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·8 min read·Lontevis Team

Roth Conversion at 65 With the 2026 Senior Deduction: Converting $70,000/Year From a $1.4M IRA Saves $61,000 Before RMDs Hit at 73

Roth ConversionRMDIRMAATax Bracket StrategySECURE 2.0Capital GainsSenior DeductionOBBBATraditional IRA

The $1.4 Million Question

You're 65. You retired last year. You have $1.4M in a traditional IRA, $200,000 in a taxable brokerage account, and Social Security you haven't claimed yet. Your income this year is lower than it's been in decades — maybe the lowest it will ever be again.

That gap between "retired, not yet claiming Social Security, not yet forced into RMDs" and "73, RMDs kick in, tax bill spikes" is the single biggest tax-planning window most retirees waste. And 2026 handed retirees a new tool for using it: a temporary $6,000 "senior deduction" tucked into the tax law Republicans are now touting on the campaign trail — the bill CNBC broke down in "As Republicans tout Trump's 'big beautiful bill,' here's who the tax breaks benefited most."

That CNBC piece makes a fair point: the biggest dollar benefits from the bill's permanent extension of the 2017 tax brackets flow to higher earners, simply because they pay more tax at the margin. But the senior deduction is different — it's a flat, age-based add-on that specifically widens the low-bracket window retirees use for Roth conversions. Whether it's worth anything to you depends entirely on your IRA balance, your other income, and how close you are to the IRMAA cliff. Here's the math, worked through with real numbers.

What Changed for Retirees in 2026

Three provisions matter for this decision:

  • The 2017 brackets didn't sunset. Without the bill, rates were scheduled to revert to pre-2018 levels in 2026 — the 22% bracket would have become 25%, the 12% bracket would have become 15%. That didn't happen. The lower brackets are now permanent.
  • A new $6,000-per-person senior deduction applies to filers 65 and older from 2025 through 2028, on top of the existing additional standard deduction for seniors. It phases out above roughly $75,000 of modified adjusted gross income for single filers (about $150,000 for married couples), so it's most valuable to retirees with modest ordinary income — exactly the people doing early-retirement Roth conversions.
  • RMD age stays at 73 under SECURE 2.0 until 2033, when it moves to 75. For anyone born between 1951 and 1959, the countdown clock is already running.

Stack those together and a single 65-year-old filer gets roughly $23,000 in combined deductions before a dollar is taxed — up from about $17,000 just a few years ago. That's real bracket-filling room, and it's temporary. This deduction phases out at 65% MAGI thresholds and sunsets after 2028, which is its own argument for using it now rather than later.

This is the kind of analysis Lontevis runs for you — so you don't have to rebuild the bracket math from scratch every time the tax code moves.

The RMD Bomb Sarah Is Trying to Defuse

Take a concrete example. Sarah is 65, single, retired, with $1.4M in a traditional IRA and $200,000 in a taxable brokerage account. Her only income right now is about $28,800 in delayed Social Security she hasn't started yet, plus roughly $6,000 in dividends. If she does nothing:

  • Her IRA, growing at an assumed 6% average annual return, reaches roughly $2.1 million by age 73.
  • Her first RMD, using the IRS Uniform Lifetime Table divisor at 73, comes out to roughly $79,000 in a single year — and it grows from there every year after.
  • Stacked on top of Social Security and other income, that RMD pushes her from the 22% bracket into the 24% bracket for the rest of her retirement, and crosses the first-tier IRMAA threshold, adding a Medicare Part B and Part D surcharge of roughly $1,600–$3,400/year depending on the year's threshold.

That's the tax bomb this window exists to defuse. For a deeper look at how the RMD calendar itself works under SECURE 2.0, see SECURE 2.0 RMD Age 73 + New QCD Rules.

Filling the Bracket: The $70,000-a-Year Conversion

Here's where the senior deduction and the permanent 22% bracket combine into an actual strategy.

Sarah's 2026 taxable income before any conversion, after her ~$23,000 in combined deductions, is close to zero. The top of the 22% bracket for a single filer sits at roughly $105,700 of taxable income. That gives her about $100,000 of room to convert traditional IRA dollars to Roth before she touches the 24% bracket.

But there's a second ceiling that matters more: the IRMAA threshold. For 2026, the first-tier Medicare surcharge kicks in around $109,000 of MAGI for a single filer. Converting all the way to the top of the 22% bracket would push her right up against that line with no margin for a good dividend year.

