Roth Conversions in 2027: Start With "If," Not "How Much"

Anyone looking at the 2027 tax brackets and asking how much to move into a Roth account is starting at the wrong end of the problem. The better first question is whether a conversion makes sense for you this year. The answer to "how much" only means something once that is settled.

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth account. You pay ordinary income tax on the amount converted in the year you do it, and in exchange the money can grow and be withdrawn tax-free later, subject to the usual rules. The case for converting is strongest when you expect to be in a higher bracket later, or when you want to shrink the balance that required withdrawals will be based on in future years. The cost is a tax bill now, and that extra income can push other earnings into higher brackets or affect Medicare premiums and certain credits.

That is why the bracket thresholds matter less than your full financial picture. A common approach is to convert just enough to fill the lower part of your current bracket, stopping before the income crosses into the next rate. Someone with a low-income year or a large one-time deduction may have far more room than someone with a steady salary and a big capital gain. The same dollar amount can be a bargain for one person and an expensive mistake for another.

Before converting, check a few things. Can you pay the tax from outside the account rather than from the money being converted? How does the conversion change your marginal rate for the year? Could it raise your Medicare premiums two years later? Will you need the converted funds within the next five years, when the Roth five-year rule can come into play?

The 2027 brackets are adjusted for inflation, and the IRS publishes the official figures each year. Use those published numbers rather than last year's table or a rough estimate. And if the amount is large, run the scenarios with a tax professional or a reputable planning tool before you commit to a figure.