Most retirees in Central Florida are sitting on a tax bill they do not know they have.
If the bulk of your retirement savings is in a traditional IRA or a 401(k), here is the uncomfortable reality: that balance is not entirely yours. You have a silent partner, the IRS, and every dollar you eventually withdraw will be taxed as ordinary income. The account statement says one number. What you actually get to keep is smaller, and exactly how much smaller depends on decisions you make in a narrow window of years that most people sleep right through.
A Roth conversion is the primary tool for taking control of that bill. Done well, it can save a household hundreds of thousands of dollars in lifetime taxes, slash the required withdrawals the government will one day force on you, lower your Medicare premiums, and hand your spouse and children a tax-free inheritance instead of a taxable one. Done carelessly, it can trigger an unnecessary tax bill, spike your Medicare costs, and cost you money you did not need to spend.
The difference between those two outcomes is planning, and this guide walks through all of it in plain English. What a Roth conversion actually is, the specific tax mechanics for 2026, why the recent law changes altered the strategy, when a conversion makes sense and when it backfires, and the exact traps that catch Central Florida retirees. Nothing here is personalized tax advice, because the right conversion amount is different for every household. What this will do is show you whether this is a conversation worth having, and give you the framework to have it intelligently.
What a Roth Conversion Actually Is
A Roth conversion is the act of moving money from a pre-tax retirement account, a traditional IRA or a 401(k), into a Roth account. You voluntarily pay income tax on the amount you convert this year, and in exchange, that money and all of its future growth become tax-free forever.
That is the entire trade. You are choosing to pay tax now, on your own terms and at a rate you can control, instead of later, at a rate you cannot. You are moving money from an account the IRS will tax every time you touch it into an account the IRS can never tax again.
Three things happen when you convert. The pre-tax amount you move is added to your ordinary income for the year and taxed at your marginal rate. The money lands in a Roth account where it grows tax-free. And from that point forward, qualified withdrawals, including all the growth, come out completely tax-free, with no required distributions during your lifetime.
It is important to understand what a conversion is not. It is not a contribution, so it is not limited by the annual IRA contribution caps. You can convert a large sum in a single year if it makes sense. It is also irreversible. Since 2018, you can no longer undo a conversion, so it has to be done deliberately and correctly the first time. This is the definition of a measure-twice, cut-once decision.
The Problem Roth Conversions Solve
To understand why anyone would volunteer to pay taxes early, you have to understand the trap that traditional retirement accounts set.
For decades, the conventional advice was to stuff as much as possible into pre-tax accounts. You got a tax deduction going in, the money grew tax-deferred, and the assumption was that you would be in a lower tax bracket in retirement. For many people that assumption turns out to be wrong, and even when it is right, the pre-tax account creates problems that compound over time. We wrote about this at length in The Silent Tax Bomb Hidden Inside Most 401(k)s, and it is worth understanding before you decide whether to defuse it.
The core problem is that a large pre-tax balance is a growing tax liability. As the account grows, so does the eventual tax bill. And you do not fully control when that bill comes due, because of required minimum distributions.
Starting at age seventy-three, the government forces you to withdraw a percentage of your pre-tax accounts every year, whether you need the money or not, and taxes it as income. Those forced withdrawals, detailed in our RMD guide for Orlando retirees, grow as a percentage of the account each year, and for someone with a large IRA they can push income to levels that were never anticipated. A retiree with a seven-figure IRA can find themselves in their late seventies with more taxable income than they had while working, taxed at higher rates, with more of their Social Security taxed and their Medicare premiums surcharged as a result.
A Roth conversion attacks this problem directly. Every dollar you move to Roth in your lower-income years is a dollar that is not sitting in the pre-tax account growing into a larger forced withdrawal later. You are shrinking the future tax bomb while filling up low tax brackets that would otherwise go to waste.
How the 2026 Tax Law Changed the Strategy
This is important and recent, and it changes advice you may have heard even a year ago.
For several years, advisors urged clients to convert aggressively before the end of 2025, because the lower tax brackets from the 2017 Tax Cuts and Jobs Act were scheduled to expire, and rates were set to jump in 2026. That deadline drove a lot of urgency.
