How Much Should You Convert to Roth Each Year? The Four-Ceiling Framework

Many retirees ask whether there is an IRS annual limit on Roth conversions. There is not — unlike Roth IRA contributions (capped at $7,000 per year in 2026), you can convert any amount from a traditional IRA or 401(k) to Roth in a single year.¹ The real constraint is your own: the amount that minimizes lifetime taxes without triggering an expensive threshold. That optimal number is set by one of four ceilings. This guide shows you how to find yours.

The four ceilings that determine your annual conversion amount

Each of the four ceilings below acts as a hard cost-inflection point. Going $1 above them does not gradually increase taxes — it either triggers a surcharge, removes a benefit, or jumps to a higher marginal rate. Identify which one applies to your situation before sizing any conversion.

Ceiling 1 — IRMAA Medicare surcharge (most common for ages 65+)

If you are enrolled in Medicare, converting past $109,000 MAGI (single) or $218,000 (MFJ) adds $1,978 per person per year in Medicare Part B and Part D surcharges at Tier 1 — and more at higher tiers.² Because IRMAA uses a two-year lookback (2026 conversions affect 2028 Medicare premiums), crossing this line has a delayed cost that surprises many retirees.

For most retirees with no pension and no Social Security, the IRMAA Tier 1 threshold is the effective ceiling. Convert up to — not above — $109,000 single / $218,000 MFJ, minus other income.

Ceiling 2 — ACA premium tax credit cliff (most common for ages 55–64)

If you are age 55–64 with marketplace health insurance, converting past approximately $62,600 MAGI (single) or $84,600 (MFJ) eliminates your premium tax credit entirely.³ This hard cliff — 400% of the federal poverty level — can cost $10,000–$25,000 in a single year if crossed. For pre-Medicare retirees, the ACA cliff is usually the binding constraint and the cheapest possible ceiling to convert to (bracket rates are often 12% or lower below this level).

Ceiling 3 — bracket top (universal, but often dominated by ceilings 1 or 2)

For 2026, MFJ taxable income stays in the 22% bracket up to $211,400; single filers up to $105,700. Converting past the 24% bracket top ($403,550 MFJ / $201,775 single) pushes income into 32%.¹ For most retirees, the 22% bracket top matters most — and for many, IRMAA or ACA forces a stop well below it.

Ceiling 4 — Social Security torpedo amplification

If Social Security benefits have started, every dollar of conversion income increases the share of SS that becomes taxable. Above $44,000 combined income (MFJ) or $34,000 (single), 85% of Social Security is taxable — and the effective marginal rate on conversion income inside the phase-in zone runs 1.5× to 1.85× the stated bracket rate.⁴ For SS recipients, size conversions to stop at the SS torpedo ceiling, not just the bracket top.

Which ceiling is yours? A quick decision framework

Step-by-step: calculating your 2026 conversion ceiling

1. Choose your binding ceiling from the framework above (IRMAA or ACA amount in MAGI terms)
2. Subtract your other 2026 income — pension, Social Security, interest, dividends, capital gains distributions, part-time wages
3. The remainder is your maximum conversion MAGI — the most you can convert without crossing the ceiling
4. Calculate taxable income: subtract standard deductions from the conversion amount (for MFJ both 65+: $32,200 base + $3,300 age addition + $12,000 OBBBA senior deduction = $47,500 total)^1,5
5. Identify your effective marginal rate on the conversion using 2026 bracket thresholds
6. Compare to your future RMD bracket — if your projected RMD rate is higher, converting at today's rate saves lifetime taxes

Worked example: Robert and Anne, ages 68/66, Medicare, no Social Security yet

Robert (born 1958) and Anne (born 1960) both retired last year. They have $2.1 million in traditional IRAs, no pension, and have delayed Social Security to age 70. Both are on Medicare. They have $0 in other income this year.

• Binding ceiling: IRMAA Tier 1 at $218,000 MAGI
• Other income: $0
• Maximum conversion: $215,000 (leaving a $3,000 buffer)
• Standard deductions: $32,200 (base MFJ) + $1,650 × 2 (both 65+) + $12,000 (OBBBA senior, both 65+) = $47,500
• Taxable income: $215,000 − $47,500 = $167,500
• Federal tax: 10% × $24,800 + 12% × $76,000 + 22% × $66,700 = $2,480 + $9,120 + $14,674 = $26,274
• Effective rate on conversion: $26,274 ÷ $215,000 = 12.2%
• IRMAA check: MAGI $215,000 < $218,000 Tier 1 — no Medicare surcharge

Robert reaches RMD age 73 in 5 years. At $215,000 per year, Robert and Anne will have converted approximately $1,075,000 by then. Their remaining traditional IRA balance (ignoring growth) will be about $1,025,000 when RMDs begin. The RMD on that balance (using IRS Uniform Lifetime Table divisor of 26.5 at age 73) would be approximately $38,700 — a manageable amount that, added to Social Security, will likely stay within the IRMAA Tier 1 threshold.

