Retired Couples Can Save $100,000 by Converting $178,000 to Roth at 22%

3 articles · Updated · 24/7 Wall St. · Aug 15

$178,000 is the key 2026 conversion target for a married couple with low income, letting them fill the 22% bracket and pay about $39,200 in federal tax now.
That trade works because traditional 401(k) withdrawals later can land near a 40% effective marginal rate once RMDs stack on Social Security taxation and Medicare IRMAA surcharges.
On a $178,000 balance growing at roughly 6% for 15 years, delaying the tax bill until age 75 can more than double the amount exposed to tax, producing six-figure lifetime savings from converting earlier.
The strategy is most valuable in the five-year window between retirement at 65 and Social Security at 70, when taxable income is unusually controllable and annual bracket-filling can be repeated.
For workers still 60 to 63, 2026 rules add urgency: the 401(k) deferral limit is $24,500, the catch-up is $11,250, and higher earners must already route that catch-up into a Roth 401(k).