December Roth conversion checklist

By Tom, CPA · Updated October 27, 2026

Part of: Easy Tax Strategies

TL;DR: In December you know almost all of your 2026 income, which makes it the best month to size a Roth conversion. Estimate taxable income, convert up to the top of your target bracket (for example $100,800 of joint taxable income for the 12% bracket), check ACA, IRMAA and senior deduction thresholds, pay the tax from outside the IRA if you can, and make sure the money leaves the traditional IRA by December 31.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Roth conversions are a lot like holiday shopping: the best deals go to people who know their budget, and the worst outcomes happen at 4 PM on December 31. A conversion moves money from a traditional IRA or 401(k) to a Roth, you pay ordinary income tax on it now, and future growth is tax-free. The trick is converting just enough to fill a low bracket without spilling into a higher one or tripping a benefit cliff.

December is perfect for this because the year is almost over and your income is no longer a mystery. Here's the 60-minute checklist, with 2026 figures from the IRS as of October 2026. For the strategy behind it, see the Roth conversion planning guide and the Roth conversion ladder.

CPA Warning Label: Conversions can't be undone: recharacterization was eliminated after 2017, so a conversion sized on a bad income estimate stays a bad conversion.

Estimate income

Time: 20 minutes. Build a quick projection of 2026 income:

• Year-to-date wages from your latest pay stub, plus remaining paychecks and any bonus.
• Interest and dividends so far, plus an estimate for December distributions. Many funds pay large capital gain distributions in December; check fund company estimates.
• Realized capital gains and losses from your brokerage's year-to-date gain/loss report.
• Self-employment or rental net income.
• Social Security benefits, pensions and other IRA withdrawals.
• Subtract above-the-line deductions (pre-tax 401(k), HSA, half of SE tax) and the standard deduction: $32,200 joint or $16,100 single for 2026, plus extra amounts for age 65+ and the new $6,000 senior deduction if eligible.

The result is your estimated taxable income before any conversion. Last year's return is a good template.

Bracket room

Time: 10 minutes. Pick a target bracket and subtract.

Then check the cliffs that don't appear in the brackets:

• Capital gains: a conversion is ordinary income and stacks under your gains, so it can push qualified dividends out of the 0% bracket (ends at $98,900 joint taxable income).
• ACA premium credit: for 2026 coverage, households above 400% of the federal poverty level ($84,600 for two people) get no credit.
• IRMAA: Medicare premiums use income from two years earlier. A 2026 conversion can raise 2028 premiums if you're on Medicare then. In 2026 IRMAA starts above $109,000 single and $218,000 joint (SSA).
• Senior deduction: the $6,000 deduction phases out above $75,000 single and $150,000 joint MAGI.
• Social Security: extra income can make more of your benefits taxable, up to 85%.

Model it with the Roth conversion calculator and the marginal tax rate calculator.

Withholding

Time: 5 minutes. Decide how to pay the tax on the conversion.

• Best: pay from a taxable account or cash. The full converted amount stays in the Roth.
• If you're under 59½: tax withheld from the conversion is a distribution, not converted, and can be hit with the 10% additional tax. Avoid it.
• If you're 59½ or older: having the custodian withhold federal tax using Form W-4R is a clean way to pay. Withholding is treated as paid evenly through the year, which can also fix underpaid earlier quarters (Publication 505).
• Estimated payment alternative: make a fourth-quarter payment by January 15, 2027. Check the safe harbor: 100% of 2025 tax, or 110% if 2025 AGI was over $150,000.

Execute by 12/31

Time: 10 minutes online. A conversion counts in the year the money leaves the traditional account. Unlike IRA contributions, there's no April grace period.

• Custodians often set internal cutoffs a few business days before December 31, especially for paper requests or in-kind transfers. Aim for mid-December.
• You can convert shares in kind rather than selling. The value on the conversion date is the taxable amount.
• Converting in a market dip means more shares for the same tax.
• Roth 401(k) in-plan conversions follow your plan's rules and processing times. See in-plan Roth conversions.
• Once done, it's permanent. No recharacterization since 2018 (Publication 590-B).

Illustration

Rae and Sam, both 58, retired. December estimate: $18,000 of interest and pension, $22,000 of qualified dividends, no other income. Taxable income before conversion: $18,000 + $22,000 − $32,200 = $7,800, all of it dividends, because the deduction swallows the ordinary income. On paper they could convert about $93,000 and still stay in the 12% bracket. But every converted dollar pushes the $22,000 of dividends up the stack, and the dividends lose their 0% rate once taxable income passes $98,900. They also buy marketplace insurance, so they cap MAGI at $84,600: a conversion of $44,600. Taxable income becomes $52,400, with $30,400 ordinary (tax about $3,150) and the dividends still at 0%. They pay the tax from savings and convert on December 12.

Records

• Save the confirmation showing the date and value converted.
• Form 1099-R arrives in January from the traditional IRA custodian, usually with code 2 or 7 in box 7.
• Form 5498 from the Roth custodian in May shows the conversion.
• Form 8606, Part II reports the conversion. If you ever made nondeductible IRA contributions, the pro-rata rule decides how much is taxable, using all your traditional, SEP and SIMPLE IRA balances on December 31 (Form 8606 instructions).
• Track each conversion's five-year clock in a simple spreadsheet if you're under 59½, for the 10% additional tax on early withdrawals of converted amounts.

One last sanity check: if your December estimate is shaky (a bonus not yet paid, a K-1 coming in March), convert less. You can always convert more next year, but you can never un-convert. Splitting conversions across several years usually beats one giant conversion that climbs two brackets.

Related: custodial Roth IRAs for kids, and the 529-to-Roth rollover. Back to easy tax strategies.