That deadline is gone. The One Big Beautiful Bill Act, signed in 2025, made the lower tax bracket structure permanent. The 2017 tax-bracket rates that were set to expire at the end of 2025 were instead extended indefinitely. The seven brackets of ten, twelve, twenty-two, twenty-four, thirty-two, thirty-five, and thirty-seven percent remain in place, and the top rate did not revert to the higher thirty-nine point six percent it was scheduled to hit.
So does that kill the case for Roth conversions? No, and this is the key point. It removes the artificial deadline, but the fundamental reasons to convert are untouched, and in some ways the picture is now clearer. You are no longer racing a clock, which means you have a longer, calmer runway to convert strategically across multiple years. The strategic case now rests on the durable reasons: reducing your future required distributions, protecting a surviving spouse from the widow’s tax trap, leaving tax-free money to heirs, and hedging against the real possibility that tax rates rise again in the future given the trajectory of federal deficits. Today’s rates being permanent by law does not mean they are permanent in practice. A future Congress can change them, and many observers believe today’s rates are historically low and unlikely to last forever.
The reframe is this: the deadline disappeared, but the opportunity did not. You now have more time to do it right rather than less time to do it fast.
The 2026 Numbers You Need to Know
Strategy without numbers is just theory, so here are the 2026 figures that drive conversion planning. Confirm current figures at the time you act, since they adjust annually.
The 2026 federal tax brackets, made permanent by the OBBBA, are ten, twelve, twenty-two, twenty-four, thirty-two, thirty-five, and thirty-seven percent. The thresholds rose modestly for inflation.
The 2026 standard deduction is thirty-two thousand two hundred dollars for married couples filing jointly and sixteen thousand one hundred dollars for single filers. Taxpayers sixty-five and older get an additional standard deduction on top, and the OBBBA added a temporary senior deduction of up to six thousand dollars for those sixty-five and older, subject to income phase-outs. These deductions matter for conversions, because they represent income you can effectively convert at a zero percent rate before any bracket even applies.
For a married couple filing jointly in 2026 with no other income, the conversion capacity within the twelve percent bracket alone is meaningful, and the space up to the top of the twenty-two and twenty-four percent brackets is substantial. The twenty-four percent bracket for joint filers extends into the low four hundred thousands of taxable income, which is why many well-planned conversions aim to fill through the twenty-two or twenty-four percent bracket in the right years.
On the Medicare side, the 2026 IRMAA surcharges begin when modified adjusted gross income exceeds one hundred nine thousand dollars for a single filer or two hundred eighteen thousand dollars for a married couple filing jointly. These thresholds are critical, because crossing them is what turns a smart conversion into a costly one, as we will cover below.
The numbers that matter most for you specifically are your current taxable income, the room left in your current bracket, your age relative to Medicare and RMDs, and the size of your pre-tax balance. Those four figures determine nearly everything about a conversion plan.
The Conversion Window: The Most Valuable Years You Will Ever Have
There is a specific window in most people’s lives when Roth conversions are dramatically more valuable, and recognizing it is half the game.
That window is the gap between when your income drops, usually at retirement, and when your income is forced back up, by Social Security and required minimum distributions. For many Central Florida retirees, that is roughly the years from age sixty to seventy-three.
Here is why this window is golden. Once you stop working, your salary disappears, so your taxable income often falls to its lowest point in decades. If you have not yet claimed Social Security and are not yet taking required distributions, you may have very little income filling up your low tax brackets. Those empty brackets are a use-it-or-lose-it opportunity. Every year you do not convert, you waste the room in your ten, twelve, and twenty-two percent brackets that you could have used to move money to Roth cheaply.
Then, at seventy-three, required distributions begin and often push you right back into higher brackets. The window slams shut. Money you did not convert during the low-income years now comes out on the government’s schedule, at the government’s preferred rate, for the rest of your life.
There is an especially valuable sub-window worth calling out: the two years before you enroll in Medicare, typically ages sixty-three and sixty-four. Because IRMAA uses a two-year lookback, conversions done in those specific years generally do not trigger Medicare surcharges, since you are not yet on Medicare. That makes the pre-Medicare years some of the most efficient conversion years available. This is exactly the kind of timing that a coordinated plan captures and an uncoordinated one misses, a theme from The High Cost of the “Junk Drawer” Retirement.
