How Much Can a 62-Year-Old Couple With $2.3 Million in Their 401(k) Save With Roth Conversions?

On a recent episode of Your Money Your Wealth, certified public accountant Al Clopine gave a 62-year-old California listener a Roth conversion playbook most retirees never hear: “Convert to the top of the 22%. But convert in the 24% bracket during down years. Be opportunistic. The market will recover while it’s in a Roth and you get more bang for your buck.”

The listener and his 61-year-old wife hold $2.3 million in a 401(k) and $1.2 million in a brokerage account earmarked for the tax bill. They draw a $55,000 government pension with COLA plus roughly $40,000 in dividends and rental income, and plan to delay Social Security until 70, when combined benefits will reach about $75,000. His question: stop at the top of 22% to dodge IRMAA, or push into 24%?

The verdict: fill the 22% bracket, then break the rule when stocks drop

Clopine and co-host Joe Anderson agreed the default answer is the top of the 22% bracket. Anderson put the stakes plainly: if the listener does nothing, required minimum distributions starting at 75 will likely push him into the 24% bracket anyway, so “if he doesn’t convert, he’ll be in the 24%” regardless.

For 2026, the standard deduction for married filing jointly is $32,200, and the 22% bracket for joint filers runs to $211,400 of taxable income. Clopine walked the math: “Dividend and rental income, $40,000. Pension, $55,000. Subtract out standard deduction of $32,000. I get taxable income of $63,000.” That gives the couple roughly $140,000, call it $150,000 of additional conversion room before crossing into 24%. Anderson estimated converting that amount for a decade moves $1,000,000 to $1,200,000 out of the 401(k).

The distinctive insight is what Clopine said next. When the market drops 15% or 20%, the same $150,000 conversion moves more shares into the Roth. The recovery then happens entirely tax-free. In a steep down year, intentionally crossing into the 24% bracket can be the better trade, because future tax-free growth on those depressed shares more than compensates for the extra two percentage points paid today.

The variable Clopine flagged: spending

Before endorsing any conversion amount, Clopine stopped the analysis cold: “We’re missing one key fact. What’s he spending? We don’t know.” Anderson pushed it further: a couple burning $400,000 a year would drain the 401(k) on their own and never face an RMD problem, making aggressive conversions pointless.

The Bureau of Labor Statistics pegged average annual household spending at $78,535 in 2024. A couple living near that figure, with the pension, investment income, and eventually $75,000 in Social Security, has far more income than they need. That is exactly the profile where RMDs balloon the tax bill in the late 70s and Roth conversions pay off. A couple spending $250,000-plus is a different problem.

The IRMAA wrinkle matters here too. For 2026, Medicare Part B surcharges for joint filers begin once modified adjusted gross income exceeds $218,000, with the standard premium of $202.90. IRMAA uses MAGI, not taxable income, and is generally based on a prior tax year, so a one-off conversion into the 24% bracket during a market crash may trigger a temporary surcharge two years later. Price that in.

The cost segregation angle on rental income

Anderson raised a wrinkle most retirees miss: “He needs to do a cost seg.” A cost segregation study breaks a rental property into components (appliances, flooring, land improvements) that depreciate faster than the standard 27.5-year schedule for residential real estate. Accelerated depreciation can shelter a chunk of the $40,000 in rental income, lowering taxable income and opening more headroom under the 22% ceiling for conversions.

What to do with this

1. Pin down your spending number first. If withdrawals will exhaust the 401(k) before RMDs hit at 75, conversions add complexity without saving tax. Project a base case and a high-spend case before sizing anything.
2. Set a default ceiling at the top of the 22% bracket ($211,400 of taxable income for joint filers in 2026) and pre-commit to crossing into 24% only when the S&P 500 is down double digits from its prior peak.
3. Model IRMAA two years forward. An opportunistic 24% conversion year can raise Medicare premiums two years out; budget for that surcharge before pulling the trigger.
4. Ask a CPA about a cost segregation study on any rental property to free up additional conversion room without raising the tax bill.

This is general education from a podcast discussion, not individualized tax advice; the right number depends on your spending, longevity, state taxes, and future rates. The Clopine and Anderson takeaway: bracket-filling is just the floor of a good Roth strategy. The real money is made by converting more when the market hands you a discount.