Roth Conversions Before Year-End: The Math That Most Advisors Get Wrong at Your Income Level

The standard warning about Roth conversions and Medicare surcharges is written for an income level well below yours, and it usually gets repeated without that caveat attached.

The standard warning goes like this: convert too much, and you'll trigger IRMAA, the income-related surcharge that raises your Medicare Part B and D premiums two years later. It's presented as a hidden cost that catches people off guard. For a retiree drawing $150,000 a year from a pension and a modest IRA, that warning is genuinely useful. For a surgeon earning $1.1 million a year, it often isn’t the central issue, because you're likely already past the point where IRMAA has anything left to escalate.

Here's why that matters, and what the conversation should actually be about instead.

The bracket math hasn't changed, but the context around it has

The 37% top marginal federal income tax rate applies in 2026 to taxable income over approximately $640,600 for single filers and $768,700 for married couples filing jointly, under current law as of the 2026 tax year. For years, the conventional Roth conversion pitch was "convert now, before rates go up." That pitch works differently now, because many surgeon households in this income range already have their top dollars taxed at 37% today.

That changes the question. It's no longer "should I beat a coming rate increase." It's "is my current rate actually higher than the rate I'll pay when this money eventually comes out, whether that's in retirement or to my heirs," recognizing that future tax law and rates can change.

Why IRMAA usually isn't the variable that decides this

Medicare's IRMAA surcharge applies on a sliding scale, with the highest tier for Medicare Part B and D premiums in 2026 kicking in at a much lower income than typical surgeon compensation, and currently topping out once modified adjusted gross income is above the highest published threshold for married couples. If your household income is already well above that top IRMAA tier, and for many surgeons in this income bracket it is, you're already paying the maximum IRMAA surcharge before you convert a single dollar. Adding a conversion on top doesn't push you into a new IRMAA tier in those circumstances; there isn't a higher one to move into.

This is worth saying plainly because most retirement content assumes a reader closer to the threshold, where a conversion genuinely could tip them into a more expensive bracket. At surgeon-level income, that tipping point has usually already been crossed by your regular earnings alone. In that situation, the conversion itself isn't what's triggering the surcharge. Your income already did.

That doesn't mean IRMAA is irrelevant to your planning. It means it's a near-certainty to factor into your broader retirement income picture, not a marginal cost that should by itself swing a specific conversion decision. IRMAA is also based on income from two years prior, and the exact impact depends on your full income picture and Medicare enrollment.

The three-branch framework

Once IRMAA is out of the way as the main deciding factor for higher-income households already at the top tier, the actual decision comes down to three questions.

Conversion may help if you expect to relocate to a no‑income‑tax state in retirement, if your primary goal is passing assets to heirs who are likely in a lower tax bracket than you, or if this specific year's income is unusually high in a way that makes future years' brackets look lower by comparison.

Deferral may be more favorable if your current marginal rate genuinely exceeds what you expect your effective rate to be in retirement, which is a common case for a surgeon who may eventually draw from a combination of practice sale proceeds and a diversified portfolio at a lower blended rate than 37%. In that scenario, leaving pre‑tax assets in traditional accounts and paying tax later at a lower effective rate can be more efficient.

Partial conversion can fit if you expect meaningful income variability in early retirement—the years between stepping away from the practice and claiming Social Security or taking required minimum distributions. Those years often create a window where you can convert into, for example, the 24% or 32% brackets rather than the 37% bracket you're in today.

None of these branches are universal advice. They’re frameworks to organize the math and assumptions around your specific situation.

A worked example

Consider a 58-year-old surgeon, married filing jointly, with $1.1 million in combined W-2 and pass-through income this year. He's weighing a $150,000 Roth conversion.

The direct cost is straightforward in this simplified illustration: $150,000 taxed at his 37% marginal federal rate, or $55,500 in additional federal income tax this year, assuming the entire converted amount falls in the top bracket and ignoring state taxes and other interactions. Because his income is already well above the highest IRMAA tier for Medicare Part B and D in this example, the conversion doesn’t move him into a higher IRMAA tier; he’s already at that ceiling.

Now the benefit side. Suppose he expects to retire at 64 in a state with no income tax, drawing down a mix of taxable and retirement accounts at a blended effective federal rate of 24%. In that hypothetical retirement scenario, that same $150,000 would have cost him about $36,000 in federal tax if left as a traditional balance and withdrawn later.

$55,500 paid today versus $36,000 paid later. In this simplified example, deferral appears more favorable by roughly $19,500, and that's before accounting for the simple fact that money kept and invested today is generally worth more than money paid to the IRS today. The framework doesn't produce a universal answer. It produces his answer for these assumptions, and it's a different answer than the one a generic "convert before rates rise" article might have given him.

Actual outcomes depend on your full tax picture—deductions, credits, business structures, state taxes, future tax law, and investment returns—and should be modeled carefully before acting.

The estate connection from last week

One more thread worth pulling, since we spent last week on estate planning. Roth IRA assets pass to heirs differently than traditional retirement accounts. Under current law and IRS guidance, many non-spouse beneficiaries who inherit Roth IRAs after 2019 are subject to a 10-year depletion rule under the SECURE Act, meaning the account generally must be emptied by the end of the tenth year following the original owner’s death. In many cases, there are no required minimum distributions for inherited Roth IRAs when the original owner died before their required beginning date, though there are situations—particularly when death occurs after that date—where annual required distributions may apply even under the 10-year framework.

Heirs still receive the benefit that qualified distributions from inherited Roth IRAs are generally tax-free, and they may have up to a decade of potential tax‑free growth. But their flexibility on timing is now shaped by required minimum distribution rules and the 10‑year deadline, which is meaningfully different from the pre‑SECURE Act landscape and from the rules governing many traditional IRAs.

If leaving a cleaner, more flexible, potentially tax‑free asset to your kids is part of what's driving your interest in converting, that's a legitimate factor to weigh. Just make sure it's the factor actually doing the work, not an IRMAA scare that doesn't apply to your income level in the way most generic articles assume.

Run the actual numbers before year-end

The window to model this correctly is now, while this year's income picture is largely known and there's still time to execute before December 31. Don't run the conversion math based on a warning written for a different income level. Run it based on your actual marginal rate today, your realistic expectation for retirement, and what you actually want the assets to do for the people who inherit them.

Financial planning isn't only about growing your bank account. It's about increasing the quality of your life and aligning tax and investment decisions with the outcomes you care about. A Roth conversion decision made on the wrong variable—like an IRMAA threshold that isn’t actually binding for you—is a decision made with worse information than you actually have available.

Capably Yours,

Jared

DISCLAIMER

This article is for informational and educational purposes only and does not constitute investment, tax, or legal advice. It does not take into account the specific objectives, financial situation, or needs of any particular person. You should consult your own tax, legal, and investment professionals before acting on any information contained herein. Capable Wealth, a New York registered investment adviser, provides advisory services only where properly licensed or exempt from licensing.