Published: May 10, 2026 • By Rick Allison, CFP®
With potential tax law changes on the horizon, now may be an excellent time for many St. Johns County and Jacksonville retirees to consider a Roth conversion strategy.
Rome wasn't built in a day. Neither should Roth Conversions be done in a day. It is better to manage the tax bracket and do partial conversions each year. Keep it under the 22% bracket at most. Typically, Roth Conversions are more appealing to retires when their income is lower. More specifically, between age 60 and 67. Even sooner if you are retired before age 60.
If you are already retired, then you have to watch out for IRMAA. You want to keep your income below the IRMAA threshold. For 2026, this is $109,000 for single filers and $218,000 for married filing jointly. If you exceed these thresholds, then Medicare looks back two years and charges you an extra Medicare premium. It is important to stay under these thresholds, because this IRMAA penalty can be excessive.
One thing to keep in mind about Roth Conversions, is the fact that each year that you convert, there is a five (5) year holding period before the principal and earnings are considered tax free. So, in effect, you have a laddered period before your entire Roth Conversion IRA is considered fully tax free. If you do annual Roth Conversions for example, over a six (6) year period, then you would have six different tranches. The first tranche would be tax free after five (5) years. The last tranche would not be available until starting after year eleven (11). A lot of people misunderstand this fact, because they think it works like a regular Contributory Roth IRA. Roth Conversions work differently with these five (5) year holding periods. There is a 10% penalty for early withdrawals during the first five (5) years of each conversion. This is why it is so important to understand this issue.
Do you have a 401(k)? Are you thinking about converting part or all of you 401(k) to a Roth 401(k)? The same strategy above applies here as well. It is probably best to convert portions of your regular 401(k) balance periodically when you can afford to pay the tax from another source like a savings or a brokerage account.
Your particular 401(k) plan also needs to allow conversions to a Roth 401(k). Most larger 401(k) plans have this ability.
Unfortunately, you cannot convert Inherited IRA money to a Roth IRA. There is no way around it.
With Inherited IRA's, you have to pull all (100%) of the money out by the last day of the 10th year following the death of the person you inherited the money from if you are a non-spouse beneficiary. If you are a spouse beneficiary, then you can treat the Inherited IRA as your own.
With Inherited Roth IRA's, as long as the original Roth IRA was established for five (5) years or more, then distributions are tax-free! If the original Roth IRA was not established for the full five (5) years and you are a non-spouse beneficiary, then you would have to take required minimum distributions over a 10 year period. Alternatively, for non-spouse beneficiaries can withdraw it all on the last day of the 10th year. However, this might not make sense, because it would increase your tax liability if the account grew over that time period. Generally, it is better to take it out each year for non-spouse beneficiaries.
Generally, it is better for the spouse to treat the Inherited Roth IRA as their own. It is worth a discussion however.
If there are multiple non-spouse beneficiaries and RMD's are required, then each beneficiary must open their own Inherited IRA or Inherited Roth IRA in a timely manner. Many qualified custodians require multiple non-spouse beneficiaries to open their Inherited IRA by September of the year following the death of the original IRA account owner. It is worth being aware of this practice by custodians.
Important: Every situation is different. We analyze potential Roth Conversions for each client to determine if a partial or full Roth conversion makes sense.
Would you like to discuss whether a Roth conversion strategy is right for you? Call Rick at (904) 460-2700.
This article is for informational purposes only and does not constitute legal advice, personalized investment or tax advice. Please consult with your legal or tax professional before making any decisions.