So instead of maxing out the bracket, Sarah converts $70,000 a year, keeping her total MAGI around $100,000 — inside both the 22% bracket and comfortably under the IRMAA cliff. The tax cost on that conversion, working through the brackets, comes to roughly $11,000 in the first year. She pays that from the taxable account, not from the IRA itself, so the full $70,000 moves to Roth intact.

Do that for five or six years before RMDs start, and a large chunk of the IRA balance is already in Roth by 73 — meaning the forced RMD on what's left is smaller, doesn't spike her into 24%, and doesn't trigger the IRMAA surcharge at all.

The Tradeoff Nobody Mentions: Roth Conversions vs. 0% Capital Gains Harvesting

Here's the part most conversion calculators skip. Sarah also has $200,000 in a taxable brokerage account with embedded long-term capital gains. The 2026 0% long-term capital gains bracket tops out at roughly $48,350 of taxable income for a single filer — and capital gains stack on top of ordinary income for bracket purposes.

That means the cheap bracket space at the bottom is a shared resource. If Sarah fills her ordinary-income brackets with a $70,000 Roth conversion, there's no room left in the 0% capital gains zone that year — every dollar of gains she harvests gets taxed at 15%. She can't do both in the same year without pushing into higher brackets on one side or the other.

This is a real tradeoff, not a theoretical one, and it's the exact tension covered in Roth Conversion + Capital Gains Harvesting at 65. The right answer — convert more this year and harvest gains next year, or split the difference — depends on the size of Sarah's embedded gains, her cost basis, and how many years she has before RMDs start. That's a personal-inputs problem, not a rule-of-thumb one.

The IRMAA Cliff Sarah Is Stepping Around

IRMAA doesn't phase in gradually — it's a cliff. Cross the threshold by one dollar and the entire Medicare premium jumps to the next tier for both spouses, for the full year, based on income from two years earlier. That's why Sarah's $70,000 conversion target isn't "the top of the bracket" — it's "the top of the bracket, minus a buffer for the IRMAA line and a bad dividend year."

Rising fixed costs make that buffer matter more than it used to. Mortgage rates sitting above 7% and homeowners insurance premiums climbing in disaster-exposed states are both squeezing retiree cash flow from the expense side — which is exactly why you don't want a surprise Medicare surcharge squeezing it from the income side too. Building the buffer into your conversion target, rather than maxing out the bracket on paper, is the difference between a strategy that survives a volatile year and one that doesn't.

Three Scenarios, Compared

StrategyAnnual conversionIRA balance at 73RMD at 73Bracket at 73IRMAA triggered?
No conversion$0~$2.1M~$79,00024%Yes — tier 1
Fill only to 12% bracket~$43,000~$1.75M~$66,00022%Borderline
Fill to $70,000, use senior deduction$70,000~$1.35M~$51,00022%, comfortable marginNo

Running the tax bill plus IRMAA surcharges forward across a 20-year retirement, the "no conversion" path costs roughly $61,000 more in cumulative federal tax and Medicare surcharges than the $70,000-a-year conversion path in this example. That gap is driven almost entirely by two things: staying one bracket lower for two decades, and avoiding the IRMAA cliff entirely rather than skating along it.

This is a modeled example, not a universal outcome — your number could be higher or lower depending on your IRA size, your state tax rate, and how the brackets and thresholds get adjusted for inflation between now and when you turn 73.

Why This Only Works If You Run Your Own Numbers

Every input in Sarah's scenario is a lever: IRA balance, filing status, Social Security claiming age, other income, embedded capital gains, state of residence. Change any one of them and the "fill to $70,000" answer changes too. A married couple with $2M combined and two Social Security checks has a different bracket ceiling and a different IRMAA threshold entirely — see how that plays out in Roth Conversion at 65 With a 3.6% Social Security COLA. Someone converting from a larger balance in a down market faces a different tradeoff still, covered in Roth Conversion at 63 vs Waiting for RMDs at 73.

You can model this for your specific situation at Lontevis — plugging in your actual IRA balance, filing status, and Social Security timing rather than adapting someone else's worked example.

The Bottom Line

The window between retirement and RMD age is the cheapest tax bracket space you'll ever see again, and 2026's tax law just made it a little wider with the senior deduction and the permanent extension of the lower brackets. But "convert as much as possible" isn't the strategy — "convert up to the bracket ceiling minus an IRMAA buffer, while leaving room for capital gains harvesting in the years that call for it" is. Sarah's numbers say $70,000 a year and roughly $61,000 saved over her retirement. Your numbers will say something else entirely — the only way to find out is to run them.

Sources

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