Every Year a Retiree Skips a Roth Conversion Before 73 Costs About $3,500 in Extra Tax Later. Here’s the Math on the Average $167,970 Balance.

Converting traditional IRA funds during gap years at the 12% bracket rate can prevent those same dollars from being taxed at 22% or higher under RMDs.

Roth conversions raise modified adjusted gross income, potentially triggering IRMAA Medicare surcharges above $109,000 for individuals, with a two-year lookback affecting future premiums.

Converting only beats doing nothing if future tax rates are actually higher. Retirees planning qualified charitable distributions or near IRMAA thresholds may rationally skip conversions.

The headline places a specific number on a decision most retirees never explicitly make: whether to convert some of a traditional IRA or 401(k) into a Roth account during the low-income years between retirement and the required beginning date for withdrawals. That window is often called the gap years, and the capacity inside each tax bracket during those years is real, temporary, and non-refundable. Skip it, and the same dollars come out later under required minimum distributions (RMDs), taxed at whatever rate applies then.

That headline balance comes straight from the official benchmark: Vanguard's How America Saves 2026 report found that the average 401(k) balance reached a record $167,970 at year-end 2025. While the median sits much lower at $44,115, this $167,970 average represents the realistic target for long-tenured savers heading into their gap years and provides the baseline for the calculations below.

A gap year is any tax year after wages stop but before RMDs begin. An RMD is the annual withdrawal the IRS requires from most pre-tax retirement accounts once the account holder reaches the required beginning age. Under SECURE 2.0, the required beginning age depends on birth year. It is 73 for one birth cohort and 75 for those born in 1960 or later. A retiree in the later cohort has a longer conversion window, which strengthens rather than weakens the case for using it.

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Bracket capacity is the room left inside a given marginal rate before income spills into the next one. The marginal rate is the tax on the next dollar of income, not the average rate on all income. For a single filer in tax year 2026, the standard deduction is $16,100, the 12% bracket applies above $12,400 of taxable income, and the 22% bracket begins above $50,400 of taxable income, per IRS Revenue Procedure 2025-32. Married filing jointly figures are roughly double, with the standard deduction at $32,200 and the 22% bracket beginning above $100,800.