5 Roth Conversion Questions Public & Federal Employees Actually Ask
Whether you're a teacher covered by TRS, a city employee under TMRS, a state worker in ERS, a county employee in TCDRS, a firefighter or police officer in a local pension fund, or a federal employee under FERS, you face a version of the same challenge: you have a defined-benefit pension, and most Roth conversion advice was written for people who don't.
Texas state and local employees supplement their pensions with 403(b) and 457(b) accounts. Federal employees use the Thrift Savings Plan (TSP). But the core planning problem is the same: a guaranteed monthly pension creates a permanent income floor that changes every assumption on which standard Roth guidance is based. Here are the five questions I hear most, and the straight answers I give.
Pension Systems Covered in This Post
Pension System | Who It Covers | Key Roth Planning Note |
|---|---|---|
TRS | Texas public school & university employees | Pension starts at retirement; no income gap — size conversions around pension floor |
TMRS | Texas city & municipal employees | Benefit varies by city match rate; the same bracket compression issue applies |
ERS | Texas state agency, legislative & judicial staff | 403(b)/457(b) supplements available; IRMAA and bracket rules same |
TCDRS | Texas county government employees | Defined benefit; model conversions around pension income floor |
TPAF / City Funds | Texas police, fire, and municipal workers | Often higher pension income; less bracket room — model carefully |
FERS | U.S. civilian federal workers (post-1987) | TSP is the supplemental account; Roth TSP in-plan conversions available in 2026; FERS + TSP + SS creates the same bracket compression |
CSRS | Federal workers hired before 1984 | Higher pension, typically no Social Security — bracket compression often severe; TSP still available for conversions |
The bracket compression problem and IRMAA risk are consistent across all of these systems — Texas state/local and federal. Specific numbers differ by tier and benefit amount, but the planning principles are the same.
Maybe — but this is where public employees need to slow down and run actual numbers instead of following generic advice.
Most Roth conversion advice is built around one assumption: you have a low-income window between retirement and age 73 (when RMDs begin). You convert during that quiet stretch at favorable rates, and avoid the forced distribution storm later.
A defined-benefit pension breaks that assumption. Your pension starts immediately at retirement — and it's fully taxable as ordinary income. Whether it's $30,000 from TMRS, $40,000 from FERS, $48,000 from TRS, or $65,000 from a municipal police fund, it creates a permanent income floor that compresses your available tax brackets from day one.
That doesn't mean conversions are off the table. It means you need to size them precisely around whatever bracket room remains after your pension takes its share. Here's a simplified example (2026, MFJ, both spouses 65+):
Item | Lower Pension ($36k) | Higher Pension ($60k) |
|---|---|---|
Annual pension income | $36,000 | $60,000 |
Standard deduction ($32,200 base + $3,300 age add-on, MFJ both 65+) | − $35,500 | − $35,500 |
Taxable income before conversion | ~$500 | ~$24,500 |
Room remaining in 12% bracket | ~$100,300 | ~$76,300 |
OBBBA Senior Deduction (age 65+, 2025–2028) | − $12,000 more | − $12,000 more |
Suggested annual conversion range | $20,000–$50,000 | $20,000–$50,000 |
Bottom line: yes, convert — but size it to stay within the 12% bracket unless you have a specific reason to absorb higher rates. Smaller annual conversions spread over multiple years nearly always beat a single large lump-sum conversion.
Federal employees: TSP vs. IRA conversion path
FERS and CSRS employees convert using the TSP rather than a 403(b) or 457(b). You can roll traditional TSP funds into a traditional IRA and then convert to a Roth, or use the TSP's in-plan Roth conversion feature introduced in 2026. Either path triggers the same bracket and IRMAA rules — the vehicle is different, the planning is the same.
This is the single most important guardrail in Roth conversion planning for public employees — and the one most people discover too late.
Medicare uses your Modified Adjusted Gross Income (MAGI) from two years prior to set your Part B and Part D premiums. A conversion you do in 2026 affects your 2028 Medicare costs. Exceed a threshold, and you owe IRMAA — Income-Related Monthly Adjustment Amount surcharges — for the entire following year. This applies equally to Texas state/local retirees and federal retirees: FERS employees enroll in Medicare at 65 alongside FEHB, and IRMAA hits the same way.
MAGI — Married Filing Jointly (2026) | Part B Monthly Premium | Extra Cost vs. Base (per person/yr) |
|---|---|---|
≤ $218,000 | $202.90 | $0 (baseline) |
$218,001 – $274,000 | $284.10 | +$974 |
$274,001 – $342,000 | $405.80 | +$2,448 |
$342,001 – $410,000 | $527.50 | +$3,894 |
$410,001 – $750,000 | $649.20 | +$5,436 |
> $750,000 | $689.90 | +$5,844 |
Source: CMS 2026 Medicare Parts A & B Premiums (CMS-8089-N). Surcharge is per person enrolled in Part B — multiply by 2 for a couple where both spouses are on Medicare. | ||
For most public employees, the practical rule is to keep total MAGI (pension + conversion + any other income) below $218,000 in years when you're converting significantly. That first threshold is the cliff most people accidentally cross.
