A 65 year old single retiree posted a familiar question on a Bogleheads thread last month: “I have $1.6 million in a traditional 401(k) and $30,000 in Social Security. Every article tells me to do Roth conversions to fill the 12% bracket. Nobody tells me the actual dollar amount.” The honest answer for that exact profile is $43,000 a year, every year, from age 65 through 72. What follows is the line-by-line math that gets there.
Under 2026 rules, a single filer owes 12% on taxable income up to $50,400. One dollar above that threshold tips into the 22% bracket. Three deductions stack together to determine how much gross income the retiree can absorb before reaching that wall: the standard deduction of $16,100, the age 65 add-on of $2,050, and the temporary senior bonus deduction of $6,000 created by the One Big Beautiful Bill Act, which is available in full for tax years 2025 through 2028 to single filers whose MAGI stays below $75,000. The three together total $24,150. Because the One Big Beautiful Bill also made the seven-bracket structure permanent, the 12% rate is not a temporary planning window. It is the law for the foreseeable future.
That means the ceiling on gross income before tipping into the 22% bracket is $50,400 plus $24,150, which equals $74,550. Social Security takes a bite out of that ceiling. With $30,000 in benefits and provisional income well past the upper threshold, 85% of those benefits becomes taxable income. That is $25,500 of ordinary income before a single dollar of conversion has been processed.
Why $43,000 Is the Right Conversion Size
Subtract the taxable Social Security from the bracket ceiling: $74,550 minus $25,500 leaves roughly $49,000 of headroom for a Roth conversion. The temptation is to convert the full amount. Resist it. A taxable brokerage account throws off dividends and the occasional capital gain distribution in December that the retiree cannot forecast in March. Bond interest, a Treasury maturing, a mutual fund kicking out a surprise gain: any of those can push the last dollar of the conversion into the 22% bracket retroactively.
Converting $43,000 preserves a buffer of roughly $6,000 for that noise. The federal tax on the conversion itself is $43,000 times 12%, or $5,160 a year. Run that for eight years, from age 65 through 72 (the last full year before required minimum distributions begin at 73 for those born between 1951 and 1959), and the retiree has shifted $344,000 out of the traditional 401(k) at a known, locked-in rate, for a cumulative federal tax cost close to $41,000.
The Bracket Arbitrage Nobody Writes Down
Left alone, that same $344,000 compounds inside the 401(k). At a 6% annual return over eight years, the untouched balance would grow to roughly $548,000 by age 73, then start flowing out as required minimum distributions on top of Social Security and any other income. At that point, the marginal rate on the top slice of RMDs would almost certainly be 22% or 24%, well above today’s 12%. The arbitrage is straightforward: pay 12% now to avoid paying 22% to 24% later on the same dollars plus all the compounding those dollars will do in the interim.
Pushing the conversion higher destroys the trade entirely. A $70,000 conversion would put roughly $20,000 into the 22% bracket, taxing that marginal slice at a rate identical to the future RMD rate this strategy exists to sidestep. At that point there is no spread left to capture.
The IRMAA Window Stays Wide Open
The 2026 IRMAA surcharge kicks in at $109,000 of MAGI for single filers, layering additional costs on top of the standard $202.90 Part B monthly premium. A $43,000 conversion combined with $25,500 of taxable Social Security puts AGI near $68,500, leaving more than $40,000 of cushion before Medicare premiums face any surcharge. That cushion is not academic. IRMAA uses a two-year lookback: the income reported on the 2026 tax return is exactly what the Social Security Administration will examine when it sets the Part B premium for 2028. Keeping AGI well below $109,000 now protects against a premium spike two years later.
One mechanical rule: pay the conversion tax from a taxable brokerage account rather than by withholding from the IRA itself. Withholding shrinks the amount that actually lands in the Roth. After age 59 and a half there is no early-withdrawal penalty, but every dollar held back for taxes is a dollar that stops compounding tax-free for the rest of the retiree’s life. That opportunity cost is real.
Three Things to Do This Quarter
- Project this year’s gross income line by line: Social Security, interest, dividends, capital gains, any pension, then back into the conversion size that lands AGI between $65,000 and $70,000. Do not eyeball it.
- Set the conversion to execute in November or December, once the year’s dividends and capital gain distributions are known rather than guessed.
- Earmark a taxable account holding (a money market fund works well) to cover the roughly $5,000 federal tax bill so the full $43,000 reaches the Roth.
Editor’s note: This article was updated to reflect confirmed 2026 IRS figures including the $16,100 standard deduction for single filers, the $2,050 age-65 additional deduction, the $6,000 OBBBA senior bonus deduction available for tax years 2025 through 2028, and the confirmed IRMAA threshold of $109,000 for single filers with a standard Part B premium of $202.90. The RMD age of 73 applies specifically to those born between 1951 and 1959; those born in 1960 or later will not face RMDs until age 75 under SECURE 2.0.
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