A Retired Couple, Both 75, With $850,000 in an IRA Has 54 Days to Take a $34,553 RMD. Here’s the Largest Roth Conversion That Stays in the 12% Bracket
This year's RMD and any Roth conversion for 2026 both close Dec. 31. For a couple at 75 with an $850,000 IRA, the RMD is $34,553, and the most they can convert inside the 12% bracket is $73,000, because each…
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The IRS released the 2027 tax brackets on Nov. 5, and that leaves 54 days for retirees to settle two moves that both close on Dec. 31: this year’s required minimum distribution and any Roth conversion that is meant to count for 2026.
Consider a married couple, both 75 and retired. His traditional IRA held $850,000 on Dec. 31, 2025. They collect $3,900 a month in Social Security together, $46,800 a year, and have no pension, wages or other income. They would pay any conversion tax from savings outside the IRA. Their question: after taking the RMD, how much can they convert to a Roth before the tax bill jumps?
The direct answer: take the $34,553 RMD first, then convert $73,000. That is the largest conversion that keeps their taxable income inside the 12% bracket and keeps their full senior deduction. It costs $10,993 in added federal tax, or 15.1% of the amount converted.
First job by Dec. 31: the $34,553 RMD
Under IRS rules, each year’s RMD is the prior Dec. 31 IRA balance divided by the Uniform Lifetime Table factor, which is 24.6 at age 75. So $850,000 divided by 24.6 is $34,553, about 4.1% of the balance. The RMD must come out before any conversion, and the RMD dollars themselves cannot go into the Roth.
The excise tax on a missed RMD is 25% of the shortfall, $8,638 here, cut to 10%, or $3,455, if you fix it within two years. The income tax is owed either way.
With only the RMD, their $34,553 of IRA income makes $17,860 of their Social Security taxable, for adjusted gross income of $52,413. The 2026 standard deduction for a couple with both spouses 65 or older is $35,500, and the senior deduction adds $6,000 per person, $12,000 together. Taxable income lands at $4,913 and federal tax at $491.
The bracket table says $95,887 of room. The real number is $73,000
The joint 12% bracket tops out at $100,800 of taxable income in 2026. Subtract the $4,913 the couple already has and the table seems to offer $95,887 of room.
The catch is Social Security. Under IRS Publication 915, the taxable share of benefits depends on provisional income, which is other income plus half of benefits. Each converted dollar raises provisional income, so each one also drags more benefits into the taxable column until 85% of them are taxed. For this couple, a conversion pushes taxable Social Security from $17,860 to $39,780, an extra $21,920 of taxable income they never touched.
Run the full calculation and the largest conversion that stays in the 12% bracket is $73,967. Rounding to a clean $73,000 leaves a small cushion. At that figure, AGI is $147,333, taxable income is $99,833 and total federal tax is $11,484. The conversion adds $10,993 to the bill, which is 15.1% of $73,000. You stay in the 12% bracket, yet you pay about 15 cents per converted dollar because of the Social Security effect.
Where the next dollars start to bite
Three tripwires sit just above $73,000.
The 22% bracket. Converting $83,000 instead of $73,000 raises total tax to $13,781. The extra $10,000 costs $2,297, about 23 cents per dollar, against 15 cents on the dollars below it.
The $150,000 senior-deduction line. Each spouse’s $6,000 senior deduction shrinks by 6% of modified AGI over $150,000 on a joint return. At $73,000 the couple sits at $147,333, with $2,667 to spare. At $83,000 they would lose $880 of the deduction, and that is part of why the next $10,000 costs more.
IRMAA. Medicare’s income surcharge looks back two years, so 2026 income sets 2028 premiums, and the first joint tier starts above $218,000 of modified AGI. At $147,333 the couple has $70,667 of headroom.
Filling the table’s apparent $95,887 of room would cross the first two lines. Total tax would reach $16,956, an added $16,465 on the conversion, and the senior deduction would fall to $9,574.
What the new 2027 brackets change
The brackets released Nov. 5 widen the 12% bracket to $104,050 of taxable income, $3,250 more than this year. The standard deduction for a couple with both age add-ons rises to $36,600, up $1,100 from $35,500.
A conversion also trims next year’s RMD. After the RMD and the $73,000 conversion, the IRA holds $742,447 before any growth. Divided by the age-76 factor of 23.7, the 2027 RMD is about $31,327. Without the conversion, the IRA would hold $815,447 and the RMD would be about $34,407. That is $3,080 less forced income next year.
Run the numbers on your own account
- Compute your RMD: prior Dec. 31 balance divided by your table factor. Here: $850,000 / 24.6 = $34,553.
- Add half your Social Security to the RMD to get provisional income, and find your taxable benefits under the Publication 915 worksheet. Here that is $17,860.
- Subtract your standard deduction and senior deduction from AGI. Here: $52,413 minus $35,500 minus $12,000 = $4,913.
- For each conversion amount you test, repeat step 2 with the conversion added to other income. The formula for the hardest step, once provisional income is above $44,000: taxable benefits = the lesser of 85% of benefits or 0.85 x (provisional income minus $44,000) plus $6,000.
- Stop at the largest conversion that keeps taxable income at or under $100,800 and AGI under $150,000. Here that is $73,000.
Where this is weak
Conversions made after 2017 cannot be undone. The $10,993 leaves savings now, and the payoff is a future tax bill that nobody can state in dollars today because it depends on rates, growth and how long each spouse lives. Next year’s smaller RMD is $3,080 less income, which at 12% to 15.1% saves only about $370 to $464 of tax, so the payoff rests on later years, on a surviving spouse and on heirs.
State income tax is not in this math. If you live in a state that taxes conversions, your effective rate is higher than 15.1%.
Converting less, or nothing, fits you better if you expect to stay in the 12% bracket or lower for life, if you need the IRA for spending in the next few years, or if paying $11,000 from savings would leave you thin on cash. Any other income, even a modest pension, moves the ceiling and must be rerun.
Two facts lean toward converting anyway. When one spouse dies, the survivor files single, and in 2027 the single 12% bracket ends at $52,025 of taxable income, half the joint line, while the IRA stays the same size. And the $6,000 senior deductions run only through 2028, so the room they open is temporary.
The bottom line
This couple should take the $34,553 RMD, then convert $73,000 by Dec. 31 and pay roughly $11,000 from savings. The number that decides it is 15.1%, the real cost per dollar once Social Security is counted. It is worth paying if a surviving spouse on single brackets, or their heirs, would pay more than that on the same dollars. If they expect both of them, and their heirs, to stay at 12% or below, the conversion buys little. Next year’s wider bracket means this is a yearly exercise with a new ceiling each December.
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