A married couple in their early 60s with $2.0 million in traditional 401(k)s, $300,000 in a brokerage account, and no Roth balances walks into retirement looking wealthy. The problem is that the IRS has a claim on a large slice of that $2 million, and the size of that claim depends almost entirely on what happens between now and the year the first required minimum distribution lands.
That gap, the years between retirement and age 73, is where the bracket-filling Roth conversion does its work. For a couple who can live on outside money during the conversion window, the lifetime tax savings on a $2 million traditional balance run into the $400,000-plus range. Here is how the math pencils out for 2026.
The setup that makes the strategy work
Picture a couple aged 61 and 62 who retired this year. Both plan to delay Social Security to age 70, and they live on $90,000 a year drawn from the brokerage account and cash reserves. Because they are not pulling from the 401(k) and not yet collecting Social Security, their taxable income for the next several years is close to zero. That empty bracket space is the asset most retirees never use.
The 2026 numbers define the runway. The MFJ standard deduction is roughly $30,000 while both spouses are under 65, rising to about $32,300 once both turn 65. The 12% MFJ bracket extends to about $96,950, which leaves roughly $66,950 of conversion capacity taxed at 12%. The next $109,750 sits at 22%, taking the couple to the $206,700 top of the 22% bracket.
$77,000 a year, for 12 years
The plan is to convert $77,000 per year from age 61 to age 73, filling the 12% bracket and dipping a small slice into 22%. Over twelve years, that moves $924,000 from traditional to Roth at a blended federal rate of about 13.5%, roughly $124,700 in total conversion tax.
Compare that to the no-conversion path. Left untouched and compounding at 6%, the $2 million grows to roughly $4.0 million by age 73. The first RMD using the 26.5 Uniform Lifetime divisor lands at about $151,000. Stack that on top of roughly $60,000 in combined Social Security at age 70, of which 85% is taxable, and ordinary income clears $200,000. Every RMD dollar is now taxed at 22% to 24% for the rest of both lives, and the surviving spouse eventually files single, where those same brackets hit at half the income.
Current macro conditions support the 6% growth assumption. The 10-year Treasury yields 4.41%, the Fed funds target sits at 3.75% after three cuts since September 2025, and core PCE remains elevated at the 90.9th percentile of the past year. Inflation that sticks above target is exactly the environment in which paying tax at today’s known rates beats deferring into unknown future ones.
Three rules that make or break the result
- Use the gap year first. Conversion capacity is largest before Social Security starts, because no portion of the bracket is consumed by taxable benefits. The couple gets nine clean years (ages 61 through 69) before claiming, then three tighter years from 70 to 73 once benefits begin.
- Front-load conversions before age 63. IRMAA uses a two-year lookback, so the MAGI on the return filed at age 63 sets the Medicare premium at age 65. Spiking conversion income at 63 or 64 can add a meaningful surcharge per spouse in Part B and Part D surcharges. Keep the early years closer to the 12% bracket cap and push larger 22% bracket conversions to ages 61, 62, and again after the IRMAA window clears.
- Pay conversion tax from the brokerage, not the 401(k). Pulling the tax out of the IRA defeats the strategy by shrinking the Roth and triggering withholding from a tax-advantaged account. The $300,000 brokerage exists precisely to fund both living expenses and the annual tax bill.
What to do this week
Pull last year’s tax return and calculate exactly how much room sits between projected 2026 taxable income and the top of the 12% bracket. That number is the floor for this year’s conversion. If the gap is larger than $77,000, consider going further into the 22% bracket in 2026 and 2027 to compress the schedule before the IRMAA lookback begins.
Then run the survivor scenario. Single filers hit the 24% bracket near $103,000 of taxable income in 2026, and a $151,000 RMD on top of one Social Security check obliterates that line. The Roth conversion is, in large part, a bet that one spouse outlives the other. That bet pays off about $400,000.
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