Your traditional IRA or 401(k) has grown for decades – and so has the IRS’s claim on it. Every dollar in a pre-tax account comes with a deferred tax bill that gets more expensive the longer you wait, especially once required minimum distributions force withdrawals at rates you never planned for. I see this regularly with clients here in Texas who spent their careers building significant wealth, only to find that a sizable portion belongs to the government the moment they start drawing it down.
The question I hear most often is not whether to do a Roth conversion, but when. For most people in the 65-to-70 window, the answer is: right now, before RMDs begin. And 2026 is a particularly valuable year to act, with tax brackets confirmed by the IRS and IRMAA thresholds set at specific income levels that reward careful planning.
This guide walks through a realistic Roth conversion strategy for 2026 – the bracket math, the Medicare cost traps, an IRMAA laddering table for married filers, a Texas-specific angle that changes the numbers, and guidance for oil and gas professionals managing RSU vesting schedules alongside conversion timing.
Why the 65-70 Window Is the Optimal Time for Roth Conversions
The gap between retirement and age 73 – when RMDs begin – is the most tax-efficient window most people will ever have. Income typically drops after leaving work. Social Security may not have started yet. The pre-tax account balance, however, keeps growing. That combination creates a planning opportunity that closes permanently once RMDs begin.
Here is what makes the math work during this window:
- Lower taxable income – Without wages, many retirees temporarily fall into the 22% or even 12% bracket before RMDs push them into the 24% or 32% range
- Control over the conversion amount – You choose how much to convert each year, allowing precise bracket management
- RMD reduction for life – Every dollar moved to a Roth now reduces the future RMD calculation, compounding the tax savings over decades
- Tax-free inheritance – Roth assets pass to heirs without income tax
- Medicare premium protection – Roth withdrawals in retirement do not count toward MAGI for IRMAA purposes
The risk of waiting is not just higher taxes – it is loss of control. Once RMDs begin, the IRS sets the minimum withdrawal. You may still convert above that floor, but you lose the flexibility to stay inside a specific bracket with precision.
Is 2026 a Good Year for a Roth Conversion? Bracket Analysis
Yes – and here is why. The One Big Beautiful Bill Act made the 2017 Tax Cuts and Jobs Act rates permanent, which removes the uncertainty that hung over conversions for years. For married couples filing jointly, the 2026 brackets are confirmed by the IRS as follows:
- 10% – Taxable income up to $24,800
- 12% – $24,801 to $100,800
- 22% – $100,801 to $211,400
- 24% – $211,401 to $403,550
- 32% – $403,551 to $512,450
- 35% – $512,451 to $768,700
- 37% – Above $768,700
The standard deduction for married couples filing jointly rises to $32,200 in 2026. Couples where both spouses are 65 or older may claim an additional $1,650 per spouse, bringing the combined deduction to $35,500 before the new OBBBA senior deduction.
A retired couple with $80,000 in Social Security and pension income may have substantial room in the 22% bracket before hitting $211,400. Converting $50,000 to $100,000 annually at 22% is far preferable to eventually paying 24% or 32% on forced RMD distributions from a larger, still-growing balance. With rates now permanent, five-year projections can be built on a stable foundation rather than expiration-date guesswork.
The IRMAA Trap: Why Your Conversion Amount Matters for Medicare Costs
A Roth conversion adds to your MAGI in the year it occurs – and Medicare’s IRMAA surcharge uses MAGI from two years prior to set your premiums. That means a large 2026 conversion could raise your 2028 Medicare costs if it pushes you above the threshold.
For 2026, IRMAA kicks in at $218,000 MAGI for married couples filing jointly. The surcharge works as a cliff – crossing by a single dollar triggers the full additional cost for that tier. For a couple where both spouses are on Medicare, that can mean over $1,900 in additional annual Part B premiums alone, plus Part D surcharges on top.