If your pension is $48,000 and you have no other income, you can convert up to roughly $170,000 before hitting the first IRMAA tier. In practice, most retirees should target far less — $30,000 to $80,000 per year — to stay comfortably below the threshold and spread conversions for a lower blended rate.
Federal employees: FEHB + Medicare + IRMAA
FERS retirees often keep FEHB in retirement and add Medicare Part B at 65. IRMAA surcharges apply to Part B and Part D premiums regardless of FEHB coverage. A large conversion the year before you turn 65 is the most common trigger — because the IRMAA lookback is two years, not one.
Yes — significantly. This is the issue most generic Roth advice misses entirely.
Your defined-benefit pension is taxable ordinary income. Every dollar of pension consumes your lower tax brackets before you convert a single dollar. The higher your pension, the less room remains in the 12% and 22% brackets. Here's how the 2026 MFJ brackets look with pension planning notes (source: IRS Rev. Proc. 2025-32):
Tax Rate | MFJ Taxable Income (2026) | Notes for Pension Holders |
|---|---|---|
10% | $0 – $24,800 | Rarely available — pension income fills most of this range |
12% | $24,801 – $100,800 | Primary target — wide bracket, relatively low cost per converted dollar |
22% | $100,801 – $211,400 | Workable if future rate is higher; watch IRMAA threshold at $218,000 MAGI |
24% | $211,401 – $403,550 | Avoid as a default; IRMAA will already be triggered before this bracket |
32%+ | Above $403,550 | Not a conversion window for most public employees |
Source: IRS Revenue Procedure 2025-32. Taxable income after deductions. | ||
With a $48,000 pension and a $35,500 combined standard deduction (base + age add-on for both spouses 65+), your taxable income before any conversion is roughly $12,500. That leaves about $88,000 of room in the 12% bracket.
There's also a temporary planning window available right now. The OBBBA Senior Deduction — $6,000 per qualifying person age 65 or older, available 2025 through 2028 — adds up to $12,000 in additional above-the-line deductions for a qualifying couple. That room directly reduces what you owe on converted dollars. It phases out above $150,000 MAGI for joint filers and disappears entirely after 2028.
The practical conversion rule
Convert up to the top of the 12% bracket (MFJ ceiling: $100,800 of taxable income) unless future rate analysis clearly supports absorbing 22%. For most public employees — whether converting a 403(b), 457(b), or TSP — the annual sweet spot is $30,000–$88,000, depending on pension level and other income.
Yes — in a meaningful way. If you haven't updated your conversion plan since January 2025, do it now.
The Social Security Fairness Act, signed January 5, 2025, repealed both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), retroactively to January 2024. If you worked in Social Security-covered employment at any point in your career, you now receive your full earned benefit — with no reduction because of your public pension.
This affects a broad cross-section of public employees: TRS members, TMRS members, ERS employees, county workers, police and fire retirees, and many federal employees under FERS who worked part of their careers in Social Security-covered private-sector jobs. CSRS employees generally didn't pay into Social Security, so the WEP/GPO repeal had limited impact on that group — but FERS employees often have meaningful earned Social Security benefits that were previously reduced. Here's what it means for Roth conversions:
- Less bracket space: Social Security is taxable ordinary income — up to 85% of it. A public employee who expected $0 from Social Security and now receives $1,400/month has $14,280+ of additional taxable income per year at 85% inclusion — before any conversion.
- Better income security: Restored benefits may mean you can afford to leave more in Roth accounts to grow tax-free, rather than drawing down converted funds immediately.
- Retroactive lump-sum payments: Many retirees received a large back payment from SSA after the law took effect. If you converted in that same tax year, review whether the combined income pushed you into a higher bracket or crossed an IRMAA threshold.
- Spousal and survivor benefits restored: GPO repeal restored spousal and survivor Social Security benefits. These additional streams further shift household income projections and optimal conversion sizing.
Federal employees: the FERS + SS + TSP triple stack
FERS retirees face a particularly compressed bracket picture in their 70s: FERS pension (fully taxable) + Social Security (up to 85% taxable) + TSP RMDs all arriving simultaneously. The case for converting TSP funds early — before Social Security begins and before RMDs force distributions — is often compelling for federal employees with large TSP balances.
Read more: Social Security Fairness Act: What It Means for Texas & Federal Public Employees
This is a great question — and asking it means you're already thinking more carefully than most people.
