Roth Conversions in 2026: What Pre-Retirees and Retirees Should Know

If you're approaching retirement or already retired, you've probably heard the term "Roth conversion" come up in conversations about taxes and retirement income. It's a strategy worth understanding, but it isn't a one-size-fits-all move. Here's what it involves and what to think through before deciding if it fits your plan.

A Roth conversion is when you move money from a traditional IRA (or similar pre-tax retirement account) into a Roth IRA. The amount you convert is generally treated as taxable income in the year of the conversion, but once the money is in the Roth, it can grow and potentially be withdrawn tax-free in retirement, subject to the rules below. For 2026, there is no IRS income limit and no annual dollar cap on how much you can convert, though the IRS explains the mechanics of Roth conversions through trustee transfers, same-trustee transfers, or 60-day rollovers.

Key takeaways

• Roth conversions have no income limit or annual cap, but the converted amount is generally taxed as ordinary income in the year you convert.
• To count for the 2026 tax year, a conversion must be completed by December 31, 2026, there is no extension to April 15.
• Partial, multi-year conversions can help manage which tax bracket you land in rather than converting everything at once.
• Paying the conversion tax from funds outside the IRA (rather than from the IRA itself) generally preserves more of the account's growth potential.
• The 5-year rule is actually two separate rules, one for converted principal and one for earnings, and they work differently.

Why 2026 specifically

Several factors lead people to think about Roth conversions in a given year, and 2026 is no exception. Current tax brackets, required minimum distribution (RMD) timing, and market conditions can all shape whether a conversion window makes sense right now versus later.

If you expect to be in a similar or higher tax bracket in future years, whether from RMDs, Social Security, pension income, or other sources, converting some IRA assets now, while you may have more control over your taxable income, is one planning angle worth exploring. This is a decision that depends heavily on your personal tax situation, so it's worth reviewing with a qualified tax professional before acting.

It's also worth noting that if you are already subject to RMDs, those distributions must be taken first in a given year. RMD amounts themselves generally cannot be converted, but conversions of other IRA assets are still possible after your RMD is satisfied.

How a Roth conversion works, mechanically

The conversion is initiated through your IRA custodian, not through a government office or agency appointment. The IRS describes the transfer methods as trustee-to-trustee transfers, same-trustee transfers (when both accounts are at the same institution), or 60-day rollovers.

Once completed, the conversion is reported on your tax return using Form 8606, and your custodian will issue a Form 1099-R reflecting the distribution from the traditional IRA. If you have a mix of pre-tax and after-tax (nondeductible) contributions in your IRA, the pro-rata rule determines how much of the conversion is taxable, this is calculated on Form 8606 as well.

A practical timeline for 2026 looks like this:

• Confirm what portion of your IRA, if any, consists of after-tax (nondeductible) contributions.
• Contact your custodian to request a conversion using one of the methods above.
• Make sure the conversion is completed by December 31, 2026, since conversions finished in January 2027 count toward the 2027 tax year instead.
• Keep documentation for Form 8606 when you file.

One important note: current rules do not allow Roth conversions to be reversed once completed, since recharacterization of conversions was eliminated under current law. This makes it especially important to think through the decision carefully before converting, rather than treating it as something you can undo later.

Is a conversion right for you? Questions to work through

There's no universal answer here, but a few planning questions tend to matter most:

Tax bracket management. Would converting now push you into a meaningfully higher bracket this year? Spreading a conversion across multiple years (a partial or multi-year conversion strategy) can help you stay within a target bracket rather than converting a large sum all at once.

Where will the tax money come from? Using non-IRA savings to pay the tax on a conversion generally allows the full converted amount to stay invested and grow inside the Roth. Paying the tax out of the IRA itself reduces what's left to convert, and if you're under 59½, that withdrawn portion could also trigger an early-withdrawal penalty.

Medicare and IRMAA considerations. Because a Roth conversion increases your taxable income for the year, it can affect income-related thresholds used elsewhere in the tax code, including Medicare premium surcharges (IRMAA) for those already on Medicare. This is a nuanced area that depends on your specific income picture, and it's one we'd want to review together rather than generalize about.

Estate and legacy goals. For some families, converting assets to a Roth can be part of a broader legacy conversation, since Roth IRAs do not require the original owner to take RMDs during their lifetime. Whether this fits your goals depends on your broader estate plan.

The 5-year rule, both versions. Converted principal generally needs to season for five years before it can be withdrawn penalty-free if you're under 59½. Separately, Roth earnings have their own five-year clock that must be satisfied for qualified, tax-free withdrawals. These are not the same rule, and mixing them up is a common source of confusion.

Common mistakes to avoid

• Converting everything at once without considering how it affects your tax bracket for the year.
• Paying the conversion tax from the IRA itself, which shrinks the amount that continues growing tax-free and may trigger penalties if you're under 59½.
• Assuming Roth conversions are always the better choice. The right answer depends on your current versus expected future tax rate, and other parts of your financial picture.
• Overlooking the RMD requirement. If you're subject to RMDs, that distribution must come out first before any conversion of other IRA assets.
• Confusing the two 5-year rules for converted principal versus earnings.
• Missing the December 31 deadline. Unlike some tax moves, there is no extension into the following April for a conversion to count toward a given tax year.

When to talk with us

Roth conversions can be a useful piece of a broader retirement income and tax strategy, but the decision is highly personal. It depends on your current tax bracket, expected future income, Medicare timing, legacy goals, and more. Every family's situation is different, and a conversion that works well for one household may not make sense for another.

If you'd like to talk through whether a Roth conversion fits your specific plan, schedule a free retirement assessment with us. We'll look at your full picture together and help you weigh the tradeoffs before you decide.