The mechanics. You elect to convert some dollar amount from a traditional IRA to a Roth IRA. That amount is added to your ordinary income for the year and taxed at your marginal rate. Once in the Roth, it grows tax-free and — provided you satisfy the rules — comes out completely tax-free in retirement, with no RMDs during your lifetime and tax-free treatment for your heirs (who must generally empty inherited accounts within 10 years, but pay no tax on Roth dollars).
Why it works: arbitrage across time. A dollar in a traditional IRA is a dollar you'll eventually pay tax on — the only question is at what rate. If you expect your future rate to be higher than today's, converting now is a win. Many retirees expect exactly that: in their late 60s, once Social Security turns on and (at 73) RMDs begin, several income streams stack up and push them into higher brackets than they'll ever see in the quiet gap years just after retiring. Converting in those low years is buying tax at a discount.
The RMD problem it solves. Traditional IRAs force taxable withdrawals starting at age 73 (Chapter 21), whether you need the money or not, on a schedule that grows as you age. A large pre-tax balance can produce RMDs big enough to inflate your bracket, tax more of your Social Security, and trigger IRMAA — all at once, in your 70s and 80s. Converting during your 60s shrinks the pre-tax balance that RMDs are based on, defusing that future spike. Roth accounts have no RMDs, so every dollar converted is a dollar removed from the RMD machine.
The gap-year window. Picture someone who retires at 63 with modest spending, hasn't yet claimed Social Security, and won't face RMDs for a decade. Their taxable income might sit near zero. Those years are a gift: they can convert enough each year to "fill" the 10% and 12% brackets (and the generous 2026 senior deductions from Chapter 11 make the first chunk essentially free), converting at rates far below what they'd pay later. Spreading conversions across several such years — a "Roth conversion ladder" — smooths the tax and keeps each year under key thresholds.
Respect the two guardrails. Conversions add to MAGI, and MAGI drives two things: your IRMAA surcharge two years later, and how much of your Social Security becomes taxable. So the art is converting up to — not past — the next meaningful line. A conversion that spills one dollar over an IRMAA threshold can cost more in surcharges than it saved in tax. Before claiming Social Security is often the cleanest time to convert, because you avoid the torpedo interaction entirely.
Filling the 12% bracket
A single 64-year-old has $30,000 of taxable income after deductions and is in the 12% bracket, which for 2026 runs to roughly $48,000 of taxable income. She converts about $18,000 to top off the 12% bracket, paying about $2,160 in tax (12%). If that same $18,000 came out at 75 stacked on top of Social Security and RMDs at a 22% marginal rate — plus dragging more Social Security into taxable income — it could cost her well over $4,000. She's locked in roughly half-price tax and removed the money from all future RMD, IRMAA, and torpedo math.
Pay the tax the right way. Always cover the conversion tax with money from a taxable account, not by withholding from the conversion itself. If you convert $18,000 but hold back $2,160 for taxes, only $15,840 reaches the Roth and (if you're under 59½) the withheld amount can count as a taxable early distribution. Paying from outside funds gets the full amount growing tax-free.
One more 2026 note. Under SECURE 2.0, starting in 2026, high earners (those with prior-year wages above $150,000 from the plan sponsor) must make 401(k) catch-up contributions on a Roth basis. That's a different mechanism than a conversion, but it's part of the same broad tilt toward Roth — worth knowing if you're still working.