A 60-year-old sitting on $1.7 million in a traditional 401(k) just walked into the most valuable tax window of their life and most do not know it. Between now and the day Medicare enrollment paperwork lands at age 65, there is a three-year stretch where Roth conversions can be executed without triggering the Income-Related Monthly Adjustment Amount surcharge that haunts higher-income retirees. Miss it, and every dollar converted later carries an invisible Medicare tax on top of the federal rate.
A recent thread in the Bogleheads forum captured the dilemma well: a 60-year-old asked whether to convert $150,000 a year through age 63 or wait until cash flow was simpler. The answer is in the calendar.
Why the Window Closes at 63
IRMAA uses a two-year lookback. The premium you pay at 65 is based on the MAGI reported on your tax return at 63. For a 60-year-old today, conversions executed in 2026, 2027, and 2028 sit safely outside that lookback. A conversion at 63 hits the Medicare premium two years later, and every conversion after that compounds the surcharge.
The cost is not abstract. The 2026 IRMAA Tier 1 threshold starts at $218,000 of MAGI for joint filers, adding $2,297 per couple per year in surcharges. Tier 2 begins at $274,000 and costs $5,772 per couple. Tier 3 at $342,000 runs $9,240. Those surcharges are paid every year you remain in that band, on top of the federal income tax already due on the conversion.
The Math on a $1.7 Million Balance
Assume the couple is married, retired, and has no other taxable income for the next three years. The 2026 standard deduction for joint filers is $32,200. The 24% bracket runs to $211,400 of taxable income, meaning roughly $243,600 of gross income fits inside the 24% bracket or below. A clean strategy: convert about $200,000 per year for three years, soaking up the 22% and 24% brackets while staying clear of the 32% jump that starts at $403,550.
Three years of conversions at that pace moves $600,000 out of the traditional account, shrinking the future RMD base by more than a third. Federal tax on each year lands in the blended 22% to 24% zone. The same conversion executed at 66, after Social Security and Medicare are running, would push MAGI into IRMAA Tier 2 or higher and likely cause 85% of Social Security benefits to become taxable.
The Macro Backdrop Helps
Two data points matter for timing. The 10-year Treasury yield sits at 4.56%, near the top of its 12-month range, and the federal funds upper bound is 3.75%, down 75 basis points from a year ago. Converting now means future growth on the Roth side is tax-free at a moment when bond yields are funding a meaningful slice of returns. Paying the tax with outside cash preserves the compounding base.
Do Not Forget the Super Catch-Up
If either spouse is still working, the SECURE 2.0 enhanced catch-up applies at ages 60 to 63: an extra $11,250 on top of the standard limit, for a total of $35,750 in 2026. There is a wrinkle. Workers 50 and older who earned more than $150,000 in 2025 must route the catch-up portion into a Roth 401(k). That converts what was historically a pretax deduction into an after-tax Roth deposit, compounding the tax-free balance during the same three-year window.
Three Actions to Take This Quarter
- Pull last year’s tax return and project MAGI for 2026, 2027, and 2028. Identify how much room exists inside the 24% bracket after subtracting the standard deduction and any other income. That number is your annual conversion ceiling.
- Open or fund a taxable brokerage account to hold the tax payment. Paying the IRS from outside cash, rather than from the conversion itself, is what makes the math work.
- If joint MAGI in any conversion year would land above the first IRMAA threshold of $218,000 starting in 2029 or later, a fee-only advisor who models Medicare surcharges alongside federal brackets earns the fee on the first conversion alone.
The IRS and CMS care what year it is. Three years from now, the cheapest dollar a 60-year-old will ever convert is gone.
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