Why Roth Conversions Backfire for Most Retirees: The $12,000 Tax Bill Nobody Plans For

On the May 12 episode of The Clark Howard Podcast, financial advisor Wes Moss, CFP, told Clark Howard something most retirement content avoids saying out loud:

When the tax bill comes due 3 months later, 6 months later, a year later, people forget all the glory of Clark Howard talking about the Roth. And you know what they remember? $12,000 tax bill.

—Wes Moss, The Clark Howard Podcast, 05.12.26

Howard, who runs one of personal finance’s most influential shows with more than one million monthly downloads, copped to his own bias in that same conversation: I might as well have been Senator Roth from Delaware. I’m so into the Roth. So then you get blinders on and you don’t see the downsides.

Roth conversions have been a fixture of retirement podcasts and YouTube planning channels for years, marketed as close to a no-brainer. The math, on inspection, rarely supports the marketing. If you are a retiree weighing a conversion, the stakes are straightforward: you write a five-figure check to the IRS this year in exchange for tax-free growth later. If your assumptions about future tax rates turn out to be wrong, you just paid a premium for nothing.

The math behind the conversion

Federal tax brackets are marginal, a fact that gets glossed over in most conversion pitches. A married couple in the 24% bracket is not paying 24% on their entire income. Their first dollars are taxed at 10%, then 12%, then 22%, and only the top slice reaches 24%. Moss put the effective rate for a couple in the 24% bracket at roughly 16% to 18%. The problem is that a Roth conversion gets stacked on top of all other income, so every converted dollar pays the full 24%.

Run the scenario Moss laid out. A retired couple converts $50,000 from a traditional IRA to fill the 24% bracket. The IRS treats that conversion as ordinary income. The bill comes to roughly $12,000, due with next April’s return. That money has to come from somewhere. Pull it from the IRA itself and you’ve shrunk the asset you were trying to optimize. Pull it from a taxable brokerage account and you may trigger capital gains in the process of paying the conversion tax. Either way, you are spending real money today to avoid a hypothetical bill decades from now, at rates Congress has not written yet.

Moss summed up what he sees in practice: People hate the tax bill that comes with it, whether it makes financial sense or not. They hate it because they’re already paying taxes and they’re paying more taxes. He called this the real-life story 90% of the time. Since that May episode aired, Moss returned to the podcast on June 2, 2026 and walked listeners through a full Roth conversion decision tree, reinforcing that the answer is rarely automatic.

The IRMAA trap

Howard flagged the piece that quietly wrecks budgets: the Income Related Monthly Adjustment Amount on Medicare premiums. Once Required Minimum Distributions kick in at 73, or when a large Roth conversion spikes your reported income, your Medicare Part B and Part D premiums climb. In 2026, the IRMAA surcharge activates once individual income exceeds $109,000, or $218,000 for married couples filing jointly. The standard Part B premium is $202.90 per month, but IRMAA can push that as high as $689.90. For 2026, surcharge amounts rose roughly 9% from the prior year, while the income thresholds increased only about 3%.

Moss noted the cruelest detail: You can’t exactly plan for IRMAA because they’re 2 years behind on what your income is going to be. You can only guess. IRMAA uses a two-year lookback, meaning a conversion completed in 2026 hits your Medicare premiums in 2028. A couple that crosses a bracket threshold by a single dollar can face more than $1,000 in additional annual premiums each. With the 10-year Treasury yield hovering near 4.5% and the Fed holding its benchmark rate steady at 3.5% to 3.75% through the first half of 2026, fixed-income retirees are already feeling cost pressure on every front.

When conversions actually work

Conversions only produce a net benefit when your future tax rate is meaningfully higher than today’s. That depends on the gap between your current marginal bracket and your projected bracket once RMDs arrive.

If you are in the 12% bracket now and RMDs will push you into 22% or 24% later, a partial conversion can pencil out. The arbitrage is genuine. If you are already in the 24% or 32% bracket and your RMDs will land you in roughly the same place, you are prepaying tax for no advantage. Factor in IRMAA, and you may face negative arbitrage, paying more total tax than if you had done nothing.

The “tax-free growth” argument for conversions also assumes a return spread that justifies the upfront cost. With the 10-year yield near 4.5%, that payback window is stretched further out for retirees holding significant fixed-income allocations.

What to do before you sign

1. Build all three buckets, not just Roth. Moss’s prescription is tax diversification: after-tax brokerage, traditional pre-tax, and Roth. Future you wants flexibility to choose which account to draw from in any given year, depending on income that year.
2. Run the marginal versus effective math. Pull last year’s 1040, find your effective rate, and compare it to the marginal rate any conversion would hit. The gap is the real cost of converting.
3. Model IRMAA two years forward. Use the current Medicare IRMAA brackets and project where a conversion would push your Modified Adjusted Gross Income two years out. Remember that joint-filer IRMAA starts at $218,000 in 2026.
4. Convert in small slices. If conversion still makes sense after the above analysis, fill the bottom of a bracket rather than the top. Stop before crossing into a higher bracket or triggering an IRMAA tier.

Howard’s enthusiasm for Roth is understandable but incomplete. The strategy that helped his audience build wealth during their working years, contributing to Roth accounts when income was lower, is a different calculation from converting six figures in your 60s. Moss’s $12,000 example is the gap between those two ideas. Most retirees only see that gap after the check clears.

Editor’s note: This article was updated to reflect that the Federal Reserve has held its benchmark rate steady at 3.5% to 3.75% throughout 2026 with no cuts in the current year, that the 10-year Treasury yield currently sits near 4.5%, and to add the specific 2026 IRMAA income thresholds ($109,000 individual / $218,000 joint) and the note that 2026 surcharge amounts rose roughly 9% from the prior year. Post-publication context from Wes Moss’s June 2, 2026 Clark Howard Podcast appearance, which included a Roth conversion decision tree segment, was also added.