The Roth Conversion Window: Low-Tax Years Before RMDs

1. What the Roth conversion window is

A Roth conversion moves money from a pre-tax account — your Traditional TSP or a traditional IRA — into a Roth account. You pay ordinary income tax on the converted amount in the year you convert it. In exchange, that money and all its future growth become permanently tax-free, and it never generates a required minimum distribution.

The Roth conversion window is the stretch of years when doing this is cheapest: the gap between the year you retire and the year RMDs begin at 73.

During those years, something unusual happens to a federal retiree’s tax return. The paycheck is gone. Social Security may not have started yet, if you’re delaying it to grow the benefit. RMDs haven’t begun. For a federal retiree, the FERS pension is flowing — but a pension alone often leaves real room at the bottom of the tax brackets. The result is a span of years with the lowest taxable income you’ll see for the rest of your life.

That low-income span is the window. Every year inside it, you can deliberately convert pre-tax money to Roth at a low tax rate — instead of letting that money sit in the Traditional TSP, grow, and eventually come out as RMDs taxed at a higher rate. For most retirees with a substantial Traditional balance, the conversion window is the single most valuable tax-planning opportunity they will ever have.

This article builds directly on two others in this pillar. The reason the window matters is the RMD tax stack it lets you avoid — see RMD strategy for federal retirees. And the second ceiling on conversions is the Medicare surcharge — see IRMAA explained.

2. Why the window exists — and why it closes

The window exists because of a specific alignment of events in a federal retiree’s 60s.

The paycheck stops. Your largest source of taxable income for 30-plus years ends the day you retire. Nothing automatically replaces it at the same level.

Social Security can be delayed. Many retirees delay claiming Social Security to age 70 to maximize the benefit. Every year you delay is a year that income isn’t on your return — leaving bracket space open. The claiming-age decision is its own analysis — Federal Warrior covers when to claim Social Security ↗ and how the timing interacts with a federal pension.

RMDs haven’t started. Until 73, nothing forces money out of your Traditional TSP. The balance grows, but no taxable distribution is required.

The FERS pension is the one stream that’s flowing. This is what makes the federal version of the window narrower than the version a private-sector retiree gets. A federal retiree with a pension doesn’t have a near-zero-income window — the pension fills part of the lower brackets from day one. But “narrower” is not “closed.” A pension of $45,000-$50,000 still leaves substantial room before the top of the 12% or 22% bracket. The window is real for feds; it’s just smaller, which makes using it efficiently more important, not less.

The window closes at 73. When RMDs begin, they stack on top of the pension and Social Security, and they consume the bracket space that conversions used to occupy. After 73 you can still convert — but only after taking the RMD first, and the RMD has already pushed you up the brackets. The cheap space is gone.

Every year of the conversion window that passes without a conversion is bracket space permanently lost. You cannot go back and use a low-tax year after it’s gone. The window is the definition of a use-it-or-lose-it opportunity.

There’s one more reason the window matters in 2026 specifically. The One Big Beautiful Bill Act, signed in July 2025, made the TCJA tax brackets — 10, 12, 22, 24, 32, 35, 37% — permanent. For years, conversion planning carried the uncertainty of a scheduled bracket sunset. That uncertainty is gone. You can now build a multi-year conversion plan on a stable, known bracket structure.

3. The bracket-filling method

The core technique of the conversion window is bracket filling: converting exactly enough each year to bring your taxable income up to the top of a chosen bracket — and not one dollar more.

It works because the U.S. income tax is marginal. Income stacks, and each layer is taxed at its own rate. If your pension leaves your taxable income partway up the 12% bracket, the space between there and the top of the 12% bracket is conversion room that costs only 12 cents on the dollar to use. Convert into it and you’ve moved money to Roth at 12%. Leave it empty and that 12% space is gone at the end of the year.

The 2026 brackets give you the targets. Here are the relevant bracket tops, stated as taxable income (after the standard deduction):

The method, step by step:

1. Estimate your taxable income for the year before any conversion — pension, any taxable interest or dividends, the taxable share of Social Security if you’ve claimed it, minus your standard deduction.
2. Pick your target bracket ceiling — often the top of the 12% or 22% bracket.
3. Subtract. The difference between your pre-conversion taxable income and the bracket ceiling is your conversion room for the year.
4. Convert that amount from Traditional TSP or IRA to Roth.
5. Repeat every year of the window, recalculating as your income changes.

