. “Fill the 12% bracket” is one ceiling stated as though it were universal, and for a household whose required distributions will double it is usually too low. The target depends on your own later rate, the survivor’s rate, and what else is on your return.
Do I need to convert before the tax rates go back up?
There’s no scheduled increase on the calendar. But tax law can change with any Congress, and today’s top rate of 37% is low by historical standards: since 1932 it has been lower in only 15 years. Federal debt, meanwhile, is near its post–World War II record and still rising. We don’t treat higher rates as a deadline, but we don’t assume today’s rates will last, either — one more reason to use the low-income years you have.
Is the 24% bracket too high a target?
Not by itself. It is right when the alternative is you or a survivor paying more than 24% on the same dollars later, and wrong when getting there crosses Medicare thresholds worth more than the bracket saved. That is arithmetic, specific to your return.
Do conversions raise Medicare premiums?
They can.Medicare premiums are based on your total income from two years earlier, so a conversion this year feeds into the premiums you pay two years from now — which is why the surcharge tends to arrive as a surprise. If a tier is going to be crossed, it is better crossed in a year you chose.
The point
A conversion target is not a number someone hands you. It is a judgment about which future rate you are getting out in front of — mostly your own, later, and possibly alone. Take it from a rule of thumb instead and you will very likely convert too little, for too long, and hand the difference to your future self at a higher rate.
We’re happy to walk through how this applies to you — just reach out.
This article is educational and is not individualized investment, tax, or legal advice. Figures reflect 2026 federal rules and are illustrative only; tax law changes and the right approach depends on your specific circumstances.