Contrast: if Robert and Anne had not converted, the full $2.1M traditional IRA would produce a first-year RMD of approximately $79,245 — plus Social Security (say, $60,000 combined) — for roughly $139,000 in ordinary income, well into IRMAA Tier 1 territory and the 22% bracket from dollar one, with no flexibility to reduce it.

Why your annual ceiling recalibrates every year

The optimal conversion amount is not a fixed number you set once. Four events shift it:

• Social Security starts. Every dollar of SS counts toward both IRMAA MAGI and the SS torpedo combined income thresholds. A couple adding $60,000 of SS to their income immediately loses $60,000 of IRMAA-constrained conversion room — a structural reduction that requires resizing the plan the year SS begins.
• Medicare enrollment at 65 (or earlier). The transition from ACA years to Medicare replaces the $84,600 ACA ceiling with the $218,000 IRMAA ceiling — roughly $130,000 more annual conversion room. This is typically the single largest expansion of conversion capacity in a retiree's life.
• IRMAA two-year lookback shift. A large 2026 conversion affects 2028 Medicare premiums. Each year, you need a rolling 3-year IRMAA forecast to avoid cascading surcharges across consecutive premium years.
• Bracket thresholds adjust for inflation annually. The 22% bracket top rose from $201,050 (2025) to $211,400 (2026) — about $10,000 more room each year. If the IRA is growing at a similar rate, your per-year conversion pace may need to increase to hold steady as a fraction of total balance.

Best practice: recalculate your conversion ceiling each October-November using that year's actual income, once capital gains distributions are estimated and final IRMAA lookback income is known. That last-quarter window lets you execute the year's conversion with current data.

The ACA-to-Medicare transition: where conversion capacity doubles

For retirees who left the workforce in their late 50s or early 60s, the transition from ACA insurance to Medicare at 65 is the most important year in the entire conversion schedule. Before 65: ACA cliff at ~$84,600 (MFJ). After 65: IRMAA ceiling at $218,000 (MFJ). That is a $133,000 increase in annual conversion room — in a single year.

Retirees who have been holding conversions to $84,000/year to preserve ACA credits should model a significant one-time acceleration in the year both spouses are on Medicare. The IRMAA two-year lookback means a large 2026 conversion shows up in 2028 premiums — but at Tier 1, that surcharge is about $1,978/person/year. For a $131,000 jump in Roth assets, that is often a favorable trade.

Sources

1. IRS Rev. Proc. 2025-32 — 2026 Tax Inflation Adjustments: 2026 federal income tax brackets (MFJ: 10% to $24,800; 12% to $100,800; 22% to $211,400; 24% to $403,550; single: 10% to $12,400; 12% to $50,400; 22% to $105,700; 24% to $201,775); standard deduction $32,200 MFJ / $16,100 single; age 65+ additional deduction $1,650/person (MFJ) / $2,050 (single). Roth IRA contribution limit $7,000 / $8,000 (age 50+) confirmed via IRS Notice 2025-67.
2. CMS — 2026 Medicare Costs Fact Sheet: 2026 IRMAA Tier 1 thresholds: MAGI above $109,000 (single) / $218,000 (MFJ) triggers $81.20/month Part B surcharge + $14.50/month Part D surcharge = $1,978.80/person/year. IRMAA uses two-year lookback: 2026 income determines 2028 premiums.
3. HealthCare.gov — Federal Poverty Level and ACA Premium Tax Credits: ACA premium tax credit eligibility ends at 400% of the federal poverty level. 2026 thresholds approximately $62,600 single / $84,600 MFJ (based on 2025 HHS poverty guidelines). Crossing the cliff eliminates the full credit in a single year.
4. IRC § 86 — Social Security Benefit Inclusion Thresholds: Combined income (MAGI + ½ SS benefit) above $32,000 (MFJ) begins the 50% inclusion phase-in; above $44,000 the 85% inclusion phase-in applies. Single filers: $25,000 and $34,000. These thresholds are statutory and have not been adjusted for inflation since 1993.
5. PGPF — OBBBA Senior Deduction (2025–2028): $6,000 single / $12,000 MFJ (both spouses 65+) additional deduction under the One Big Beautiful Bill Act; below-the-line (reduces taxable income, not MAGI); phases out at $0.06 per $1 of MAGI above $75,000 single / $150,000 MFJ through 2028.

Tax values verified as of June 2026. 2026 income tax brackets and standard deductions from IRS Rev. Proc. 2025-32. IRMAA thresholds from CMS 2026 Medicare Costs Fact Sheet. IRC § 86 Social Security thresholds are statutory (unchanged since 1993). ACA cliff from HHS 2025 poverty guidelines. OBBBA senior deduction from PGPF and Peterson Foundation analysis, cross-checked against CBO scoring documents.