The discipline is in doing it every year and not overshooting. One large conversion that punches through into the next bracket wastes the strategy — you’d be converting at 24% money you could have converted at 12% by spreading it across more years. The window rewards patience and repetition.

4. A federal retiree example: eight years of conversions

Numbers make the method concrete. Consider a married federal couple, both 63, both recently retired, filing jointly in 2026.

• FERS pension: $48,000 (about 95% taxable, so roughly $45,600 counts)
• Social Security: delayed to 70 — not yet flowing
• RMDs: none yet — 10 years away
• Traditional TSP balance: $700,000

Their bracket room. Taxable income from the pension, after the $32,200 standard deduction, is about $13,400. That sits low in the 12% bracket. The 12% bracket for a married couple runs up to $100,800 of taxable income — so they have roughly $87,400 of room inside the 12% bracket before they’d cross into 22%.

If they wanted to convert more aggressively, the 22% bracket runs up to $211,400 — leaving about $198,000 of room if they’re willing to pay 22% on the upper portion.

The conservative plan. Suppose they convert $50,000 a year, comfortably inside the 12% bracket, every year from 63 to 70 — eight years.

Converting $400,000 at 12% costs $48,000 in tax. Leaving that same $400,000 in the Traditional TSP to come out later as RMDs taxed at 22% would cost $88,000. The deliberate use of the window saves roughly $40,000 in lifetime tax — and that’s before counting the reduced taxable Social Security and lower IRMAA exposure that come with smaller future RMDs.

The chart shows the whole argument in three bars. The same $400,000 of pre-tax money costs $48,000 in tax if converted deliberately at 12% during the window — or $88,000 to $96,000 if left to come out later as RMDs taxed at 22% or 24%. The window doesn’t change how much money you have; it changes the rate at which it’s taxed on the way to becoming permanently tax-free.

5. The two ceilings: tax brackets and IRMAA

Bracket filling has two ceilings, not one, and a federal retiree has to watch both.

Ceiling one: the tax bracket. Covered above — convert up to a bracket top, not through it.

Ceiling two: IRMAA. Once you’re within two years of Medicare enrollment at 65, a second ceiling appears. A Roth conversion adds to your modified adjusted gross income, and IRMAA — the Medicare premium surcharge — is set by your MAGI from two years earlier. A conversion done in 2026 feeds your 2028 IRMAA determination.

This matters because IRMAA is a cliff. The 2026 first IRMAA threshold is $109,000 MAGI for a single filer and $218,000 for a married couple filing jointly. Cross it by one dollar and the full surcharge for that tier applies. So once you’re inside the two-year IRMAA shadow, your conversion ceiling is whichever is lower: the tax bracket top, or the IRMAA threshold.

The timing interaction creates a clear sequencing rule:

The takeaway: the earliest years of the window are the most valuable. Conversions done at 60-62, before the IRMAA two-year lookback reaches back to them, face only the tax-bracket ceiling. Front-loading conversions into those early years — while staying within the chosen bracket — gets the most money converted before the IRMAA constraint switches on.

6. TSP in-plan conversions: the 2026 option

Until recently, a federal retiree who wanted to convert Traditional TSP money to Roth had to do it indirectly — roll the TSP money to a traditional IRA, then convert the IRA to a Roth IRA. That changed in 2026.

As of January 28, 2026, the TSP offers in-plan Roth conversions. You can now convert money from your Traditional TSP balance to your Roth TSP balance directly, inside the TSP, through My Account. If you don’t already have a Roth TSP balance, the first conversion creates one.

A few things to know about the in-plan conversion:

• The converted amount is taxable income in the year of the conversion, exactly like any Roth conversion. The TSP will report it on a 1099-R.
• It happens inside the TSP — you keep the TSP’s very low expense ratios and the G Fund. You don’t have to leave the TSP to execute a conversion strategy anymore.
• It’s a genuine simplification. The old roll-out-then-convert path involved an IRA, a second institution, and more moving parts. The in-plan conversion removes that friction. It is also irrevocable once processed.

