Retired Couple Can Convert $90,000 to Roth at 8% Tax Rate, Saving About $7,500
Updated
Updated · Yahoo Finance · Aug 11
Retired Couple Can Convert $90,000 to Roth at 8% Tax Rate, Saving About $7,500
3 articles · Updated · Yahoo Finance · Aug 11
Summary
$90,000 of annual 401(k)-to-Roth conversions can fit at an 8% blended federal tax rate for a retired 66-year-old couple with $1.5 million saved and little current income.
A $44,200 combined standard and senior deduction plus about $15,000 in taxable dividends leaves taxable income at $60,800—well below the 2026 12% bracket ceiling of $100,800 for joint filers.
That setup produces a federal tax bill of roughly $7,500, far cheaper than converting at the 22% to 24% rates the couple had expected to tolerate.
Skipping conversions could let the $1.5 million grow to about $2.3 million by age 75, when RMDs and Social Security could push them into 22% to 24% brackets and trigger Medicare IRMAA surcharges.