Roth Conversion Window: Why a 64-Year-Old With $1.3M Has Until Dec. 31, Not April 15, to Move $78,000

Roth Conversion Window: Why a 64-Year-Old With $1.3M Has Until Dec. 31, Not April 15, to Move $78,000

Jake FitzGerald

6 min read

Quick Read

Roth conversions must complete by December 31, and missing that deadline pushes the entire strategy into the next tax year.

A 64-year-old with $55,000 in other income can convert $78,000 and keep the entire amount taxed at 12%, avoiding the 22% bracket.

Converting $200,000 in a lump sum nearly quadruples the tax bill versus bracket-filling, and can trigger Medicare IRMAA surcharges two years later.

Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.

You are 64, semi-retired, and sitting on roughly $1.3 million split between a traditional IRA and an old 401(k). Your accountant mentioned a Roth conversion in passing last spring, and now it is mid-September. You are wondering whether you can still act on that idea for this tax year, and if so, how much. The short answer: yes, but the runway is shorter than you think, and the size of the conversion is the decision that actually matters more than the timing of the paperwork.

This scenario is common enough that Suze Orman has covered it repeatedly on her podcast, warning listeners that "conversions have to be made by December 31st of the year you are converting" and that moving a large traditional balance in one shot "can put you in a very high tax bracket." The conversion deadline is December 31. Miss that date and the entire strategy slides into the next tax year, which may look nothing like this one.

Why $78,000 Is the Right-Sized Conversion

Roth conversions are taxed as ordinary income in the year you convert. Every dollar you move from the traditional side gets stacked on top of your other 2026 income and taxed at your marginal rate.

For a married couple filing jointly in 2026, the standard deduction is $32,200. The 12% bracket runs up to $100,800 of taxable income, and the 22% bracket kicks in above that, running to $211,400 before 24% starts.

The 4% Rule is Broken, Built On A World That No Longer Exists

Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.

There's a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.

Assume you and your spouse have around $55,000 of other income this year: part-time work, interest, a small pension. Layer the standard deduction on top and you have meaningful room left inside the 12% bracket before the next rate tier hits. A conversion of $78,000 fills that room almost exactly, keeping the entire conversion taxed at 12% instead of spilling into 22%. Push the conversion to $100,000 and the last $22,000 gets taxed at nearly double the rate. That is the tension: how much to convert without crossing a bracket line you cannot uncross.

Why the December 31 Deadline Is Non-Negotiable

The IRS treats a conversion as a taxable event in the calendar year the money actually leaves the traditional account and lands in the Roth. If your custodian does not complete the transfer by December 31, 2026, it counts as a 2027 conversion, taxed against 2027 income and 2027 brackets.

Custodians get slammed in late December. Wire cutoffs, holiday closures, and in-kind transfer delays regularly push requests submitted in the last week of the year into January. Submit paperwork by early December to be safe.

Two Realistic Paths, One Clear Winner

Convert $78,000 now and stop. You pay roughly 12% federal on the conversion, keep Medicare IRMAA surcharges off the table (assuming income stays under the 2026 thresholds), and shrink the balance that will drive required minimum distributions later. Under SECURE 2.0, RMDs start at age 73 for you, giving you nine years of runway to do this same maneuver annually. Nine bites of $78,000 meaningfully reduces the traditional balance before RMDs force distributions on the IRS's schedule instead of yours.

Convert a larger lump, say $200,000, to "get it over with." This is the path Orman warns against. The incremental dollars get taxed at 22% and potentially 24%, and the higher AGI can trigger IRMAA surcharges on Medicare premiums two years later, plus increase the taxable share of Social Security if you have started claiming. For most 64-year-olds in this bracket, the lump-sum approach is inferior. The annual, bracket-filling approach wins.

Opportunity Cost Backdrop

With the 10-year Treasury yield near 5% and the federal funds target near 4%, the cash you use to pay the conversion tax carries real opportunity cost. Pay the tax from a taxable brokerage account rather than withholding from the IRA itself. Withholding shrinks the amount that actually reaches the Roth. You are 64, so the penalty is off the table, but the math still favors paying from outside dollars so the full $78,000 compounds tax-free.

What to Do This Week

Pull a year-to-date income estimate. Add the projected conversion. Confirm the total taxable income stays below $100,800 if you want to cap the marginal rate at 12%. Then call your custodian and initiate the transfer by early December to beat custodian bottlenecks. Bracket-fill annually. Do it nine times. That is the strategy, and it is the same low-tax window we sized up in detail in a free Roth report: grab it here.

Before Your Next Withdrawal, Run One Number ( It's Not The 4% Rule Everyone Knows)

Take your essential monthly expenses and subtract your guaranteed income — Social Security, plus any pension. What's left is your income gap, and how you close it determines whether retirement runs on share sales or on a paycheck your portfolio writes you every month. Our free reader guide, The 4% Rule Is Broken, shows exactly how to close that gap with portfolio income: a worked example (one retiree needed about $480,000 in income-producing assets to cover his essentials for good), an eight-point conversion checklist, and the 20-year numbers comparing dividends to withdrawals. It's free and takes about 15 minutes to read. Get the guide here before you take your next withdrawal.