Sizing a Q4 Roth Conversion Around the Senior Deduction Phase-Out and the IRMAA Tiers

Picture mid-November. Your client couple, both 67, have an IRA balance and a bracket with room in it. Last year you would have sized a fourth-quarter Roth conversion against two ceilings: the top of the bracket and the next IRMAA tier (the Income-Related Monthly Adjustment Amount, Medicare's income-based premium surcharge). This year there is a third number on the page. For tax years 2025 through 2028, each spouse 65 or older can claim an extra $6,000 deduction, and that deduction shrinks as modified adjusted gross income (MAGI) rises. A conversion is exactly the kind of income that shrinks it.

The effect is gentler than an IRMAA cliff, because it builds gradually instead of landing in one step, but it sits in the same income range and it is easy to leave out of the sizing. Here is how the pieces stack, a worked example, and how to explain it to clients, including Spanish-speaking households.

Two thresholds that overlap

The senior deduction is a bounded hill. It starts shrinking at one MAGI and is fully gone at another, and the most it can ever cost is the deduction itself times the marginal rate. IRMAA works differently: it is a cliff that triggers a full tier of surcharge the moment MAGI crosses a line, and it reads income from two years earlier.

The two zones overlap for most clients in the conversion years. For a married couple, the first 2026 IRMAA tier starts inside the deduction's phase-out zone. For a single filer, the phase-out zone spans the first three IRMAA lines.

The IRMAA lines are the 2026 tiers, which Medicare sets from the 2024 return. The tiers that will apply to a 2026 conversion's premiums in 2028 have not been published yet, so treat these as stand-ins and rebuild the table when CMS releases the new figures.

The mechanics, straight from the form

Schedule 1-A, Part V does the work. MAGI starts from Form 1040, line 11b, plus a short list of add-backs for Puerto Rico and foreign-income exclusions. The form then subtracts the threshold ($75,000, or $150,000 if married filing jointly), multiplies the excess by 6%, and subtracts that from $6,000. The same reduced amount is applied to each spouse who qualifies.

Two practical consequences follow:

• Per qualifying spouse, the deduction falls 6 cents per dollar in the zone. For a couple where both qualify, the combined deduction falls 12 cents per dollar. At a 24% marginal rate, that adds roughly 2.9 points on top of the bracket for every converted dollar inside the zone.
• The cost is capped. A couple with both spouses qualifying loses at most $12,000 of deduction across the whole $100,000 zone. At 24%, that is $2,880 in total, spread through the zone rather than landing in one step.

Eligibility has its own checks: each person must turn 65 by December 31, each needs a valid Social Security number on the return, and married couples must file jointly to claim it. The deduction is available whether or not the client itemizes.

A worked Q4 example

Assume a married couple, both 67, filing jointly. Their MAGI before any conversion is $190,000. Assume conversion dollars are taxed at 24% (for illustration; use each client's actual marginal rate), and assume their Medicare MAGI and their Schedule 1-A MAGI are the same number, which you must confirm client by client.

• Convert $40,000. MAGI becomes $230,000. The combined deduction loses $4,800, about $1,152 of extra tax. It also crosses the $218,000 line, so at 2026 tiers each enrolled spouse pays an extra $81.20 a month in Part B, about $1,949 for the household for one year, two years later. Adding the $9,600 of bracket tax on the conversion, the stack comes to roughly $12,700, or about 32% of the conversion, against 24% from the bracket alone.
• Convert $28,000 and stop at the line. MAGI becomes exactly $218,000, which is at the tier edge and not over it. The deduction loses $3,360, about $806 of extra tax, and there is no IRMAA step. Bracket tax is $6,720.

The remaining $12,000 can wait for January, when a new tax year resets the phase-out and the lookback. That is the whole case for the smaller December number: the first $28,000 costs about 27% all in, while the last $12,000, taken in the same year, would cost about 43%.

Sizing rules for the fourth quarter

• Project full-year MAGI first. Pension, Social Security taxable amount, interest, dividends, expected fund distributions and any required minimum distribution. A required minimum distribution comes out before any conversion and cannot itself be converted.
• Compute three headrooms. Distance to the top of the bracket, distance to the next IRMAA line, and where the client sits in the deduction's phase-out zone. Size to the smaller of the first two, then price the third.
• Leave a buffer for December distributions. A late capital-gain distribution can push a number you sized to the dollar over the line.
• Spread across tax years when the zone and a cliff coincide. A conversion that straddles December and January splits the income across two returns and two sets of thresholds.
• Remember the sunset. The deduction is written for 2025 through 2028. The extra phase-out cost is a feature of conversions in those years, so a multi-year plan should model the years after 2028 without it.

Explaining the stacked effect, including in Spanish

Clients rarely hold three thresholds in their head. Give them one sentence per layer: "The bracket is the tax on the conversion. The new senior deduction gets a little smaller as your income rises. And Medicare looks back two years, so this December can raise your premiums in 2028."

For Spanish-speaking households, keep the register respectful and the terms anchored to the paperwork. With an older client, usted is the default: "Don Ernesto, convertir este año no tiene nada de malo; lo que queremos es que sepamos juntos cuánto cuesta cada dólar de más." Say IRMAA as the client will see it on the letter, and gloss it once: the surcharge Medicare adds to the monthly premium when income is higher. Offer the one-page comparison in Spanish and let adult children join the meeting when the client wants them there. The decision stays with the client, and the family's role is to help read the page.

Monday morning

• Add one column to review prep: each client's MAGI before any Q4 conversion, next to the senior-deduction zone and the next IRMAA line.
• Flag every client 65 or older who is considering a conversion before December 31, and show the three headrooms.
• Put the stack in writing. Bracket tax, deduction loss and the expected 2028 Medicare surcharge, each as a number the client can approve.
• Check the filing details: valid Social Security numbers, joint filing for couples, and whether a required minimum distribution has already been taken.

Sources and what we could not verify

• IRS: enhanced deduction for seniors eligibility: $6,000 per eligible person, 2025 to 2028, $12,000 for a couple, joint return, $75,000 and $150,000 thresholds.
• IRS: 2025 Schedule 1-A, Part V: MAGI starting point and add-backs, the 6% reduction, the $6,000 base.
• CMS: 2026 Medicare Parts A and B premiums and deductibles: 2026 IRMAA tiers and total Part B premiums.
• SSA POMS HI 01101.031: 2026 premiums use the 2024 return, with 2023 as the fallback.

We did not verify how the IRMAA MAGI definition compares line by line with Schedule 1-A MAGI, and the 2028 IRMAA tiers are not yet published, so both are flagged above as items to confirm. If you serve bilingual, multigenerational households, get listed on WiseNest Connect and meet families who want this kind of planning conversation.