The Hidden Pitfall Nobody Talks About When Converting to a Roth in 2026

Many people overlook a critical pitfall when considering Roth conversions this year: while moving money into a Roth account can feel like a smart financial move, the tax consequences can extend far beyond your immediate tax bill. One trap that catches people off guard is the connection between Roth conversion income and Medicare premiums—a relationship that unfolds over years and costs thousands.

Why Roth Conversions Seem Like a Great Idea

There are solid reasons to move money into a Roth account. Once your funds are there, investment gains grow completely tax-free. When you retire, you gain flexibility that traditional retirement accounts don’t offer—no required minimum distributions hanging over your head, and you can withdraw your money without triggering taxes. For high earners who couldn’t contribute directly to a Roth IRA, or anyone who missed earlier opportunities, a conversion represents a chance to capture these long-term benefits.

The Medicare Surcharge Pitfall That Can Derail Your Retirement Plans

Here’s where the pitfall emerges: when you execute a Roth conversion, the transferred amount counts as income for that tax year. If this income bump pushes your modified adjusted gross income (MAGI) above certain thresholds, Medicare will hit you with surcharges two years later. These aren’t small fees—they’re called Income-Related Monthly Adjustment Amounts (IRMAAs), and they can meaningfully increase what you pay for Medicare Part B and Part D coverage.

The thresholds aren’t terribly high. Single filers with a MAGI above $109,000 in 2026 trigger these surcharges, as do married couples filing jointly with a MAGI above $218,000. Since a large Roth conversion can easily push your income past these levels, you could suddenly face substantially higher monthly Medicare costs for years to come.

How MAGI Thresholds Create a Financial Trap

The timing trap here deserves attention: the surcharges don’t hit immediately. They arrive two years after the year in which your income spiked. That delayed consequence means people often don’t connect the dots. They do their conversion in 2026, pay the income tax that same year, and then in 2028 are blindsided by unexpected Medicare premium increases that they didn’t budget for.

This is why many financial advisors emphasize the importance of looking ahead. A conversion that looks reasonable in isolation can become expensive when you factor in this downstream effect.

Spread Your Conversions to Avoid This Costly Mistake

Rather than moving a large sum into a Roth all at once, consider spreading conversions across multiple years in smaller increments. This strategy can keep your MAGI under the surcharge thresholds and let you capture the benefits of Roth ownership without triggering unnecessary Medicare costs. The extra effort in planning pays off.

Timing also matters. Years when your income naturally drops—perhaps after retirement but before you claim Social Security—are often ideal windows. You get the conversion benefits without the IRMAA surprise.

Work With Professionals to Navigate the Roth Conversion Maze

Given how interconnected tax planning and Medicare premiums have become, working with a qualified tax professional makes sense. They can model different conversion scenarios, calculate the true two-year cost including potential Medicare surcharges, and help you decide whether converting in 2026 makes sense for your situation—or whether waiting or spreading conversions serves you better.

The bottom line: Roth conversions can absolutely be beneficial, but the pitfall is real, and it’s expensive. Plan strategically, consider the Medicare implications, and avoid the trap that catches so many people by surprise.