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This Retirement Withdrawal Strategy Could Save You $12,000 in Taxes (But Most Retirees Skip It)

Slash your lifetime tax bill.

By Josh Koebert , Edited by Lisa Dammeyer

Updated Nov. 10, 2026

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Roth conversions during your low-income retirement years may be one of the most overlooked tax moves available. With the new $6,000 senior deduction through 2028, plus higher standard deductions, today's retirees are working with one of the widest conversion windows in recent history.

That creates room to shift traditional IRA funds at lower tax rates now, potentially saving $12,000 to grow your wealth. Here's how to make the right moves.

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The tax strategy most retirees overlook

The tax strategy we're talking about is called a Roth conversion. It involves moving money from a traditional IRA into a Roth IRA, which requires paying taxes on the converted amount in the current year. In return, future growth and qualified withdrawals remain tax-free.

Many retirees overlook this by focusing on deferring taxes. As income rises later from required minimum distributions (RMDs) and Social Security, tax rates may increase, reducing the benefit of waiting instead of converting during lower-income years.

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The conversion window

Your "conversion window" refers to the years when your taxable income is unusually low. It opens after you retire but before RMDs begin at age 73 or 75. Typically, this occurs after your wages have stopped but before your Social Security is fully active.

During this period, the 2026 standard deduction of $32,200 (couples) or $16,100 (singles), plus the $6,000 per person deduction, can create room to convert at 10% or 12% rates.

Why 2025-2028 gives you the biggest window ever

The One Big Beautiful Bill Act added a temporary $6,000 senior deduction per person age 65 and older through 2028. It stacks on the regular standard deduction and the existing extra senior deduction. For a married couple with two partners age 65 or older, that totals roughly $12,000 in deductions in 2026.

No recent period in history has offered this much bracket space. The window closes after 2028, so you can act now or lose it.

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How this strategy could save you $12,000 or more

The savings come from paying taxes at a lower rate now instead of a higher rate later.

For example, converting $50,000 while in the 12% bracket results in about $6,000 in taxes, compared to roughly $11,000 at the 22% bracket. You could potentially save $12,000 or more after factoring in reduced RMDs and lower Medicare premiums.

How to take advantage of this tax move

A smart conversion strategy begins with estimating your income and coordinating your withdrawals and conversions within favorable tax brackets.

Review current federal tax brackets

Check the latest federal tax brackets to understand where your income falls. Knowing the thresholds for each bracket helps you decide how much to convert without pushing into a higher rate.

Small increases in income can shift portions of your conversion into higher brackets, so having a clear view of bracket limits allows you to plan conversions more precisely.

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Timing matters more than most retirees realize

Converting too much in a single year might push your taxable income into a higher bracket, reducing the advantage of the strategy. Still, waiting too long can limit your flexibility once RMDs begin and required withdrawals raise your income.

Early retirement years often present lower income levels, which may allow more efficient conversions. Aligning timing with these lower-income periods lets you stay within favorable brackets while managing overall tax exposure.

Coordinate conversions with withdrawals

Withdrawals from retirement accounts count as taxable income, just like conversions. If you're not careful, combining both in the same year may push your income into a higher bracket.

Planning withdrawals and conversions together allows you to balance total income more effectively. Such a strategy helps you stay within your target tax range while still meeting your spending needs.

Factor in Medicare premiums

Higher income levels can increase Medicare Part B and Part D premiums through income-related adjustments. If your 2026 Modified Adjusted Gross Income (MAGI) is over $109,000 or over $218,000 (for married couples), your monthly costs will be higher.

Accounting for these additional costs helps you avoid surprises and gives you a more complete view of the true impact of each conversion.

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Work with a tax professional to model different scenarios

Run your numbers with a tax professional who understands retirement tax planning. They can review your full situation, including taxes, Medicare premiums, and how your Social Security may be taxed.

A personalized projection shows how much room you have in each bracket and whether conversions could realistically save you $12,000 or more. Starting early in the year also gives you time to adjust and complete conversions before year-end deadlines.

When this strategy may not make sense

If you expect to remain in a very low tax bracket throughout retirement, paying taxes upfront may not provide much benefit. The same applies if you need most of your savings for near-term expenses, leaving little flexibility for conversions.

In those situations, maintaining liquidity and steady cash flow is better than long-term tax planning, especially if covering essential living costs depends on your available assets rather than future tax optimization.

Bottom line

The temporary $6,000 senior deduction through 2028 creates a wide window to convert at lower tax rates and build tax-free income for the future. This may reduce lifetime tax exposure and stretch your retirement dollars further.

Still, don't overlook how conversions can influence Medicare premiums and state taxes in retirement. Checking with a tax advisor may help you decide how much to convert with greater confidence.

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