The 2026 IRMAA tiers for married filing jointly:
| 2026 MAGI (MFJ) | Monthly Part B Premium (per person) | Added Annual Cost (couple) |
| Up to $218,000 | $202.90 (standard) | $0 |
| $218,001 – $274,000 | $284.10 | ~$1,946/year |
| $274,001 – $342,000 | $389.00 | ~$4,465/year |
| $342,001 – $410,000 | $453.90 | ~$6,024/year |
| Above $410,000 | $519.40 – $689.90 | $7,000+ /year |
The two-year lookback is what makes this planning-intensive. Conversions in 2026 affect 2028 IRMAA. Conversions in 2027 affect 2029. A five-year laddering strategy that holds MAGI just under $218,000 each year allows substantial cumulative conversions while avoiding the surcharge entirely.
Five-Year Roth Conversion Laddering: Staying Below the IRMAA Cliff
The following table illustrates how a married couple with $1.2 million in traditional IRA assets might structure annual conversions – maximizing the 22% bracket while staying below the $218,000 IRMAA threshold. This is an illustrative framework; every household needs personalized analysis based on their actual income sources.
| Year | Other Income | Conversion Target | Est. Total MAGI | IRMAA Triggered? |
| Year 1 | $85,000 | $100,000 | $185,000 | No |
| Year 2 | $87,000 | $98,000 | $185,000 | No |
| Year 3 | $89,000 | $96,000 | $185,000 | No |
| Year 4 | $91,000 | $94,000 | $185,000 | No |
| Year 5 | $93,000 | $92,000 | $185,000 | No |
The information contained above is for illustrative purposes only.
Five years at this pace converts approximately $480,000 of pre-tax assets at the 22% federal rate and without crossing the IRMAA cliff. The remaining balance still benefits from reduced future RMDs. One important caveat: municipal bond interest adds back to MAGI for IRMAA purposes even though it is excluded from standard AGI. Retirees holding significant municipal bond portfolios may have a higher effective MAGI than their 1040 suggests.
The Texas Advantage: No State Income Tax Changes the Math
Texas has no state income tax – and that single fact has significant implications for Roth conversion strategy that most national guides overlook. A couple executing a $100,000 Roth conversion in Texas owes federal tax at their marginal rate and nothing more. In California, the same conversion carries up to 13.3% additional state tax on top of the federal bill. At the 22% federal bracket, the after-tax cost of a $100,000 conversion is approximately $22,000 in Texas – compared to $35,300 or more in California. Over a five-year laddering plan, Texas residency may represent $65,000 or more in total tax savings on the same conversion amounts.
This matters for a specific group of clients: those who relocated to Texas from high-tax states following a career move in the energy sector or upon retirement. If you moved here from California, Illinois, or New York and still carry pre-tax retirement balances, your Roth conversion math is meaningfully more favorable than it was in your previous state. Texas also has no inheritance or estate tax, which strengthens the case for Roth conversion as a legacy planning tool – pre-tax IRA assets left to heirs become taxable income to them, while Roth assets do not.
Oil and Gas Professionals: Coordinating With RSU Vesting Schedules
For energy sector professionals, the Roth conversion decision is more complex because income rarely runs flat year to year. RSU vesting events, deferred compensation payouts, and variable bonus structures can push MAGI well above typical thresholds in specific years – and leave significant room in others.
If an energy executive expects a large RSU vest in 2027 that will push MAGI to $280,000 or more, the efficient conversion windows may be 2026 and 2028 – the years when income sits lower. A multi-year projection that maps vesting schedules against bracket capacity lets you front-load conversions in low-income years and pause in high-income ones. Deferred compensation payouts compete directly with conversion space the same way RSU vests do, requiring the same calendar-aware approach.
For professionals in phased retirement who still receive W-2 income alongside existing IRA balances, the window between your last high-income year and RMD onset may be narrow. In volatile industries, that window can shrink without warning. Identifying it early – and acting within it – is the core discipline that separates a good outcome from a missed one.