This doesn’t mean the IRA path is obsolete. Converting within an IRA can still make sense if you want investment options the TSP doesn’t offer, or if you’re coordinating with Qualified Charitable Distributions, which work from an IRA. But for a federal retiree who simply wants to execute a bracket-filling conversion strategy, the in-plan conversion is now the cleaner route. For the full comparison of staying in the TSP versus moving to an IRA, see TSP rollovers in 2026.

The conversion strategy and the Roth-versus-Traditional contribution decision are two halves of the same idea — getting money into the Roth bucket. For the contribution side, see Roth vs Traditional TSP in 2026.

7. The five-year rule and other conversion mechanics

A few rules govern conversions, and getting them wrong is costly.

Each conversion starts its own five-year clock. Converted money has a five-year holding requirement before the converted principal can be withdrawn without a 10% penalty — separate from the five-year rule on Roth earnings. A conversion done in 2026 satisfies its clock on January 1, 2031. For a retiree in their 60s, this is rarely a problem: most are at or past 59½, where the conversion five-year penalty rule no longer applies to them. But a retiree converting in their 50s needs to track each conversion’s clock before touching that money.

There’s no income limit and no dollar limit on conversions. Unlike Roth IRA contributions, which phase out at higher incomes, conversions have no income ceiling. There’s also no cap on how much you can convert in a year — you could convert an entire balance at once. The only thing limiting the amount is the tax bill you’re willing to trigger.

Pay the conversion tax from outside the conversion. The tax on a conversion should come from a taxable savings or brokerage account — not from the converted money itself. If you convert $50,000 and withhold the tax from that $50,000, less than the full amount lands in the Roth, and if you’re under 59½ the withheld portion can count as a taxable distribution. Pay the tax from separate funds so the entire conversion compounds.

Conversions can’t be undone. The ability to reverse — “recharacterize” — a Roth conversion was eliminated in 2018. Once you convert, it’s permanent. This is why overshooting a bracket matters: there’s no taking it back.

A conversion is not an RMD, and an RMD is not convertible. Once you’re 73, you must take your RMD first, and the RMD itself cannot be converted to Roth. Only money above the RMD can be converted. This is part of why the pre-73 window is so much more valuable than converting after 73.

8. Who should convert — and who should not

Roth conversions are powerful, but they are not universally correct. The honest version:

Conversions tend to make sense when:

• You have a large Traditional TSP or IRA balance that will produce uncomfortable RMDs at 73 — the bigger the future RMD problem, the stronger the case.
• You’re in a genuine low-tax window — retired, pension is modest relative to the brackets, Social Security not yet claimed.
• You expect your future tax rate to be equal or higher — which is common for federal retirees, because the pension plus Social Security plus RMDs often lands them in the same or a higher bracket than the window years.
• You can pay the conversion tax from outside funds.
• You want to leave tax-free money to heirs — inherited Roth accounts are far kinder to heirs than inherited Traditional accounts, which carry a 10-year drawdown and full ordinary-income tax.

Conversions tend not to make sense when:

• Your future tax rate will clearly be lower than today’s — if RMDs and Social Security will still leave you in the 12% bracket, converting at 12% or higher now gains little.
• You’d have to pay the conversion tax out of the converted money — that drags the math down substantially.
• You have a short time horizon and no heirs — there isn’t enough remaining time for tax-free growth to repay the upfront tax cost.
• The conversion would cross an IRMAA cliff and the surcharge cost outweighs the tax saved.
• Your retirement giving will be largely charitable — charities receive Traditional money tax-free anyway, so converting it first wastes the tax payment.

The federal-specific reality: a career federal employee with a solid pension, Social Security, and a healthy Traditional TSP is often a strong candidate, precisely because all three stack at 73 into a tax bracket as high as or higher than the window years. But it is not automatic. The decision rests on a genuine comparison — your tax rate in the window versus your projected rate once the full stack is running. Run that comparison before converting, ideally with a multi-year projection, because the conversion can’t be undone.