A couple with $1.5 million in IRAs: what do four different Roth conversion plans actually cost over 26 years?

The household

A married couple, both born in January 1961, both retired in January 2026 at 65, living in New York outside New York City. No wages, no pension. Spouse A has a $1,000,000 traditional IRA and a $75,000 Roth IRA. Spouse B has a $500,000 traditional IRA and a $25,000 Roth IRA. They hold one joint brokerage account of $250,000 with $190,000 of cost basis in mutual fund shares, average basis method.

Social Security starts at 67 in January 2028: $3,200 a month for A and $2,000 for B in 2026 dollars, rising 2.5% a year. They spend $9,000 a month in 2026 dollars, rising 3% a year, including their standard Medicare premiums. If one spouse dies, the survivor spends 85% of that. Both are on Medicare Part B and Part D from January 2026, and their 2024 and 2025 incomes were below the first surcharge line.

Investments earn 7% a year before taxes in every account. For the brokerage account that 7% is a 2% taxable yield treated as ordinary income plus 5% capital appreciation, with returns applied using the transaction timing described in the assumptions below. Spending is drawn from the brokerage account first, then the traditional IRAs, then the Roth IRAs. Required minimum distributions begin at 75, in 2036.

The four plans

Story 1: convert nothing. Live on the brokerage account and Social Security, take required distributions when the law forces them, and never convert.

Story 2: fill the 22% bracket. Each year from 2026 through 2035, convert enough to bring ordinary taxable income exactly to the top of the 22% federal bracket, or convert whatever is left in the IRAs if that is smaller.

Story 3: stay under the first Medicare line. Each year from 2026 through 2035, convert enough to bring modified adjusted gross income to $5,000 under the first Medicare surcharge line that will apply two years later.

Story 4: step over the line in 2026 and 2027. The same as Story 3, except that in 2026 and 2027 the couple deliberately converts $10,000 over the first line, accepting one step of surcharge in 2028 and 2029 to get more money converted early.

Conversions are split two thirds to A and one third to B, in proportion to the IRA balances. In every plan the conversion window closes after 2035. In Stories 2, 3 and 4 the traditional IRAs are empty by the end of 2034, 2037 and 2036 respectively, and from then on the couple lives on Social Security and Roth withdrawals and pays no income tax.

What each plan costs and leaves behind, both spouses living to 90

The same four plans if either spouse dies on December 31, 2041

Both spouses were born on the same day and the survivor keeps the larger Social Security benefit, so it makes no difference to the totals which spouse dies first. The survivor files as a single taxpayer from 2042, gets one New York pension exclusion instead of two, and inherits the IRAs by spousal rollover.

Doing nothing is where the survivor gets hurt. Required distributions on $2,675,508 of traditional IRA balances run from $137,637 in 2042 to $223,257 in 2051, on single brackets and single Medicare lines. The survivor pays Medicare surcharges from 2044 and reaches the second surcharge step in 2049, $25,071 in all, on top of $98,247 more income tax than the two-survivor case.

What the numbers say

Story 3 beats Story 4. Stepping over the line in 2026 and 2027 moves $15,465 more into Roth and, because those early conversions are taxed in lower-indexed years, Story 4 actually pays $1,953 less income tax over 26 years. But it pays $4,886 in Medicare surcharges in 2028 and 2029, so its combined income tax and Medicare cost is $2,933 higher, and it ends with $43,910 less in Roth. For this household the surcharge was not worth buying.

Story 3 beats Story 2 on combined cost. Filling the 22% bracket converts a little less in total and pays $9,698 less income tax, but it sits in Medicare surcharge territory for eight years and pays $21,081 in surcharges. Combined, Story 2 costs $11,383 more than Story 3 and ends with $186,304 less in Roth.

Story 1 keeps the most gross wealth and pays the most tax. It ends with about $4,230,257 across the three account types, but $2,675,508 of that is still pre-tax, the tax on it has simply not been paid yet, and the surviving spouse carries the bill alone.

