Your Last Roth Conversion of 2026: Size It in December

It's easy to get the last Roth conversion of the year wrong, and you pay either way. Convert too much and your Medicare premiums jump two years later. Convert too little and the room you leave on December 31 is gone for good. Measuring against the wrong year's IRMAA thresholds alone can leave a married couple $10,000 to $15,000 of conversion room short every year.

I went through every piece of this while updating WhenIm64 for 2027. Here's how the IRMAA thresholds really work, and how to size the last conversion of the year.

This is the second of three year-end articles. Start with the overview, and decide your gains and losses first: Before December 31: Take Your Gains and Losses on Purpose.

The Morrisons

The example is the couple in WhenIm64's demo. James is 66, retired and on Medicare. Linda is 62 and earns $220,000 through 2028. They have $2.3 million in traditional IRAs. Their plan calls for $31,309 in conversions for 2026. They converted $7,500 a quarter through September, which leaves $8,809 for December.

The Threshold Is Two Years Out

IRMAA, the Income-Related Monthly Adjustment Amount, is the surcharge higher-income Medicare enrollees pay on Part B and Part D premiums. It's based on your modified adjusted gross income (MAGI) from two years earlier: your adjusted gross income plus any tax-exempt interest. Your 2026 MAGI, including every conversion you do this year, sets your 2028 premiums.

And it's measured against the 2028 thresholds, not this year's. The thresholds rise with inflation every year, so the threshold you actually have to stay under is higher than any number published today.

A common mistake is to compare each year's MAGI against that same year's thresholds. That's two years of inflation too strict, roughly 5%. It feels safe, which is why it's easy to miss, but it costs real conversion room. WhenIm64 measures each year against the thresholds that will actually apply.

Single filers' thresholds are half of these. The top IRMAA tier, frozen since 2018, starts adjusting for inflation in 2028.

For the Morrisons, about $275,000 of 2026 MAGI sets James's 2028 premiums. Their plan uses WhenIm64's Moderate strategy, which stays in the first surcharge tier. WhenIm64 projects the 2028 threshold for the second tier at about $289,500 and stops 5% short of it, which is where their $31,309 comes from. Measured against this year's $274,000 instead, the plan would say they'd already converted too much.

The 2027 income tax brackets don't matter here. A 2026 conversion is taxed under the final 2026 brackets, whatever the IRS announces for next year.

Sidebar: The Cliffs That Actually Matter

I assumed the tax brackets were the cliffs to plan around. Building WhenIm64's conversion strategies, I found that once you're on Medicare, the IRMAA steps matter more.

The federal brackets come in near-flat pairs: 22% and 24%, then 32% and 35%. Going from 22% to 24% costs two points and opens about $190,000 of room for a married couple. The real jump is 24% to 32%, eight points at once.

IRMAA works differently. Each step is a flat surcharge on both spouses' Part B and Part D premiums. The second step alone adds about $3,500 a year for a couple, and one dollar over the threshold costs the whole step. So each WhenIm64 strategy stops at a cliff, not just a bracket:

Why no 32% strategy? For a married couple on Medicare, the 24% bracket runs to roughly $440,000 of MAGI once deductions are added back. The third IRMAA step ends at about $410,000. A strategy that stopped there would never reach 32%. It would just pay a bigger surcharge for a little more room, and in my testing it never beat Aggressive or Maximum.

Maximum is for large IRAs, roughly $3 million and up, where RMDs would push you, your surviving spouse and your heirs into the 32% to 37% brackets anyway. For most couples the real choice is Moderate or Aggressive. The question is whether emptying the IRA a few years sooner is worth the second IRMAA step.

Why the Last Tranche Waits for December

IRMAA thresholds only go up. They're adjusted for inflation each year and rounded to the nearest $1,000. So once CMS publishes the 2027 brackets in November, those numbers are a safe floor for the 2028 brackets that will apply to 2026 MAGI.

The other reason is year-end fund distributions, which mostly arrive in December. By mid-month the surprises are in. So the order of operations is:

1. Size the conversion against the new 2027 IRMAA thresholds, with a small safety margin.
2. Settle your gains and losses, including fund distributions or at least their published estimates.
3. Total year-to-date income from actual statements, not from the plan you made in January.
4. Convert what's left before December 31. Brokers get busy that last week, so don't leave it to the 30th.

If the Morrisons' funds distribute more than the $16,000 they expect, their December tranche shrinks to match.

Two Costs Hiding Inside a Conversion

More of your Social Security becomes taxable. Each dollar you convert can pull up to another 85 cents of benefits into taxable income. That raises your tax and your MAGI. Size a conversion by subtracting this year's MAGI from an IRMAA threshold and this effect can push you over. The fix is to recheck MAGI after the conversion and trim it if it overshoots, which is what WhenIm64 does. James doesn't claim until 2030, so it doesn't hit the Morrisons yet.

The senior deduction phases out. For 2025 through 2028, the One Big Beautiful Bill Act adds a $6,000 deduction for each person 65 or older. It shrinks by 6% of MAGI above $150,000 for married couples ($75,000 single), for each spouse separately. For a couple both over 65, that adds about 2.6 percentage points to the tax on a conversion in the 22% bracket. The Morrisons won't see any of it: with about $275,000 of MAGI, James's $6,000 is gone.

Neither is a reason to stop converting. Both are reasons to run the numbers after the conversion, not before.

At 63, the Clock Is Already Running

MAGI in the two years before you turn 65 sets your premiums in your first two years on Medicare. A big conversion at 63 or 64 can trigger IRMAA at 65 and 66.

Linda is next. She turns 65 in 2029, so her 2027 and 2028 MAGI set her first two years of premiums. She'll still be working, and every conversion they do in those years counts too.

Form SSA-44 asks Social Security to use a more recent, lower year after a life-changing event like retirement. It helps when your wages stop. It doesn't erase a Roth conversion you chose to do. WhenIm64 applies the IRMAA cap starting two years before Medicare for exactly this reason. For the bigger picture, see Crossing the Tax Valley.

Try It With Your Own Numbers

Open the Morrisons' plan and switch the conversion tier to see where each IRMAA threshold starts to bind, then try your own.

Next: paying for all of this by January 15 without a penalty.

Being too cautious costs money too. It just never sends you a bill.

Ben Sprachman is the founder of WhenIm64.ai, a retirement planning tool for people navigating retirement. He is not a financial advisor or tax professional. This article is for educational purposes only. Consult a qualified tax advisor for guidance specific to your situation.