Your instinct is correct: blindly converting at 22% just because "Roth is good" is not automatically the right move. The case for converting in the 22% bracket depends on specific conditions that may or may not apply to you.
When converting to the 22% bracket likely makes sense
- Your future rate will be higher. If your 403(b), 457(b), or TSP balance is large enough that RMDs will push you into 24% or 32%, paying 22% now is a real discount on what's coming. This is especially relevant for federal employees: FERS + Social Security + TSP RMDs stacking together in the 70s often puts retirees in a higher bracket than they expect.
- Post-WEP/GPO repeal added Social Security you didn't plan on. More guaranteed income in retirement means future brackets are almost certainly higher than you projected before January 2025 — for both state/local and federal employees who worked in Social Security-covered employment.
- You're using the OBBBA Senior Deduction (2025–2028). Even in the 22% bracket, the $6,000–$12,000 deduction reduces your effective rate on conversions, making the math better than it first appears.
- Your supplemental account balance is large and growing. A $400,000+ 403(b) or TSP still compounding with 10+ years until RMDs creates a growing future tax liability. Converting now at 22% may beat 32% later.
When converting at 22% likely does NOT make sense
- You're near the first IRMAA threshold. If converting at 22% pushes MAGI near or above $218,000, the true effective rate on those dollars is 24–26% once two years of Medicare surcharges are included.
- Your future income is genuinely lower. This is rare for public employees — pension plus Social Security usually sustains or grows income — but if your specific situation will simplify significantly, the urgency is lower.
- The conversion spills into the 24% bracket. Crossing the $211,400 MFJ taxable income threshold means additional converted dollars are taxed at 24%, not 22%. Precision matters — calculate before you convert.
The bottom line: don't convert at 22% by default. Convert only when the math — the current rate versus the projected future rate, minus IRMAA cost — specifically supports it. That analysis should use your actual numbers, not a hypothetical example.
The question to ask your advisor
Ask: "What is my projected total taxable income at age 75 if I do nothing — pension plus Social Security plus RMDs?" If the honest answer puts you in 24% or higher, paying 22% now is likely the right trade. If it doesn't, the urgency is lower.
Key Takeaways
- Public and federal employees with defined-benefit pensions face bracket compression from day one of retirement — the standard low-income conversion window that generic advice assumes simply doesn't exist.
- Yes, conversions can still work — but smaller annual amounts staying in the 12% bracket nearly always beat large lump-sum conversions. Size to your remaining bracket room, not your account balance.
- The IRMAA two-year lookback is the most common costly surprise. Keep MAGI below $218,000 (MFJ) in conversion years to avoid triggering Medicare surcharges two years later. Federal employees: this applies alongside FEHB, not instead of it.
- The OBBBA Senior Deduction ($6,000 per person / $12,000 per qualifying couple, age 65+) creates real extra bracket room for conversions — but only through 2028. The window is open now.
- The WEP/GPO repeal changed the income picture for many public and federal employees. If you planned your Roth strategy before January 2025, recalculate it to include actual Social Security income.
- Converting at 22% is not automatically wrong — but it requires a clear case that your future bracket will be higher. Model pension + Social Security + RMDs at age 75 before deciding.
Have More Questions? Let's Work Through Your Numbers
These are the questions I hear most often from public employees — Texas teachers, city workers, state employees, county staff, first responders, and federal employees under FERS or CSRS — but your situation has details that change the math. Your pension system and tier, your supplemental account balance (403(b), 457(b), or TSP), your spouse's income, your Social Security timeline, and how many years you have until RMDs all shape the right conversion strategy.
In my experience, the public employees who do this well aren't the ones who converted the most. They're the ones who converted deliberately — with a multi-year plan that kept them in the right brackets, avoided IRMAA surprises, and left a meaningful tax-free balance in retirement.
If you'd like to model what that looks like for your specific pension, account balance, and Social Security timeline, I'd be glad to walk you through it.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult a qualified financial advisor, tax professional, or attorney for advice specific to your situation. Past performance is not indicative of future results. Pension rules vary by system and are complex. Always verify your specific benefit tier, eligibility, and calculations directly with your pension administrator (TRS, TMRS, ERS, TCDRS, OPM/FERS, or applicable system) before making retirement decisions. This article is not affiliated with or endorsed by any Texas, federal, or other pension system. TSP information is general in nature; consult TSP.gov and OPM.gov for rules specific to federal employees. Tax rules are based on federal law as of June 2026, including IRS Revenue Procedure 2025-32 and provisions of the One Big Beautiful Bill Act (OBBBA, signed July 4, 2025). IRMAA figures sourced from CMS 2026 Medicare Parts A & B Premiums and Deductibles (CMS-8089-N). Consult IRS.gov, SSA.gov, and CMS.gov for current official guidance.