If you are in or approaching this window, the years in front of you are the most tax-flexible you will ever have. The tragedy I see most often is people who coast through this window doing nothing, then get hammered by required distributions in their late seventies, wishing they had acted when they had the room.
Bracket-Filling: The Core Strategy
The central technique in Roth conversion planning is called bracket-filling, and it is simpler than it sounds.
Your income is taxed in layers. The first layer of income is taxed at ten percent, the next at twelve percent, and so on up the brackets. In a low-income year, the upper part of a favorable bracket sits empty. Bracket-filling means converting just enough to fill that bracket to its top edge, but not one dollar more, so you capture cheap conversion space without spilling into the next, more expensive bracket.
Suppose a retired couple has taxable income well below the top of the twelve percent bracket after their standard deduction. The space between their current income and the top of the twelve or twenty-two percent bracket is room they can convert into at that favorable rate. Fill it deliberately, and they move a chunk of money to Roth at a known, modest cost. Leave it empty, and that room vanishes at year end, gone forever.
The discipline is in the precision. Convert too little and you leave cheap room on the table. Convert too much and you push income into a higher bracket, or worse, across an IRMAA threshold, turning an efficient move into a wasteful one. This is why serious conversion planning involves projecting your income for the year and converting to a specific target number, then often topping up late in the year once the year’s income is clearer.
The best plans model conversions across multiple years, three, five, eight, ten, comparing how different annual amounts affect lifetime taxes rather than just this year’s bill. One large conversion in a single year is rarely optimal, because it spikes you into high brackets. A steady series of bracket-filling conversions across the window usually wins.
The Five-Year Rules, Explained
Roth conversions come with timing rules that trip people up, so here they are in plain terms. There are actually two separate five-year rules, and they do different things.
The first is the five-year rule on conversions and early withdrawals. If you are under age fifty-nine and a half, each conversion you make has its own five-year clock. You must wait five years before withdrawing that specific converted principal, or you may owe a ten percent penalty on it. This rule is designed to stop people from using conversions to dodge the early-withdrawal penalty. For most retirees over fifty-nine and a half, this rule is not a concern, because the penalty does not apply to them anyway.
The second is the five-year rule on earnings. For your Roth earnings to come out completely tax-free, your first Roth account must have been open for at least five tax years. Importantly, this is a one-time clock tied to your first Roth account, not a new clock for each conversion. If you opened your first Roth years ago, this rule is already satisfied and new conversions do not restart it. If you have never had a Roth account, this is an argument for opening one sooner rather than later, even with a small amount, just to start the clock.
For a retiree over fifty-nine and a half who has had a Roth open for years, neither rule creates a practical obstacle. For younger retirees or those brand new to Roth accounts, they are worth understanding before you convert, because getting the sequence wrong can create an avoidable tax or penalty.
The IRMAA Trap and Other Hidden Costs
This is where good intentions most often go wrong, so pay close attention.
A Roth conversion increases your modified adjusted gross income for the year. That higher income can ripple out into several other costs that are easy to overlook, and the most notorious is IRMAA, the income-related monthly adjustment amount that raises your Medicare premiums.
Here is the trap. IRMAA operates on a two-year lookback, so a conversion you do in 2026 affects your Medicare premiums in 2028. It applies per person, so for a married couple the surcharge hits both spouses. And it works on cliffs, not a smooth phase-in. Cross an IRMAA threshold by even a single dollar and you jump to the next tier, paying hundreds or thousands more in annual Medicare premiums. A conversion that pushes your income three thousand dollars over a threshold can cost thousands in surcharges you never saw coming. We devoted a full article to this mechanism in IRMAA: The Hidden Medicare Surcharge That Catches High Earners Off Guard, because it catches so many people.
The defense against IRMAA is to build the thresholds into your conversion target. For anyone sixty-three or older, the conversion plan should fill brackets while staying under the relevant IRMAA cliff, or should deliberately accept a one-year surcharge only when the long-term benefit clearly justifies it. The pre-Medicare years, before the lookback affects you, sidestep this entirely, which is another reason they are so valuable.
IRMAA is not the only ripple. A conversion can also cause more of your Social Security to be taxed, can affect certain income-based deductions and credits, and for pre-Medicare households using Affordable Care Act marketplace coverage, can sharply raise health insurance costs by reducing premium subsidies. That last one matters for early retirees especially. If you retired before sixty-five and get your health insurance through the marketplace, a large conversion can cost you thousands in lost subsidies, and that has to be weighed against the conversion’s benefit.
