Roth Conversions

The conversion mechanics, the Fixed / Fill-to-Bracket / Fill-to-IRMAA strategies, how each solved strategy respects the year’s policy, and how conversions interact with taxes and RMDs.

Why model Roth conversions?

A Roth conversion moves money from a pre-tax account to a Roth account, paying ordinary income tax now so that the amount — and its future growth — is never taxed again and is never subject to RMDs. Whether that helps depends on the interplay of current-year tax, future tax, RMDs, IRMAA, and how long the portfolio lasts. SmartRetireCalc models the conversion year by year so you can see the trade-off rather than assume it.

How SmartRetireCalc models a conversion

In each projection year, after any RMD has been forced out of the pre-tax bucket:

• A conversion amount C is chosen (by the selected strategy, below), never more than the remaining pre-tax balance.
• The full amount C moves to the Roth balance; the pre-tax balance falls by C.
• C is added to the year’s ordinary income, so it raises federal tax and (with the two-year lookback) a later year’s IRMAA MAGI.
• The extra tax it generates is funded by the year’s tax/IRMAA gross-up withdrawal (see Paying conversion taxes).

Conversions run only from your retirement age onward, only while a pre-tax balance remains, and stop at the Conversion End Age if you set one (commonly set to the year before RMDs begin).

Conversion strategies

Fixed amount

A specified dollar amount is converted each year, capped at the available pre-tax balance. Simple and fully under your control; it does not react to that year’s income.

Fill-to-Bracket

See below.

Fill-to-IRMAA limit

See below.

A separate Cap to avoid IRMAA option can be layered on top of any strategy — it never raises the chosen conversion, only reduces it so the year’s modeled MAGI stays under the first IRMAA tier.

Fill-to-Bracket

Fill-to-Bracket chooses the largest conversion that keeps the year’s final federal taxable income within the ordinary-income bracket you select (for example, the top of the 12% or 22% bracket).

The target is bracket capacity, not a naive dollar difference. The model solves for the conversion because a conversion can change which account funds your spending (pre-tax vs. tax-free Roth), which in turn changes taxable income. The “final taxable income” it fits under the ceiling is computed after the actual spending-withdrawal waterfall, the §86 taxable portion of Social Security, the full deduction stack (standard + age-65 + senior deduction where applicable), and the tax gross-up withdrawal.

The bracket top is the one for that row’s tax year. For a calendar-anchored projection, rows after the latest official IRS table use the inflation-projected bracket edges described in Taxes (F1C) — the solver does not freeze every future row at today’s bracket edges. The 37% bracket has no finite ceiling, so selecting it converts the whole eligible balance.

Fill-to-IRMAA

At age 65 and older, Fill-to-IRMAA chooses the largest conversion that keeps the year’s final modeled Medicare MAGI at or below the first IRMAA tier threshold. Under 65 — when IRMAA does not yet apply — it falls back to filling the 12% bracket via the Fill-to-Bracket solver.

Two points matter here:

• The threshold is that row’s IRMAA configuration. In a calendar-anchored projection, premium years after 2026 use the projected MAGI thresholds (statutory CPI framework, nearest $1,000, never decreasing) and the exact high-income boundary classification described in Medicare & IRMAA (F1D / F1D.1). An admin threshold override, if present, is used instead.
• It targets the MAGI the year generates — which, through the two-year lookback, drives a later premium year’s surcharge — not the current year’s own surcharge, whose timing is unchanged.

RMD interaction

In every projection year the RMD is forced out of the pre-tax bucket first, before the conversion amount is chosen, and the RMD counts as part of the ordinary income the Fill-to-Bracket and Fill-to-IRMAA solvers must fit under their ceilings. A conversion can never satisfy or reduce an RMD — both are ordinary income in the same year, stacking on top of each other. This is the core reason conversions are most effective in the window between retirement and the RMD start age (73 or 75 depending on birth year), when other income is often at its lowest.

Paying conversion taxes

Federal tax and IRMAA are treated as an additional plan cost, paid on top of spending. Any guaranteed-income surplus for the year (Social Security + pension/annuity beyond spending and loan payments) pays this bill first. For whatever remains, the model “grosses up” a withdrawal: it solves for the pre-tax withdrawal whose after-tax proceeds pay the year’s remaining tax and IRMAA, counting that withdrawal as ordinary income too. This gross-up withdrawal draws from your primary pre-tax balance, and falls back to Roth only if the primary pre-tax balance is exhausted. Spouse pre-tax, savings, and the taxable brokerage account are not used to fund the tax in the current model. See Taxes.

Why a conversion can help or hurt

SmartRetireCalc does not present conversions as universally good. Depending on your situation a conversion can:

• raise this year’s tax (and possibly the taxable share of your Social Security);
• lower future RMDs, and the taxes and IRMAA they would have triggered;
• raise a later premium year’s IRMAA if it pushes MAGI across a tier;
• shift account composition toward tax-free Roth, which changes withdrawal flexibility and what heirs inherit;
• lengthen or shorten portfolio longevity, because paying the conversion tax now removes dollars that would otherwise have compounded.

Compare a plan with and without conversions — the projection shows the year-by-year and end-of-plan effect for the modeled assumptions.

Limitations

• The solvers optimize within a single year’s ceiling; they do not search for a globally optimal multi-year conversion schedule.
• Fill-to-IRMAA targets only the first IRMAA tier threshold, not higher tiers.
• The 5-year rule on converted principal, state income tax on the conversion, and the pro-rata rule across all Traditional IRA balances are not modeled.
• The conversion tax is funded from primary pre-tax (then Roth) only — not from a globally optimal choice of account.

Official sources

• IRC §408A — Roth IRA rules, including conversions from a traditional IRA
• IRS Rev. Proc. 2025-32 — 2026 ordinary-income bracket edges the Fill-to-Bracket ceiling uses
• CMS announcement, 2025-11-14; 42 U.S.C. §1395r(i) — IRMAA MAGI thresholds the Fill-to-IRMAA ceiling uses