Roth conversion despite being in 37% tax bracket

I plan on converting my large IRA into my 5-year-old Roth, 25% in each of the four years 2022-2025. I’m 65, still working full time and plan to work until 12/31/2025. My work W-2 puts me in the 37% tax brackets. So all the converted IRA amounts are taxed at 37%.
Questions:
-should I convert the whole 7-figure IRA amount in one fell swoop in 2022, or split it over the 4 years?
-does it still make sense to convert to my Roth when I’m already in the 37% bracket?



Other factors aside, if you are paying Medicare Part B or Part D premiums they are based on your past year AGI. Spreading the conversion across four years might put you in a top bracket four years whereas cramming it into a single year might only raise your premium following that one year. The devil is in the details, and this may be in the noise relative to other issues.



Great point. yes, starting to pay Medicare B, D, IRMAA for both, and also supplement Plan G. So would make sense to convert the whole amount now. But like you said, the devil is in the details. Like what if I have a health or work issue that causes my W-2 income to drop in 2024 or 2025, then it would be better to convert in those years. Too many permutations…..



  • Medicare Part B & D premiums are based on your IRMAA MAGI from two years prior.
  • E.g. 2026 premiums would be based on your 2024 IRMAA MAGI.
  • It would be best to complete Roth conversions by 2023, it starting Medicare Parts B and D in 2026.


How much you convert before your RMDs begin likely depends on how much you plan to convert each compared to your W-2 earnings. SInce your W-2 is apparently substantial, your best conversion window might the couple of years after you retire and before your RMDs begin at 72. You will have to do some detailed number crunching year by year.



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