None of these hidden costs means you should not convert. They mean the conversion amount has to be calculated with all of these interactions in view, which is precisely why a conversion is a coordination decision, not a standalone one.
Why Florida Makes Roth Conversions More Attractive
Your location genuinely improves the math, and it is worth understanding why a conversion can be more valuable for a Florida retiree than for someone doing the identical move in a high-tax state.
Florida has no state income tax. When you execute a Roth conversion, you pay federal income tax on the converted amount, but you pay zero state income tax on it. A retiree doing the same conversion in a state with a five, seven, or even higher percent income tax pays that rate on top of the federal bill. On a two hundred thousand dollar conversion, a five percent state tax would add ten thousand dollars of cost that a Florida resident simply does not pay.
This creates a specific opportunity for people who moved to Florida from a high-tax state, or who split time between Florida and somewhere else. Establishing genuine Florida residency before executing large conversions can save substantial state tax, but residency has to be real and properly documented, not just claimed. We cover how to do it correctly in Establishing Florida Domicile to Cut Your Tax Bill. If you are a snowbird still technically domiciled in a high-tax northern state, sorting that out before a big conversion year can be worth more than the conversion strategy itself.
The Florida advantage also compounds with everything else. No state tax on the conversion, no state tax on the Roth withdrawals later, no state estate tax for your heirs, and strong asset protection under Florida law. For a retiree who has already made the move, Florida is close to an ideal place to execute a multi-year Roth conversion strategy. The broader tax picture for Florida retirees is laid out in Managing 401(k) Taxes for Florida Retirees.
Roth Conversions and the Widow’s Tax Trap
This is one of the most powerful and least understood reasons to convert, and it deserves its own section because it affects nearly every married couple.
When one spouse dies, the survivor usually moves from filing jointly to filing as a single taxpayer the following year. This is a brutal tax shift that most couples never plan for. The survivor often keeps a large share of the household income, the pensions, the larger Social Security benefit, the same required distributions from the same IRA, but now faces the single-filer brackets and standard deduction, which are far less generous than the joint ones. The result is that a widow or widower frequently pays substantially more in tax on similar income, purely because of the filing status change. We detailed this in The Widow’s Tax Trap.
Roth conversions are one of the best defenses against this trap. Every dollar you convert to Roth while both spouses are alive and filing jointly, at the more favorable joint brackets, is a dollar the surviving spouse will never have to withdraw and be taxed on at the harsher single rates. You are effectively using the couple’s low-tax joint years to pre-pay taxes that would otherwise land on the survivor at a much higher rate, on top of their grief.
For a married couple with a large pre-tax balance, modeling the conversion strategy around the eventual transition to single filing is not morbid, it is one of the kindest and most valuable financial gifts one spouse can arrange for the other. It is also frequently the single largest tax-saving reason to convert, and it is invisible to anyone looking only at this year’s return.
Roth Conversions and Your Heirs
The strategy does not stop at your own lifetime. Roth conversions are one of the most effective tools for passing wealth to the next generation efficiently.
When your children inherit a traditional IRA, they inherit the tax bill with it. Under current rules, most non-spouse beneficiaries must empty an inherited IRA within ten years, and every withdrawal is taxed as ordinary income, stacked on top of whatever the child already earns. If your children are in their peak earning years when they inherit, that inherited IRA can be taxed at their highest marginal rate, and the ten-year compression forces it out fast. A large traditional IRA passed to a high-earning adult child can lose a significant share to taxes.
A Roth inheritance is different. Your heirs still must empty the account within ten years, but the withdrawals are tax-free. You will have paid the tax during your lifetime, likely at a lower rate than your children face, and they receive the money clean. Converting during your lifetime, especially if you expect your children to be in higher brackets than you, transfers wealth far more efficiently than leaving them a pre-tax account and its embedded tax bill.
This is a case where the analysis has to look beyond your own tax return to your family’s overall picture, which is exactly the kind of multi-generational coordination that separates real planning from simple investing.
