A Retired Couple With $60,000 of Income Can Convert About $180,000 to a Roth This Year and Never Leave the 22% Bracket. The December Math Advisors Charge 1% a Year to Run
The 22% bracket is far wider than most retirees realize, and the window to act closes hard on December 31 with no extensions and no take-backs. What you do in the next few months could quietly reshape your tax bill…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Most retirees treat the 22% bracket like a warning sign. For a married couple in 2026, it works more like a parking lot: wide, cheap and mostly empty. Forbes recently called this stretch the retirement tax window many people never use.
Consider an illustrative couple, both 62, retired and delaying Social Security. They live on $60,000 a year from a pension and IRA withdrawals, file jointly and take the standard deduction. They can move about $183,600 from a traditional IRA into a Roth before December 31 without a single dollar taxed above 22%. The extra federal tax comes to $33,092, an average of about 18% on the converted money.
How $60,000 of Income Leaves $183,600 of Room
Start with the IRS figures for tax year 2026. The standard deduction for joint filers is $32,200. The 22% rate applies to taxable income over $100,800, and 24% kicks in over $211,400.
Brackets are fill lines. After the deduction, the couple’s $60,000 becomes $27,800 of taxable income, just into the 12% layer. Everything between there and $211,400 is open space. Add back the deduction, subtract existing income, and the limit lands at $183,600.
| 2026 federal return (married filing jointly) | No conversion | $183,600 conversion |
|---|---|---|
| Gross income | $60,000 | $243,600 |
| Standard deduction | $32,200 | $32,200 |
| Taxable income | $27,800 | $211,400 |
| 10% layer | $2,480 | $2,480 |
| 12% layer | $360 | $9,120 |
| 22% layer | $0 | $24,332 |
| Federal tax totals | $2,840 | $35,932 |
About $73,000 of the conversion fills the unused 12% layer. The remaining $110,600 occupies the full 22% bracket and ends there.
Why the Math Only Works in December
Income isn’t final until late in the year. A surprise mutual fund capital-gains distribution, a bigger IRA withdrawal or extra CD interest all eat into the room. Since 2018, conversions can’t be reversed, so overshooting means paying 24% on the excess.
A conversion counts in the year the money leaves the traditional IRA, so December 31 is a hard deadline with no April extension. Custodians get swamped in the final weeks, which makes mid-December the safer target.
The core calculation fits on one page: project full-year income, subtract the deduction and convert up to the top of your chosen bracket. It doesn’t need an ongoing 1% advisory fee, which runs $10,000 a year on a $1 million portfolio.
Three Traps That Shrink the Number
- IRMAA’s two-year lookback. Medicare premiums are set by income from two years earlier, and the levels work as drops. Full-conversion income of $243,600 tops the 2026 tier-1 surcharge line of $218,000. Our 62-year-olds won’t be on Medicare in 2028, so they’re clear. If either spouse is 63 or older, limiting the conversion near $158,000 avoids the surcharge.
- ACA subsidies. Couples under 65 with marketplace coverage lose premium tax credits as income rises. Lost subsidies can wipe out the conversion’s savings.
- Social Security and the senior deduction. Once benefits start, conversion income can make up to 85% of them taxable. The new $6,000-per-person deduction for those 65 and older phases out above $150,000 of joint income. Converting before taking avoids both.
Paying the Bill Without Shrinking the Roth
Pay the tax from savings or a taxable brokerage account. Tax withheld from the conversion never reaches the Roth, and savers under 59½ owe a 10% penalty on it.
A big December conversion can also set off an underpayment penalty. IRS rules treat withholding from a regular IRA distribution as paid equally through the year, which fixes the problem. Form 2210’s annualized-income method also works. The conversion itself gets reported on Form 8606.
States set their own rules. Couples in no-income-tax states keep the math above intact. Couples in high-tax states owe state tax on top, and the bill changes by state.
Who Should Convert Less This Year
Filling the 22% bracket pays off when future required minimum distributions and Social Security will keep you at 22% or higher, or when heirs in high brackets will inherit the IRA. On a December 2025 episode of the Clark Howard podcast, advisor Wes Moss said “typically the right way to do Roth conversions is in chunks spread out over time.”
Couples who expect to stay in the 12% bracket for life, or who plan to leave IRAs to charity, gain little by prepaying at 22%. Whether today’s rate beats your future rate is worth checking once with a fee-only CPA or fiduciary planner before December 31 (the quiet years between a last paycheck and the first RMD are the whole subject of our free Roth window guide).
Contact [email protected] for any questions or corrections.
Vilma Rios is a tax professional and tax content contributor with more than 15 years of experience in tax and accounting. She specializes in federal tax research, tax education, and translating complex tax rules into clear, practical information for individuals, families, and small-business owners.
Vilma is a Content Tax Contributor II with the National Association of Tax Professionals (NATP), where she contributes to tax education and professional content. She has also presented tax information through webinars, including Spanish-language tax education, and has appeared on Telemundo 47 discussing tax topics and helping viewers understand important tax-filing requirements.
Her experience also includes tax and accounting work, tax research, IRS-related matters, and public tax education. While in college, Vilma volunteered in an IRS-sponsored tax assistance program and was recognized for her community service by local and state officials.
Known as “Your Tax Geek,” Vilma is passionate about making taxes easier to understand and helping people navigate an increasingly complex tax system.
