Say you're in your late 50s, newly retired, and you move $10,000 from your 401(k) into a Roth this year. You're in the 12% bracket, so you budget about $1,200 in tax. For a lot of people that same move costs closer to $2,700. Nothing went wrong. It depends on what else you sold that year and the order the tax code counts it in.
That's most of what a lower tax bill in retirement comes down to: a handful of decisions about which year your income shows up, made in the years when you still get to decide. Wages and traditional IRA withdrawals go in first and fill the brackets from the bottom up. A Roth conversion stacks on top of those. Long-term capital gains sit on top of everything else.
The conversion window
Every dollar you move into a Roth is done being taxed, and so is everything it earns from that day forward. The window is the stretch after your last paycheck and before Social Security and required distributions start. Required distributions begin at 73, or 75 if you were born in 1960 or later. For most people that stretch is the lowest income they'll have as an adult, and it's the only one where they decide how much income shows up.
So fill the bracket on purpose. Convert up to the top of the 12% bracket and stop there. Do it in November or December, once you know what the year's income actually was. Nothing arrives in the mail telling you which year you should have done this.
The 0% rate on your own gains
If you're married and your taxable income lands under $98,900, your long-term capital gains are taxed at 0%. On your own, that number is $49,450.
Now go back to that $10,000 conversion. It stacked underneath the gains and pushed $10,000 of them over the line, where the rate jumps from 0% to 15%. Twelve cents on the conversion plus fifteen cents on gains that would have been free. That's the $2,700, and that's where the extra $1,500 came from.
When you have room under the ceiling instead, use it. Say you're married with about $60,000 of taxable income. That leaves roughly $39,000 of space under the 0% ceiling. Sell appreciated shares on purpose, take the gain, owe nothing on it, and buy the same fund back that afternoon. The wash sale rule only applies to losses, so there's no waiting period when you're selling a winner. That $39,000 of growth never gets taxed, not this year and not in 15 years when you sell for real. Your portfolio holds the same shares it held that morning. The only thing that moved is the number the IRS starts from later.
You pick one of these per year: convert in years you aren't selling winners, harvest gains in years you aren't converting.
The bill that costs more than any of the taxes
This one is a health insurance premium, and it may be the highest effective rate you ever pay. Retire before 65 and you're buying your own coverage until Medicare picks you up. The government helps pay for it up to 400% of the federal poverty level, which in 2026 is $62,600 for a single person and $84,600 for a couple. A dollar under and you get help with your premiums. A dollar over and you get none.
Take a 63-year-old couple in West Virginia on a gold plan making about $85,000. Their premium ran about $300 a month last year with the subsidy. For 2026 without it, it's $4,562 a month. Their income didn't change and their health didn't change. The rule that had been protecting people above that line expired at the end of 2025, and the old cutoff came back.
Watch what that does to the conversion math. Somebody stops working at 57 with most of the money in a traditional 401(k) and converts to the top of the 12% bracket every year until Social Security starts. Put the insurance line into the same spreadsheet and the answer inverts. The right conversion is suddenly tens of thousands of dollars smaller every year until they turn 65.
So if you're on a marketplace plan, find the subsidy limit before you convert a dollar in any year before 65, and count your income the way the insurance rules do: everything that came in that year, including the conversion, before the standard deduction comes off. Measured that way, the insurance line usually sits below the top of your bracket, so it decides how much you convert. Harvested gains count against you too. That's the rule as it stands in 2026, and it's subject to change.
The HSA deadline
A health savings account is the only account in the tax code that goes untaxed at all three stages, and once Medicare covers you, you can't put money in at all. Sign up after 65 and Part A backdates up to six months, though never before the day you turned 65. File in July and coverage starts back in January, which turns every dollar you contributed since January into an excess contribution carrying a 6% penalty for every year it sits there. Stop contributing six months before you file for Medicare or Social Security, which signs you up for Part A automatically after 65.
The tax your kids pay
This is the one where you aren't the one writing the check. A regular brokerage account gets a step up in basis when you die, so whatever gain you built over 30 years disappears. If your kids sell it the next week, they owe nothing on that growth. The traditional IRA works the opposite way. Most non-spouse heirs have to empty it within 10 years, and every dollar comes out as ordinary income. An heir who is 45 and in peak earning years stacks your IRA on top of their own salary for a decade at their rate.
Two accounts, same balance. The brokerage is the best thing you can leave behind and the traditional IRA is the worst. So spend down the traditional IRA first in the low years and leave the appreciated brokerage alone. I hold a traditional 401(k), a Roth, an HSA, and a regular brokerage, with the buy-and-hold positions in the brokerage on purpose and anything that throws off ordinary income inside the IRA, where that income stays off this year's return.
You decide which year the money shows up
All of this comes down to that. While you're working, the paycheck lands when it lands, the taxes come out of it, and there isn't much left to decide. The day it stops, you get some of that control back. Selling shares to cover the bills hands it straight back, because the amount you sell gets set by what you need to live on and what the market says those shares are worth that day.
The alternative is income that shows up on a schedule you agree to in advance. Dividend stocks, high yield savings accounts and CDs, bonds and bond ladders, rental property, and private mortgage notes all do that. A private mortgage note is a loan on a specific house where the person holding the note is the lender instead of the bank. The borrower makes a payment of principal and interest every month the way a bank would collect it, and the loan is secured by a lien recorded at the county. A note can also sit inside a self-directed IRA, traditional or Roth, and held that way the interest doesn't land on this year's return.
If your paycheck has already stopped, two of these windows are open right now, the conversion window and the 0% gains window, and the insurance line decides how far you can use either.