When a Roth Conversion Does Not Make Sense
I am not here to tell you to convert. For some people it is the wrong move, and honesty about that is what separates planning from a sales pitch. Here are the situations where a conversion often does not make sense.
When you will be in a lower tax bracket later. If you genuinely expect your retirement income to be low, low enough that your future withdrawals would be taxed at a lower rate than your conversion would cost today, then paying tax now at a higher rate is counterproductive. The whole strategy depends on converting at a lower rate than you would otherwise pay later.
When you would have to pay the conversion tax from the IRA itself. The math works best when you pay the tax with money from outside the retirement account. If you have to withhold from the converted amount to cover the tax, especially if you are under fifty-nine and a half and face a penalty on the withheld portion, much of the benefit erodes. Ideally you pay the conversion tax from taxable savings, leaving the full converted amount to grow in the Roth.
When the conversion would spike you across an IRMAA cliff or cost you ACA subsidies with no offsetting benefit. Sometimes the hidden costs simply outweigh the gain in a given year. The answer there is often to convert less, not to abandon the strategy.
When you are charitably inclined and plan to give from your IRA. If you intend to leave your IRA to charity or make qualified charitable distributions from it, that money passes tax-free to the charity anyway, so converting it first just means paying tax you did not need to pay. Pre-tax dollars are the better ones to give away.
When you simply do not have the cash to pay the tax comfortably. A conversion should not strain your finances. If paying the tax would force you to raid funds you need, the timing is wrong.
The honest summary is that Roth conversions are powerful but not universal. The right answer depends on your brackets now versus later, your other income, your health, your heirs, and your charitable intentions. Anyone who tells you to convert without examining all of that is not planning, they are guessing.
Common Mistakes We See in Central Florida
A short catalog of the errors that cost people money, drawn from what actually happens.
Doing nothing during the conversion window. The most common and most expensive mistake. People coast through their low-income sixties, convert nothing, and get crushed by required distributions later. Empty brackets wasted are gone for good.
Converting too much in one year. Enthusiasm without precision. A single giant conversion spikes you into high brackets and across IRMAA cliffs, costing far more than spreading it out would have.
Ignoring the IRMAA two-year lookback. Converting at sixty-four without realizing it affects Medicare premiums at sixty-six, or crossing a cliff by a small margin and paying surcharges on both spouses.
Paying the tax from the IRA. Withholding the conversion tax from the converted amount instead of paying from outside cash, which shrinks the benefit and, for younger retirees, can add a penalty.
Forgetting the pro-rata rule. If you have both pre-tax and after-tax money in your IRAs, the IRS requires that conversions be treated as a proportional mix of both, which can create unexpected taxable amounts. This catches people who thought they were converting only after-tax dollars.
Not coordinating with Social Security timing. Claiming Social Security early fills up your brackets with benefit income and leaves less cheap room for conversions. Delaying benefits can open more conversion space in the same years, one of many interactions covered in 10 Social Security Mistakes Orlando and Central Florida Retirees Make.
Treating it as a one-year decision. Conversions are a multi-year campaign, not a single event. The people who benefit most plan the whole window, not just this April.
How to Approach a Multi-Year Conversion Plan
Pulling it together, here is the shape of a sound approach, though the specific numbers must be yours.
Start by projecting your income across the conversion window, the years between retirement and required distributions, so you can see where the empty bracket space is. Identify your target bracket, usually filling through the twelve, twenty-two, or twenty-four percent bracket depending on your situation and your expected future rate. Layer in the constraints, the IRMAA thresholds if you are sixty-three or older, ACA subsidies if you are pre-Medicare, and the tax you will owe and where it will come from. Then convert to a specific dollar target each year, adjusting late in the year as your actual income firms up.
Across the full window, the goal is to move as much as sensible from pre-tax to Roth at the lowest achievable lifetime tax rate, shrinking your future required distributions, protecting the surviving spouse, and setting up a tax-free inheritance, all while never spilling into a bracket or across a threshold that costs more than the move is worth.
This is genuinely complex, because every piece interacts with every other piece. The conversion affects your Medicare premiums, which interact with your Social Security timing, which affects your bracket space, which changes the conversion. That interconnection is the whole reason this belongs in a coordinated plan rather than a spreadsheet done in isolation, the argument at the heart of Why You Need a Financial Quarterback in Orlando. It is also why the potential savings are so large, because most people leave all of these interactions on the table.
