67-Year-Old With $1.3M Discovers Single Roth Conversion Triggered $48,000 Tax Bomb

Constance retired last year at 66 with a portfolio most planners would call enviable. She has $900,000 in a traditional IRA, $200,000 in a Roth, $200,000 in a taxable brokerage, and gets roughly $30,000 a year in Social Security. At 67, she sits in the window between retirement and required minimum distributions, the years many advisors call the “Roth conversion runway.” So Constance did what seemed like a reasonable thing: she converted $400,000 from her IRA to the Roth in a single tax year to get it over with.

That one decision cost her roughly $48,000 more than necessary. Spread across two calendar years, the same conversion would have landed the same long-term Roth balance with a meaningfully smaller tax and Medicare bill. This is one of the most common, and most expensive, mistakes retirees in the pre-RMD window make.

Why the Lump Conversion Backfires

A Roth conversion is taxed as ordinary income in the year you execute it. Stack $400,000 of conversion income on top of Social Security and modest brokerage interest, and you blow straight through multiple brackets.

For a single filer in 2025, the 24% bracket runs from $103,351 to $197,300 and the 32% bracket runs from $197,301 to $250,525, with 35% starting above that. The 2026 thresholds are similar in shape: 24% kicks in above $105,700 and 32% above $201,775 for single filers. A $400,000 conversion does not simply fill the 24% bracket. Once Social Security and brokerage income are layered in, the top dollars get pushed into 32% and even 35% territory.

Investment strategist Wes Moss addressed this scenario directly on a Clark Howard Podcast episode. “Just be careful not to do too big of a conversion all at once because the conversion itself increases your income, which increases your tax bracket,” he said. “So typically the right way to do Roth conversions is in chunks spread out over time.”

The tax bill is only half the damage. Medicare uses a two-year lookback on modified adjusted gross income (MAGI) to set Part B and Part D premium surcharges, known as IRMAA. A 67-year-old converting in 2026 will feel the IRMAA consequences in her 2028 premiums.

IRMAA operates as a hard cliff: cross a tier by a single dollar and the full surcharge applies to the entire year. For single filers in 2026, Tier 1 begins at $109,000 of MAGI, and the brackets run through five tiers up to $500,000. Constance’s lump conversion, combined with her Social Security income, pushes her MAGI well above $200,000 and into Tier 4 (covering MAGI from $205,001 to $500,000 for single filers). The Tier 4 monthly surcharge adds $446.30 to Part B and $83.30 to Part D, a combined $529.60 per month. Over a full year, that totals roughly $6,300 above standard premiums.

The Two-Year Ladder, in Numbers

Splitting the conversion into $200,000 in year one and $200,000 in year two keeps the top of each year’s income near the ceiling of the 24% bracket rather than punching into 32%. It also holds MAGI in a lower IRMAA tier in both lookback years, which compounds the savings.

The roughly $48,000 delta traces to three sources: dollars no longer taxed at 32% or 35%, a lower IRMAA tier in each lookback year, and a smaller share of Social Security forced into taxation at the higher provisional income level. Each piece individually seems manageable; together they become a five-figure surprise.

What to Evaluate Before You Convert

1. Pick a target bracket ceiling. Most pre-RMD retirees should fill the 24% bracket and stop. For 2026, that ceiling for single filers is $201,775 of taxable income. Work backward from that figure to size the conversion.
2. Factor in the new senior deduction. The One Big Beautiful Bill, signed in July 2025, introduced a temporary $6,000 bonus deduction for single filers age 65 and older, effective through 2028. For Constance, that extra deduction slightly widens her conversion headroom inside the 24% bracket before a tax professional runs the full numbers.
3. Model the IRMAA tiers before December. The conversion surfaces on Medicare’s radar two years later. Run the projected MAGI against the current single-filer tiers and leave a buffer. Crossing a tier by $500 costs exactly as much as crossing it by $5,000.
4. Account for the 2026 Social Security COLA. The 2.8% COLA nudges benefit income higher, which nudges MAGI higher before a single dollar is converted. That matters at tier boundaries.
5. Pay the conversion tax from the brokerage account. Using IRA dollars to cover the tax shrinks the amount actually moved into the Roth and undercuts the whole strategy.

Roth conversions are almost always more efficient in slices than in a single bite. Many retirees could benefit from working with a fee-only financial planner or tax professional to map out the sizing and timing. The advisory fee frequently pays for itself several times over in taxes and surcharges avoided.

Editor’s note: This article was updated to correct the annual IRMAA surcharge figure for single filers landing in Tier 4, which is approximately $6,300 per year rather than the previously stated “more than $4,000.” It also adds a checklist item on the $6,000 senior bonus deduction introduced by the One Big Beautiful Bill for filers age 65 and older, effective for tax years 2025 through 2028.

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