Mega Backdoor Roth: A Strategy for High Earners Still Working
The Mega Backdoor Roth allows high earners whose 401(k) plans permit after-tax contributions to move significantly more into Roth accounts than standard limits allow. The total annual addition limit for a 401(k) in 2026 is $70,000. If your plan allows after-tax contributions and in-plan Roth rollovers, the gap between your pre-tax contribution and the $70,000 ceiling can be filled with after-tax dollars and then converted – potentially adding $30,000 or more to a Roth account annually above standard IRA limits.
Key requirements for this strategy to work:
- Plan must allow after-tax contributions – Not all plans do; check the plan document
- In-service distribution or in-plan Roth rollover required – Without this, the money sits in the plan and the Roth benefit is delayed until separation
- Anti-discrimination testing compliance – High earners may face limits if lower-earning employees are not participating at comparable rates
For high-earning energy professionals in their late 50s or early 60s who want to accelerate Roth accumulation before retirement, this strategy combined with traditional conversions may shift the pre-tax-to-Roth ratio significantly in the years remaining before they leave work.
Frequently Asked Questions
When should I do a Roth conversion?
The best window for most retirees is between age 65 and 73 – after work income decreases but before required minimum distributions begin. Income is often at its lowest during this gap, which may allow conversions at the 22% federal bracket or lower. Texas residents have additional motivation because no state income tax reduces the after-tax cost of each conversion substantially compared to high-tax states.
Is 2026 a good year for a Roth conversion?
Yes. The current tax rate structure is now permanent following the One Big Beautiful Bill Act, which removes prior uncertainty about rate expiration. The 2026 brackets are confirmed, IRMAA thresholds are known, and multi-year plans can be built on a stable foundation. Waiting without a specific reason may mean converting later at higher rates when RMDs add mandatory income to the picture.
What is the IRMAA cliff and how do I avoid it?
IRMAA is a Medicare premium surcharge that begins at $218,000 MAGI for married couples filing jointly in 2026. One dollar over the threshold triggers the full surcharge for that tier – potentially over $1,900 per year in added Part B premiums for a couple. Avoiding the cliff requires calculating total MAGI from all sources before setting the conversion amount each year, then targeting a figure that keeps MAGI below the threshold. Multi-year laddering that caps annual MAGI just under $218,000 allows large cumulative conversions without triggering the surcharge.
Can oil and gas professionals with RSUs benefit from Roth conversions?
Yes – but timing requires coordination with vesting schedules. RSU vests create large ordinary income spikes that may temporarily push MAGI above IRMAA thresholds and bracket ceilings. A multi-year projection that identifies low-income years between major vesting events, and front-loads conversions into those windows, typically produces better outcomes than converting without accounting for RSU income.
Does a Roth conversion affect Social Security taxes?
Indirectly, yes. Roth conversions increase MAGI in the conversion year, which may cause a higher percentage of Social Security income to become taxable – up to 85% for higher-income recipients. This additional tax cost needs to be included in the annual conversion calculation alongside the bracket and IRMAA analysis.
The Right Time to Build Your Roth Conversion Plan
A Roth conversion strategy that accounts for tax brackets, IRMAA thresholds, RSU schedules, and state tax advantages requires a plan built around your specific income picture and retirement timeline. The math is knowable. What changes the outcome is whether someone has actually run the projections for your situation.
At Saxon Financial Group, we work with pre-retirees and retirees across Texas to build multi-year tax-efficient withdrawal and conversion strategies. If you are in the 65-to-70 window and have not yet evaluated how a Roth conversion ladder may fit your retirement plan, the brackets are confirmed, the IRMAA thresholds are known, and the window before RMDs is open right now.
Contact our team to discuss whether a Roth conversion strategy may be appropriate for your situation.
This article is intended for educational purposes only and does not constitute personalized tax or investment advice. Tax rules are complex and individual circumstances vary. Please consult with a qualified financial advisor and tax professional before making conversion decisions. Saxon Financial Group is an SEC-registered investment advisor.
Additional Disclosure Language:
Some information throughout this document has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.
