Roth Conversion Optimizer for Pension Rollover IRA (2026)

You rolled your pension into a traditional IRA. That deferred the tax — but didn't eliminate it. Starting at age 73 (or 75), the IRS forces you to take Required Minimum Distributions on the full balance at ordinary income rates. This calculator finds the optimal annual Roth conversion amount: how much to convert each year to fill a chosen tax bracket, reduce future RMDs, and minimize lifetime taxes on your pension money.

Why the Roth conversion window matters for pension rollover holders

Most retirees who roll a corporate or federal pension into an IRA underestimate the long-term tax problem they've created. At age 73 (or 75 for those born 1960 or later), the IRS begins forcing taxable withdrawals — Required Minimum Distributions — regardless of whether you need the money. For a $750,000 pension rollover IRA growing at 5% annually, that means:

• Balance at age 73: approximately $1.04 million (if you do nothing from age 64)
• First-year RMD: $1,040,000 ÷ 26.5 (IRS divisor at 73) = approximately $39,245/year
• That $39,245 stacks on top of your pension annuity income and Social Security — potentially pushing you into a higher bracket than your working years

The Roth conversion window — the years between retirement and RMD start — lets you drain the traditional IRA gradually at controlled rates. You pay tax on the conversion at today's known brackets (22%, 24%) instead of rolling the dice on future rates and on what bracket the RMD forces you into.

What "optimal" conversion means

Optimal in this context means: convert enough each year to fill your target bracket without going above it. If you're married filing jointly with $55,000 in other income and a $32,200 standard deduction, your taxable income is $22,800 — leaving $188,600 of room in the 22% bracket ($211,400 cap minus $22,800). That's how much you can convert each year and stay at or below 22%.

The logic: every dollar you convert in the 22% bracket today is a dollar that will never come out as a taxable RMD in a future year, potentially at 25%, 28%, or 32% if rates rise. It also reduces the balance that keeps compounding and creating a larger future RMD burden.

IRMAA: the hidden tax on large conversions

Medicare Part B premiums for 2026 start at $202.90/month. But if your MAGI (which includes Roth conversions) exceeds $109,000 single / $218,000 married, you enter the Income-Related Monthly Adjustment Amount (IRMAA) surcharge tiers. Each tier adds $74–$370/month per person to your Part B premium. Converting too aggressively in a single year can push you into IRMAA even if it keeps you below the income tax bracket you were targeting.

The fix: stay below the IRMAA Tier 1 threshold (full bracket table), or deliberately cross it in years when you're converting the last remaining balance and the math still favors paying the surcharge.

Roth conversion and the Social Security tax torpedo

If you're receiving Social Security, Roth conversions add to your "provisional income" — and pushing provisional income from the 0% SS-taxation zone into the 85%-SS-taxation zone creates a hidden 1.85× marginal tax multiplier. Example: if you're MFJ with $34,000–$44,000 in provisional income, each additional $1 of Roth conversion income triggers $0.85 more of Social Security to become taxable, making the effective marginal rate on that dollar 1.85× the stated bracket. The calculator does not model this interaction — see the Pension + SS Tax Calculator and the Roth conversion guide for a full treatment.

When Roth conversion might not be worth it

• Short life expectancy. Roth conversions pay off over time. If life expectancy is under 10–12 years, the upfront tax may not be recovered.
• You're already past RMD start age. Roth conversions are still possible, but RMDs cannot be converted — you must take the RMD first, then convert additional amounts separately.
• Your heirs are in a low bracket. Under the 10-year rule (T.D. 10001), inherited traditional IRA beneficiaries must empty the account within 10 years. If your heirs would pay little or no tax (e.g., in low-income years), paying the conversion tax now may be unnecessary.
• State pension tax exemption. If you live in a state that fully exempts pension annuity income but taxes IRA distributions (including Roth conversions), the state-level tradeoff changes the math. See the state pension tax guide.