Frequently Asked Questions
What is a Roth conversion in simple terms? It is moving money from a pre-tax traditional IRA or 401(k) into a Roth account, paying income tax on the amount now, so that the money and all future growth become tax-free and free of required distributions for the rest of your life.
Is 2026 still a good year for Roth conversions? Yes, though for different reasons than before. The old deadline to convert before 2026 rate increases is gone, because the OBBBA made the lower brackets permanent. But the durable reasons remain: reducing future required distributions, protecting a surviving spouse, leaving tax-free money to heirs, and hedging against future rate increases. You now have a longer runway to convert strategically.
How much should I convert? There is no universal answer. The right amount fills your current tax bracket to its top edge without spilling into the next bracket or, if you are sixty-three or older, crossing an IRMAA threshold. It depends on your current income, your expected future rate, your age, and your pre-tax balance. It should be calculated specifically for your situation.
Will a Roth conversion raise my Medicare premiums? It can. A conversion increases your income, and if it pushes your modified adjusted gross income over an IRMAA threshold, your Medicare premiums rise about two years later, for both spouses if married. Planning around these thresholds is a core part of doing conversions well.
Can I undo a Roth conversion if I change my mind? No. Conversions have been irreversible since 2018. This is why they must be done deliberately and in the right amount, rather than reversed later.
Do I have to pay the tax all at once? The tax on a conversion is due for the tax year in which you convert. You can spread the strategy across multiple years to keep each year’s tax manageable, which is usually the better approach anyway. Ideally you pay each year’s conversion tax from savings outside the retirement account.
What is the five-year rule? There are two. One requires your first Roth account to be open five years before earnings come out tax-free, a one-time clock. The other applies a five-year wait to each conversion’s principal for those under fifty-nine and a half to avoid a penalty. For most retirees over fifty-nine and a half with an established Roth, neither creates a practical problem.
Does living in Florida help with Roth conversions? Yes. Florida has no state income tax, so you pay only federal tax on a conversion, unlike residents of high-tax states who pay state tax on top. This makes Florida an especially favorable place to execute a multi-year conversion strategy, provided your residency is genuine and documented.
Should I convert if I plan to leave my IRA to charity? Usually not that portion. Money left to charity or given through qualified charitable distributions passes tax-free anyway, so converting it first means paying tax you did not need to pay. Pre-tax dollars are the better ones to give.
Is a Roth conversion the same as a backdoor Roth? They are related but different. A backdoor Roth is a specific technique for high earners to get money into a Roth despite income limits on contributions. A Roth conversion is the broader act of moving pre-tax retirement money to Roth, which is the focus of this guide.
Uncover Your Own Numbers
Everything in this guide is the framework. What it cannot tell you is your number, the specific amount you should convert, in which years, to save the most over your lifetime while avoiding every trap described above. That answer lives in your actual income, your brackets, your Medicare timeline, your pre-tax balance, your spouse’s situation, and your heirs’ tax picture.
That is exactly what our Found Money Tax Report uncovers. It is a personalized analysis that models your situation, shows you the tax bomb sitting inside your current accounts, and reveals the specific Roth conversion opportunities you have year by year through your conversion window. It puts real numbers to everything you just read, including how much you could save over your lifetime, how required distributions will hit you if you do nothing, and how a coordinated conversion strategy changes that trajectory. There is no obligation and no sales pressure, just clarity about money you may not realize you are leaving on the table.
If you are anywhere in or approaching the conversion window, this is the analysis that turns the general strategy into your specific plan while the low-tax years are still in front of you.
Request your free Found Money Tax Report or call (407) 974-7100.
Roger Fishel is the founder of Roger Fishel Financial, a retirement income planning practice based in Orlando, Florida, serving clients across Central Florida and nationwide.
This article is for general informational and educational purposes only and does not constitute personalized tax, legal, or investment advice. Roth conversion decisions have significant and irreversible tax consequences that depend entirely on individual circumstances. Tax laws, brackets, and thresholds are current as of 2026 and are subject to change. Always consult a qualified tax professional and financial advisor regarding your specific situation before executing a Roth conversion. Roger Fishel Financial does not provide tax or legal advice; coordinate with your CPA or tax attorney on all tax matters.
