Retirees and near-retirees who experience a year of unusually low earnings before claiming Social Security and before required minimum distributions kick in have a narrow window to move money from a traditional IRA into a Roth IRA at a reduced tax cost. Because the IRS treats converted amounts as taxable income in the year of the conversion, timing that move during a gap in earnings can keep the tax hit well below what it would be once RMDs and benefit income start stacking on top of each other. The strategy hinges on a handful of IRS and Social Security Administration rules that interact in ways most account holders never map out in advance.
Why the Pre-RMD Window Is Shrinking for Many Account Holders
Under current rules, RMDs generally start at age 73. The SECURE 2.0 Act shifted that threshold, and IRS Notice 2023-54 provided transition relief confirming that the applicable age rises to 73 or 75 depending on birth year. Once those mandatory withdrawals begin, every dollar pulled from a traditional IRA lands in gross income whether the account holder needs the cash or not. A Roth conversion done after RMDs start cannot include the RMD amount itself; Treasury regulations under 26 CFR 1.408A-4 explicitly bar converting required distribution dollars. That restriction means the most flexible conversion years are the ones before age 73, when no forced income exists.
A low-income year amplifies the advantage. Someone who retires at 62 but waits until 67 to claim Social Security faces several years with little or no earned income. Filling the lower tax brackets with conversion income during that stretch costs far less per dollar than converting after RMDs, Social Security, and pension payments all land on the same return. IRS guidance for distributions from retirement accounts in Publication 590-B underscores that traditional IRA withdrawals are taxed as ordinary income, so shifting those dollars into a Roth while in a lower bracket can reduce lifetime tax liability.
How Conversion Income Ripples Through Social Security Tax and Medicare Premiums
The tax bill on a conversion is only the first cost to measure. IRS Publication 915 explains that Social Security benefits become taxable based on “combined” or “provisional” income, which includes adjusted gross income, nontaxable interest, and half of the benefit itself. A large conversion in a year when benefits are already being received can push up to 85 percent of those benefits into taxable territory, effectively raising the marginal rate on the conversion well beyond the bracket rate alone.
Medicare premiums add a second layer. The Social Security Administration determines income-related monthly adjustment amounts, known as IRMAA, using a two-year lookback to the most recent federal tax return data provided by the IRS. A conversion that spikes modified adjusted gross income in 2026, for example, can trigger higher Part B and Part D premiums in 2028. Keeping conversion-year income below the second-lowest IRMAA bracket avoids that surcharge entirely, preserving the tax savings that motivated the conversion.
The Special Case of After-Tax Contributions and Form 8606
Taxpayers with mixed-basis IRAs face an additional calculation. Some savers have made nondeductible contributions to traditional IRAs over the years, creating “basis” that has already been taxed. When those accounts are later converted to a Roth, the IRS requires a pro rata allocation of pretax and after-tax dollars across all traditional IRAs. Instructions for Form 8606 walk through the formula that determines how much of a conversion is taxable and how much is a tax-free return of basis.
Because the pro rata rule looks at the total balance in all traditional, SEP, and SIMPLE IRAs at year-end, moving pretax funds into an employer plan before converting can sometimes isolate basis and reduce the taxable share of a Roth conversion. However, that maneuver must be weighed against plan investment options, fees, and distribution rules. Misreporting basis or skipping Form 8606 can lead to double taxation of after-tax contributions, so keeping careful records and filing the form whenever nondeductible contributions or conversions occur is critical.
Coordinating Contributions, Conversions, and Withdrawals
Effective use of a low-income year also depends on understanding the contribution and distribution framework for IRAs. IRS Publication 590-A lays out the rules for making traditional and Roth IRA contributions, including income limits, deductibility, and the impact of employer plan coverage. Those contribution decisions shape how much pretax money ultimately sits in traditional IRAs and how large future RMDs will be.
On the other side of the ledger, the distribution guidance in IRA withdrawal rules details when early distribution penalties apply, how RMDs are calculated, and which exceptions can waive the 10 percent additional tax before age 59½. While a Roth conversion itself is not subject to that early withdrawal penalty, any separate distributions taken to pay the tax on a conversion generally are if the account holder is under the penalty age and no exception applies. Using cash from outside the IRA to cover conversion taxes preserves more assets in the tax-advantaged environment.
Planning Ahead for a Narrow Opportunity
Because the optimal conversion amount depends on tax brackets, projected RMDs, Social Security timing, and Medicare thresholds, the low-income window between retirement and RMD age is easy to waste without advance planning. Running multi-year projections that incorporate provisional income, IRMAA tiers, and the pro rata rules for mixed-basis IRAs can reveal how much room remains in a target tax bracket each year. For many households, deliberately filling that space with Roth conversions during one or two unusually low-earning years can materially reduce future taxable income and provide greater flexibility in managing cash flow in retirement.
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