A Roth conversion is simple in outline — move money from a traditional IRA to a Roth, pay income tax on it now, never pay tax on it again — and misleading in practice, because the tax you pay depends on three interacting systems: your bracket, how much of your Social Security the conversion drags into taxable income, and a Medicare surcharge assessed on a two-year delay. This article walks the actual arithmetic with real numbers, using 2026 federal rules. Every figure below comes from our Roth conversion planner running its audited 2026 tables, so you can reproduce each one.
1. What a conversion actually costs
Start with the easiest case: a single 62-year-old with no other income converting $80,000 in 2026. Conversion income is taxed as ordinary income, stacked on everything else you earn that year. Here, there is nothing else.
- Standard deduction (single, under 65): $16,100
- Taxable income: $80,000 − $16,100 = $63,900
- Tax: $12,400 × 10% + $38,000 × 12% + $13,500 × 22% = $8,770
That is an effective rate of about 11% on the conversion — cheap, because the first dollars filled the 10% and 12% brackets that would otherwise go unused. The same $80,000 stacked on top of a $120,000 salary would be taxed almost entirely at 22–24%. This is why the year you convert matters more than the amount.
2. The Social Security tax torpedo
Now the trap. Once you claim Social Security, each conversion dollar can pull up to 85 cents of your benefit into taxable income. The thresholds are based on “provisional income” — your other income plus half your Social Security — at $25,000/$34,000 for singles and $32,000/$44,000 for joint filers. Above the second threshold, the formula exposes the lesser of 85% of benefits or a fixed base plus 85% of the excess.
Same $80,000 conversion, same person, now 67 and collecting $36,000 a year in Social Security: the conversion makes $30,600 of the benefit taxable (85%, straight to the cap). Total tax on the conversion-plus-benefits: $13,831, versus $7,099 for the identical conversion without Social Security on the table. The benefits added $6,732of tax on $36,000 of income the IRS already considered “tax-free.” A 22% bracket can behave like a 40.7% bracket in this band — which is precisely why the years before you claim are usually the cheapest conversion window you will ever get.
3. IRMAA: the two-year echo
Medicare premium surcharges are set by your MAGI from two years earlier — your 2026 income determines your 2028 premiums. The brackets are cliffs, not phase-ins: for 2026 premiums (2024 MAGI), the first cliff sits at $109,000 single / $218,000 joint. Land at $108,999 and you pay the standard premium. Land at $109,001 and the surcharge for the year is roughly $1,149 per person — Parts B and D combined.
In our worked example below, the planner converts every year up to that cliff and not a dollar over — the first year lands at an AGI of $108,999. That precision is the whole game with IRMAA: it is worth converting up to the cliff, and expensive to cross it by accident.
4. The forced withdrawals you are avoiding
Required minimum distributions are the reason conversions have a deadline feel. Under SECURE 2.0 they begin at 73 if you were born 1951–1959 and 75 if you were born in 1960 or later, computed as the prior December 31 balance divided by an IRS life-expectancy divisor (26.5 at age 73, 24.6 at 75, falling each year).
In the example below, our 62-year-old does nothing and reaches 75 in 2039 with a traditional balance that forces a $46,103withdrawal that year — on top of Social Security. AGI lands at $133,113, the year's federal tax is $16,491, and there is no choice about any of it. Converting earlier means paying tax on your schedule instead of the IRS's.
5. The full 29-year picture
Put it together with a realistic profile: single, 62, with $500,000 in taxable investments (60% cost basis), $900,000 in traditional IRA/401(k), $200,000 in Roth, $3,000/month of Social Security starting at 67, $90,000 of annual spending, 5% returns, 2.5% inflation. The planner converts every year from 62 to RMDs — sized to stop just under the first IRMAA cliff — and compares against doing nothing.
- Conversion window: 13 years, about $445,000 converted in today's dollars
- Federal tax, no conversions: $396,723 over the 29 years
- Federal tax, with the conversion plan: $250,227
- Difference: $146,496 saved, with zero IRMAA surcharges either way
The first year converts $68,085 and pays $12,286 of tax on it — an average rate of 18%, but a marginalrate of 23.4% on the last thousand dollars, because the tail of the conversion was already dragging Social Security math around. At 67, once benefits start, the marginal rate on converting more runs 28.2%. Both numbers come straight from the planner's year-by-year table.
6. When conversions backfire
Three situations reliably make this a bad trade. First, converting while in the 32%+ bracket — you are buying future relief at a premium price unless your later bracket is even higher. Second, paying the tax out of the conversion itself: it shrinks what lands in the Roth, and before age 59½ the withheld portion can count as an early distribution with a 10% penalty. Third, converting when your bracket now and later are the same, with no heirs or charity in the picture — you are paying tax early for nothing. If any of those describe you, the honest answer is that a two-minute quiz or a fee-only advisor will likely talk you out of it.
7. Run your own numbers
The arithmetic above is reproducible: brackets and thresholds are published (IRS Rev. Proc. 2025-32 for 2026; CMS for the IRMAA tables), and the Social Security formula is in IRS Publication 915. What is not practical by hand is the 29-year interaction — which is what the Roth conversion planner is for: enter your three account balances and Social Security, and it prices any conversion schedule against doing nothing, flags every IRMAA cliff, and shows the exact marginal rate you would pay on one more dollar each year.