Many pre-retirees overlook a key planning window between the ages of 59½ and 65—a ‘sweet spot’ where thoughtful Roth conversions can provide long-term tax advantages and reduce future Medicare costs.
Once you reach age 59½, IRA withdrawals are no longer subject to the 10% early withdrawal penalty. This opens the door to Roth IRA conversions where you can withhold taxes from the IRA distribution without facing penalties. For retirees who are not yet receiving Social Security or on Medicare, this time frame may represent a unique opportunity to strategically convert IRA assets to a Roth IRA while keeping overall income and tax rates manageable.
Why convert before age 65? Because once you begin Medicare, your income becomes a factor in determining your premiums. Large Roth conversions at that point could push your income over the threshold for IRMAA (Income-Related Monthly Adjustment Amount), increasing your Medicare Part B and Part D premiums—often significantly.
Here’s another nuance: The 2025 federal tax brackets allow married couples filing jointly to remain in the 24% marginal tax bracket all the way up to roughly $394,000 of taxable income. That means there's very little difference in federal tax rates for a couple with $100,000 in taxable income versus $390,000. It’s just the jump from 24% to 32% at that next threshold that we try to avoid.
A couple with $100,000 in taxable income (after deductions) would typically be paying mostly 10%, 12%, and 22% on their income, staying well below the top of the 24% bracket. So if their goal is to reduce their future Required Minimum Distributions (RMDs), hedge against future tax increases, or pass on more tax-efficient assets to heirs, converting up to the top of the 24% bracket may be well worth considering.
2025 Federal Tax Brackets (Projected)
**Single Filers:**
$0 to $11,600 – 10%
$11,601 to $47,150 – 12%
$47,151 to $100,525 – 22%
$100,526 to $191,950 – 24%
$191,951 to $243,725 – 32%
$243,726 to $609,350 – 35%
Over $609,350 – 37%
**Married Filing Jointly:**
$0 to $23,200 – 10%
$23,201 to $94,300 – 12%
$94,301 to $201,050 – 22%
$201,051 to $383,900 – 24%
$383,901 to $487,450 – 32%
$487,451 to $731,200 – 35%
Over $731,200 – 37%
About the Author:
Ian Massey, AIF®, is the CFO and a financial advisor at Providence Wealth Planning. Through active listening and storytelling, Ian guides his clients through complex financial decisions. His approach emphasizes trust, clarity, and personalized strategies to help families achieve their financial goals.