A bracket filling example, worked end to end
By Mario Bailey · Published · Last reviewed
The scenario: a married couple born 1966 and 1968, $1.4M in traditional IRAs, $200K already in Roth, $250K of wages until retirement at 65, living in California. The recommended strategy for these inputs is to fill the 12% bracket, worth $255,064 in lifetime tax and IRMAA versus doing nothing. Here is exactly how the first conversion years unfold.
Step 1: find the headroom
In 2026 the 12% bracket for married filing jointly runs from $24,800 to $100,800 of taxable income, and the standard deduction is $32,200. Headroom is the bracket ceiling minus taxable income before conversion; the conversion fills exactly that gap and stops.
Step 2: the transition into conversion years
| Year | Age | RMD | Conversion | Taxable income | Federal tax | State tax |
|---|---|---|---|---|---|---|
| 2030 | 64 | $0 | $0 | $226,457 | $38,147 | $16,182 |
| 2031 | 65 | $0 | $122,650 | $96,352 | $11,001 | $4,627 |
| 2032 | 66 | $0 | $122,650 | $95,394 | $10,872 | $4,627 |
| 2033 | 67 | $0 | $124,100 | $128,582 | $15,716 | $4,743 |
The first row is the last working year: wages crowd out the bracket and the engine converts nothing. Conversions begin the year wages stop. The table is the engine's actual output for this scenario, not an illustration.
Step 3: what the conversions bought at RMD age
The payoff arrives when Required Minimum Distributions begin. In 2041, the first RMD year for this couple (age 75), the do-nothing path is forced to withdraw $136,389, producing $131,655 of taxable income and $15,080 of federal tax that year. The recommended path, having spent the prior decade moving the balance, is forced to take $66,112, with $61,377 taxable and $6,647 of federal tax. Same year, same household; the difference is the shrunken traditional balance the divisor applies to.
Step 4: the lifetime result
Lifetime federal and state tax under the recommended path: $697,026, plus $112,435 in IRMAA premiums, against $952,090 and $112,435 for doing nothing. The difference, $255,064, is the value of the strategy for this one household. Different balance, state, or Social Security timing produces a different answer.