In Part 1, we explained how a Roth IRA conversion works and why the age 73 / age 75 RMD rules create a powerful planning window.
Now in Part 2, we move from theory to structured comparison.
For the HuuTri.org 55+ community, the real question is not:
“Is Roth better?”
The real question is:
“When does Roth make sense for me?”
This article provides three decision frameworks:
- Traditional vs Roth side-by-side comparison
- Medicare IRMAA impact planning
- California vs Georgia vs Nevada vs Texas state tax comparison
1) Traditional IRA vs Roth IRA — Side-by-Side Comparison
|
Feature |
Traditional IRA |
Roth IRA |
|---|---|---|
|
Tax on Contributions |
Pre-tax or deductible |
After-tax |
|
Tax on Growth |
Tax-deferred |
Tax-free |
|
Tax on Withdrawals |
Taxed as ordinary income |
Tax-free (qualified) |
|
RMD Required? |
Yes (Age 73 or 75 depending on birth year) |
No lifetime RMD |
|
Best For |
Lower tax rate in retirement |
Same or higher future tax rate |
|
Impact on Medicare IRMAA |
Withdrawals increase income |
Qualified withdrawals do NOT increase income |
|
Estate Planning |
Heirs pay income tax |
Heirs receive tax-free income (subject to distribution rules) |
|
Tax Flexibility |
Limited once RMD begins |
High flexibility |
Key Insight
Traditional IRA = Tax later
Roth IRA = Tax now
The decision depends largely on:
- Future tax expectations
- Medicare premium sensitivity
- RMD exposure
- Estate planning goals
2) Medicare IRMAA: Why Roth Conversion Timing Matters
Many retirees underestimate how Roth conversions affect Medicare premiums.
Medicare uses a 2-year look-back rule to determine premiums.
Example:
Your 2026 Medicare premiums are based on your 2024 income.
2024 IRMAA Income Thresholds (Married Filing Jointly)
|
MAGI |
Part B Monthly Premium (Per Person) |
|---|---|
|
≤ $206,000 |
Standard premium |
|
$206,001 – $258,000 |
Higher premium tier |
|
$258,001 – $322,000 |
Higher tier |
|
$322,001 – $386,000 |
Higher tier |
|
> $386,000 |
Highest tier |
Single filers have roughly half those thresholds.
Why This Matters for Roth Conversions
If you convert:
$150,000 in one year
That entire amount increases Modified Adjusted Gross Income (MAGI).
That may:
- Push you into a higher IRMAA bracket
- Increase Part B premiums
- Increase Part D premiums
For some retirees, IRMAA increases can cost several thousand dollars per year per spouse.
Smart Planning Strategy
Instead of converting large lump sums:
✔ Convert gradually
✔ Stay just under IRMAA thresholds
✔ Model income over multiple years
This is especially important between retirement and age 73 or 75 (RMD age).
3) State Tax Comparison: California vs Georgia vs Nevada vs Texas
State tax environment significantly impacts Roth conversion decisions.
Below is a simplified retirement tax comparison.
California
- State income tax: Yes (up to 13.3%)
- Taxes IRA withdrawals: Yes
- Taxes Roth qualified withdrawals: No
- Social Security taxed: No
Implication:
Large Roth conversions may trigger high state tax in the year of conversion.
California residents must model both federal + state tax impact.
Georgia
- State income tax: Yes (flat rate under new tax reform structure)
- Retirement income exclusion available for seniors
- Social Security taxed: No
Implication:
Georgia offers more favorable retirement income treatment compared to California.
Roth conversion state tax cost is typically lower than California.
Nevada
- State income tax: None
- IRA withdrawals taxed: No state tax
- Social Security taxed: No
Implication:
Roth conversion only triggers federal tax.
No state tax drag.
This increases the attractiveness of Roth conversions.
Texas
- State income tax: None
- IRA withdrawals taxed: No state tax
- Social Security taxed: No
Implication:
Similar to Nevada.
Retirees converting in Texas avoid state income tax on the conversion.
Practical Example
Married couple converts $120,000.
Federal tax: applies everywhere
State tax impact:
California → Could add thousands in state tax
Georgia → Moderate impact
Nevada/Texas → $0 state income tax
State residency can materially change conversion strategy.
4) Integrated Strategy Framework
When evaluating Roth conversion, consider three layers:
Layer 1 — Federal Tax Bracket
Layer 2 — Medicare IRMAA Exposure
Layer 3 — State Income Tax Environment
All three interact.
Who Benefits Most From Conversion?
Most likely to benefit:
✔ Born 1960 or later (RMD starts at 75)
✔ Large Traditional IRA balances
✔ Living in no-income-tax states
✔ In lower tax bracket during retirement gap years
✔ Concerned about Medicare premium spikes later
Who Should Be More Cautious?
⚠ High-income California residents
⚠ Near IRMAA threshold
⚠ Planning large one-time conversions
⚠ Unable to pay conversion tax from outside assets
Final Perspective for the HuuTri.org Community
Roth conversion is not a one-year decision.
It is a multi-year strategy involving:
- Federal tax brackets
- Medicare premium thresholds
- State tax residency
- RMD timing (Age 73 or 75 depending on birth year)
For those born in 1960 or later, the age 75 RMD rule creates a longer planning runway.
But smart planning means:
Convert intentionally
Model income
Avoid unnecessary IRMAA spikes
Consider state residency
-Phan Trần Hương-
Sources for Further Reading
- Internal Revenue Service (IRS) — Roth IRAs
https://www.irs.gov/retirement-plans/roth-iras - Internal Revenue Service (IRS) — Required Minimum Distributions (RMDs)
https://www.irs.gov/retirement-plans/required-minimum-distributions-rmds - Medicare.gov — Income-Related Monthly Adjustment Amount (IRMAA)
https://www.medicare.gov/your-medicare-costs/part-b-costs - Social Security Administration — IRMAA Overview
https://www.ssa.gov/benefits/medicare/irmaa.html - Tax Foundation — State Individual Income Tax Rates and Brackets
https://taxfoundation.org/publications/state-individual-income-tax-rates-brackets/ - SECURE 2.0 Act Summary — RMD Age Changes
https://www.congress.gov/bill/117th-congress/house-bill/2954