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Roth IRA Conversion Strategy – Fill Out the Bracket

One strategy to consider as you think about making Roth IRA conversions is the idea of “fill out the bracket”.  With this strategy, you consider your income level and what bracket you’re in, and if it makes sense, convert enough of your IRA or QRP (such as a 401k) to effectively use up the remainder of the tax rate bracket that you’re in.

180px-Arnie_Roth can fill out the bracketOf course, this mostly makes sense in the lowest brackets, but for some folks with potentially high incomes it may be appropriate at higher brackets.  Your feeling on this also depends on what you think will happen with tax rates as you get to the point where you’re ready to retire – and if you’re like me, you’ve got to believe that tax rates are on the rise.

The following table illustrates the highest income you could have within each tax bracket, using the rates for a Single taxpayer and a Married Taxpayer, using only the Standard Deduction for 2018. If you itemize, add the difference of your itemized deductions above the standard deduction of $12,000 for single and $24,000 for married.

If you’re at or over age 65, add $1,600 if you’re single, or $1,300 for each member of a married couple who is 65 or older. Add the same amount if you’re blind.

2018 Top Income Levels Per Bracket

Tax Bracket
























To use the above table, calculate your income – from wages, salaries, tips, dividends, interest, short-term capital gains, rental income, etc..  Figure out which bracket you fit into, based on the table.  Subtract your income amount from the amount for your applicable bracket:  the remainder is how much you could convert to a Roth IRA while remaining in that tax bracket.

As an example, let’s say you’re single, with no dependents.  Your total income for the year will be $30,000.  When we go to the table we see that you’re in the 12% bracket. The top gross income in that bracket is $50,700, so you could convert up to $20,700 to a Roth IRA to fill out the bracket, without bumping yourself up above the 12% rate.  The tax on that conversion would be $2,484.

For another example, let’s say you’re married, and your household income is also $30,000.  According to the table, you’re in the 10% bracket, and the upper limit on the bracket is $43,050. To fill out the bracket, you could convert as much as $13,050 without going above the 10% bracket. Tax on that conversion would be 10%, or $1,305.

Now, you might be saying to yourself, that’s all well and good, but how many families of four have the wherewithall to undertake a Roth conversion in those circumstances? After all, who wants to pay an additional tax of $1,305?! You’re right, maybe this concept is not terribly practical for folks in those particular circumstances. But consider someone who is semi-retired, who has very little earned income beyond some interest and dividends.  How about a married individual, with part-time work earnings of $10,000?  This individual could convert as much as $14,000 to a Roth IRA – and owe no income tax at all!

For future planning, below are the top levels of income for the brackets for 2019. If over 65 and/or blind, add $1,300 if married, or $1,650 if single. The standard deduction for 2019 is $24,400 if married and $12,200 if single, so if you itemize, add any amount above those limits:

2019 Top Income Levels Per Bracket

Tax Bracket
























As I’ve mentioned before, unless you’re very, very competent with income taxes, please, do yourself a favor and run any plans of this nature past a tax professional.  It’s well worth the cost – you don’t want to make mistakes on this sort of thing!  And if you rely on a web page as your tax advisor, don’t expect the page to represent your interests before the IRS if something gets screwed up. Regardless of the fact that the tax prep website is supposed to be correct, you’re still liable for the tax and penalties if there’s a mistake!


  1. Wilbur says:

    Common advice for Roth conversions is to fill out the bracket. Can spilling into the next bracket make sense if it is likely that RMD’s will be in a higher bracket? For example, instead of converting just enough to fill out the 10% bracket, convert additional to be taxed at 12% rate if you think your RMDs will hit marginal rate higher than 12%. Spilling over into 24% or higher brackets is less attractive and “riskier” than spilling over from 10% to 12%.

  2. You say to add in all your sources of income, but you don’t mention social security. Shouldn’t this be added in along with dividends and capital gain distributions, as well as realized capital gains?

    1. jblankenship says:

      Yes, capital gains and the taxable portion of your Social Security should be included. It’s everything that makes up the MAGI. See IRS Publication 590 Worksheet 2-1 for all the details. (It’s on page 42 of the 2017 version that I’ve linked to.)

  3. Scott says:

    Excellent post Jim. Below are a few additional things taxpayers should consider when contemplating Roth conversions:

    The death of a spouse usually results in the remaining spouse filing as a single taxpayer in future years. Depending on whether income remains the same, decreases or increases post-passing, the survivor may find they are in a higher tax bracket. This can be additional justification for a Roth conversion.

    It may also be worth considering the tax brackets of your non-spouse beneficiaries. Are they in, or likely to be in, significantly higher or lower tax brackets. A higher bracket beneficiary may increase the justification for Roth conversions and/or change how you apportion assets to multiple beneficiaries. Those with individual beneficiaries and charitable intent may also want to consider making their charitable legacy via tax deferred account beneficiary designations, rather than from assets that receive step-up-basis.

    For those contemplating Roth conversions, who are in the 22% or higher brackets and receive Medicare Part B, C and/or D, consideration should be give to premium increases incurred by higher income beneficiaries. These start taking affect with a MAGI of $70,000 if single and $170,000 if married, e.g., filling out the 22% bracket would result in higher premiums two years down the road. If a Roth conversion is a one time event, and income subsequently declines, the higher amount would only be in force for one year. Each person will need to consider whether higher premiums negate the Roth conversion benefit.

    Thanks for diligently publishing such useful content!

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