A Roth Conversion in a High-Income Year: Convert Now or Wait for a Lower-Income Year?

Usually wait. If your income already sits near the top bracket, converted dollars stack on top of it, and in 2026 the 37% rate starts at taxable income above $640,600 single or $768,700 married filing jointly. Converting in a high-income year taxes those dollars at your top rate, not the lower one a gap year could reach.

Which bracket do the converted dollars land in? That is the whole argument. In a high-income year the answer is the one you do not want.

The dollars stack on top of what you already earn

A conversion is taxed as ordinary income in the year you do it, and no income limit stops you from doing one (IRS). Keep in mind that the tax lands on top of the income you already have, not underneath it.

So if you are already near that 37% line for 2026, the converted dollars get taxed at your top rate. That is the opposite of what a conversion is supposed to buy you.

The pro-rata rule can make it worse

One wrinkle before the math. If you hold pretax money in a traditional IRA, the IRS treats all of your IRAs as a single pool, so a conversion comes out mostly taxable even when you only meant to move after-tax dollars. Worth checking your balances before you assume a conversion is clean, and here is how the pro-rata rule actually works.

The case for converting now, and when it holds

That would be great, but any dollars we convert this year are going to hit you hard in taxes. That is the honest version, and it is the same reason the default answer is wait.

Converting now still earns its keep in three spots. First, a year your income actually dropped, a business loss, a sabbatical, a severance gap. Second, when you expect your rate to be permanently higher later, not just higher this one year. Third, when a very large pretax balance is on track to force distributions so big they push you into a high bracket anyway.

Once you expect to sit in the same 37% bracket for the rest of your life, waiting saves you nothing, and converting now at least starts the tax-free compounding sooner. But if this year is a spike and the next decade holds a real dip, waiting is usually the cheaper path. Just a thought: the question is never “is a Roth good,” it is “which year.”

Convert now vs. wait: side by side

Sources: IRS Rev. Proc. 2025-32 (2026 brackets); IRS Retirement Plans FAQs Regarding IRAs (recharacterization); IRS, SECURE 2.0 Act (RMD age 73).

What’s at stake	Convert now (high-income year)	Wait for a lower-income gap year
Bracket the converted dollars land in	On top of your current income, up into the 37% rate that begins above $640,600 single / $768,700 MFJ (2026)	Fills the lower brackets that open up once paychecks stop and before distributions begin
Effect on future RMDs	Shrinks the pretax balance now, so required distributions at age 73 are smaller	Pretax balance keeps compounding until distributions begin at age 73, which can force a larger withdrawal
Can you undo it	No. A conversion cannot be recharacterized (conversions after 2017)	No. Same rule, whichever year you pick
IRMAA / Medicare ripple	Raises this year’s MAGI from an already-high base, which can lift Medicare premiums about two years later	Raises MAGI from a lower base, so the premium ripple is usually smaller

The gap years are the opening, and skipping them costs too

The stretch between your last paycheck and the start of required distributions is often the lowest-income window you will ever have as a retiree. Required distributions begin at age 73 under the SECURE 2.0 Act (IRS), so there is often a multi-year gap where conversions can fit into lower brackets instead of stacking on a salary. Here is how that window works.

One household I worked with moved all the way through that window without converting a dollar. The pretax balance kept compounding, which felt fine at the time. Now that required distributions have started, the forced withdrawal is larger than the income they actually need, and the size traces straight back to years that are gone. The low-income window is temporary. Not using it was itself a decision, and it carried a cost.

What won’t change

Two things hold no matter when you convert. The conversion is taxed as ordinary income in the year you do it, and you cannot take it back.

The IRS is blunt about the second one: “a conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA cannot be recharacterized” (see the IRS Retirement Plans FAQs Regarding IRAs). That undo option went away for conversions under the 2017 tax law.

So the decision runs one way. The order that keeps it from biting: run the bracket projection first, confirm the number with your CPA, and only then convert. Where a Roth conversion fits in the larger picture for high earners is laid out in the San Diego HENRY strategy.

Questions high earners ask

Is there an income limit that blocks a Roth conversion?

No. Anyone can convert regardless of income (IRS). The catch is that the converted amount is taxed as ordinary income in the year you convert, which is why a high-income year is an expensive year to do it.

If I convert and the market drops the next month, can I reverse it?

No. A conversion is final once it is done. That is exactly why the timing and the projection matter more than they used to, because there is no take-back if the number turns out wrong.

Does converting now lower my future required distributions?

It can. Converting moves money out of the pretax bucket, and required distributions are calculated off the pretax balance starting at age 73 (IRS, SECURE 2.0 Act). A smaller pretax balance means smaller forced withdrawals later.

Will a conversion raise my Medicare costs?

It can. A conversion raises your MAGI, and Medicare uses a two-year lookback, so a conversion today can lift your Part B and Part D premiums about two years down the road. Worth modeling before you convert, not after.

Everyone keeps telling me to do a Roth conversion. Is that bad advice?

Not bad, just incomplete. The advice skips the one variable that decides it, which bracket the dollars land in. Evaluate that with your CPA or advisor before you convert.

If you want to see which years actually give you the room, we can map your current bracket against your future gap years together, and talk through where conversions fit in the broader high-earner plan. The fee comes up during a complimentary review. Book a time. Hope that helps. Just let me know which year you were thinking about, and we can start there.