These comparisons hold under the assumptions stated on this page. They do not establish that Story 3 is the right answer for every household, or for this one under different assumptions. That is what the sensitivity tables below are for, and why we run your own numbers rather than these.

The first year, line by line

Story 1 owes no federal income tax in 2026 because the $12,000 senior deduction and the standard deduction cover the small amount of income on the return. Story 3 lands at $224,036, which is exactly $5,000 under the projected 2028 first line. Story 4 lands at $239,036, $10,000 over it.

Medicare surcharge lines are projections

Medicare surcharge lines are the 2026 lines projected forward at 2.5% a year. Under that projection Story 3 avoids the surcharge. If the lines stayed at their 2026 levels, the same conversions would trigger a first-tier surcharge in 2028 and 2029. Avoiding the surcharge is a projection, not a guarantee, and a real plan re-sizes the conversion every December against the lines Medicare has actually announced.

What changes if the assumptions change

Three alternatives, each re-solved from scratch with the conversion rules unchanged. Both spouses living to the stated horizon.

At 5% the household is drawing the IRAs down hard either way. Story 1's brokerage account is nearly gone by 2051 and the survivor would be spending Roth money. Story 3 still ends with the most Roth and Story 4 still loses to it.

Delaying the larger benefit widens the conversion room in 2028 through 2030 and lifts every plan's ending balances. The ordering of the four plans does not change.

Five more years of required distributions add about $303,349 of income tax to Story 1 with both spouses alive, and $53,886 of Medicare surcharges to its survivor. The conversion plans add nothing, because there is nothing left to distribute.

The assumptions, so you can argue with them

Federal brackets, the standard deduction, the extra deduction at 65, the capital gains bands, and the Medicare surcharge lines and amounts are the 2026 figures indexed at 2.5% a year. Fixed by statute and not indexed: the $6,000 senior deduction and its $150,000 phase-out, which exist for 2025 through 2028 only; the net investment income tax threshold; the Social Security provisional income lines; the New York brackets, standard deduction and the $20,000 per-person pension and annuity exclusion. New York rates include the enacted 2026 and 2027 reductions and the high-income recapture is computed with the IT-201 worksheets.

Brokerage yield is credited on the January 1 balance and sales are treated as year-end. Gains on sales are long term at the account's average basis. At the first death the joint brokerage basis steps up by half. Medicare surcharges in a given year are based on the return filed two years earlier, with that year's filing status, and no life-changing-event appeal is assumed. The surviving spouse inherits by spousal rollover and files single from the year after the death.

The 7% return is the same before taxes in every account. An earlier draft applied a fixed after-tax drag to the brokerage account's appreciation. We removed it for this example because the page already taxes the account's yield every year and its gains on every sale, and a second haircut would have counted that tax twice. Removing it raised Story 1's ending brokerage balance by $55,420 and changed nothing in the ordering of the plans.

How these numbers were checked

The figures come from the planning engine we use for client work. A separate program, written without reusing any of the engine's tax code, rebuilt all 26 years of all twelve runs from the household facts and the conversion schedules alone, then compared every income, tax, Medicare, distribution and balance line to the engine. It also rebuilt the three alternative scenarios. An outside reviewer with its own computing environment then ran the checking program, deliberately corrupted figures in a copy of the ledger to confirm the checks catch errors, and sent back a list of defects over several rounds. Each one was fixed before the page went up, including one New York recapture correction that moved Story 3's 2026 state tax by a few hundred dollars.

None of this makes the projection true. It makes the arithmetic honest. Returns, inflation, the law, and how long two people live will all be different from the assumptions above, which is why a real plan is redone every year.

What this page is not

This is an illustration, not advice. The household is invented, and your own return, state, balances, health and spending will move every number on this page. We build this same projection for planning clients from their actual return and balances, and we re-run it each December before the conversion is made. Go Beyond Tax does not sell investments or insurance to its planning clients and earns no commissions from them.