Roth conversions & the 2026 window
How much should I convert to Roth each year?
There is no universal answer — the optimal conversion amount depends on your current tax bracket, projected RMDs, other income sources, and IRMAA thresholds. The general principle is to convert up to the top of your current bracket without crossing into the next one, or to a specific dollar threshold that keeps you below an IRMAA tier. A complete analysis requires modeling your income trajectory across multiple years. See: Tax bracket management →
Is there an income limit on Roth conversions?
No. Unlike direct Roth IRA contributions, there is no income limit on Roth conversions. Anyone can convert any amount from a traditional IRA or 401(k) to a Roth IRA regardless of their income. The converted amount is taxable as ordinary income in the year of conversion. See: Traditional vs. Roth IRA →
What is the 5-year rule for Roth conversions?
Each Roth conversion tranche starts its own independent 5-year clock beginning January 1 of the year of conversion. Converted funds cannot be withdrawn without a 10% penalty until 5 years have passed. This is separate from the 5-year rule on Roth contributions. The rule applies to each conversion year independently — a 2023 conversion has its own clock separate from a 2025 conversion.
What happens to Roth conversion rates after 2026?
The TCJA individual income tax rates are scheduled to expire December 31, 2025. The 24% bracket is projected to rise to 25%, the 32% bracket to 33%, and the 37% top rate to 39.6%. Converting in 2024–2025 locks in the lower rates permanently on those funds. See: Tax bracket management →
RMDs
What age do RMDs begin?
Under SECURE 2.0, RMD age depends on your birth year: born before 1/1/1951 — age 70½ (old rule); born 1/1/1951–12/31/1959 — age 73; born on/after 1/1/1960 — age 75. See: RMD planning →
Can I avoid RMDs?
You cannot avoid RMDs on traditional IRA and 401(k) balances once you reach the required beginning date — but you can reduce them. Strategies include: Roth conversions (reducing the traditional IRA balance subject to RMDs), QCDs (satisfying RMDs with charitable gifts excluded from income), and QLACs (deferring up to $200K of the RMD base to age 85). See: RMD planning →
Do Roth IRAs have RMDs?
No. Roth IRAs have no required minimum distributions during the original owner's lifetime. However, Roth 401(k)s are subject to RMDs — the solution is to roll the Roth 401(k) to a Roth IRA when you leave the employer, eliminating the RMD requirement permanently.
IRMAA
What triggers IRMAA?
IRMAA is triggered when your Modified Adjusted Gross Income (MAGI) from two years prior exceeds the threshold for your filing status. In 2024, the first threshold is $103,000 for single filers and $206,000 for married filing jointly. Even $1 over triggers the full tier surcharge. See: IRMAA →
Does a Roth conversion trigger IRMAA?
Yes — Roth conversion income counts toward MAGI for IRMAA purposes. A large conversion in 2024 will affect your 2026 Medicare premiums. This is why Roth conversions must be sized carefully to stay below IRMAA thresholds — not just income tax brackets. See: IRMAA →
Can I appeal an IRMAA surcharge?
Yes — using Form SSA-44 for a qualifying life-changing event such as retirement, death of a spouse, or loss of income. A Roth conversion is not a qualifying event for appeal purposes. The appeal must be filed with documentation of the qualifying event and your expected current-year income. See: IRMAA →
Inherited IRAs
What is the 10-year rule for inherited IRAs?
Under the SECURE Act, most non-spouse beneficiaries who inherit an IRA must fully distribute the account within 10 years of the original owner's death. All distributions are taxable as ordinary income. There are no annual RMD requirements within the 10 years — but the full balance must be distributed by December 31 of the 10th year. See: Inherited IRA & 10-year rule →
Who is exempt from the 10-year rule?
Eligible Designated Beneficiaries (EDBs) are exempt: surviving spouses, minor children of the deceased (until the child reaches majority), disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the deceased. Spouses have the most flexibility — they can roll the inherited IRA into their own IRA and treat it as their own. See: Inherited IRA →
Life insurance & annuities
Is the life insurance death benefit taxable?
The death benefit is income-tax-free to named beneficiaries under IRC Section 101(a) — regardless of the policy's size. However, if the insured owned the policy at death, the death benefit is included in the taxable estate for estate tax purposes. An ILIT removes the policy from the estate, making the death benefit both income-tax-free and estate-tax-free. See: Tax benefits of life insurance →
Are policy loans from an IUL taxable?
No. Policy loans are not income — they are loans secured by the cash value and do not appear on your tax return. They do not count toward MAGI, do not trigger IRMAA, and do not increase the taxable portion of Social Security benefits. If the policy lapses with an outstanding loan exceeding the basis, the gain becomes taxable at that point. See: IUL →
What is the difference between a FIA and a variable annuity?
A Fixed Indexed Annuity credits interest based on an index with a 0% floor — you cannot lose principal. A variable annuity invests directly in sub-accounts with full market exposure — your account value can decline. Both offer tax deferral, but FIAs have significantly lower fees and no principal loss risk. We do not recommend variable annuities to clients aged 55 or older. See: FIA →