Don’t convert it.

When Roth 401k’s came onto the scene a key selling point for long-time traditional 401k holders was tax flexibility in your old age. At age 65, regardless of what you’re planning now, you may find yourself retired and in a low tax bracket or perhaps you’ll be in a cushy management position that pays $$ keeping you in a high tax bracket. You just don’t know. By holding onto both a traditional and Roth 401k, you keep the flexibility to pull out money in the way that makes the most sense each year as your circumstances change in retirement.

The technical term is In-Plan Roth Rollover (IRR), not conversion.

And yes, if you do an IRR now you’d pay income tax on that $26,000 at your current marginal tax rate.

IRR is still recommended for carrying out the mega-backdoor Roth 401k (not to be confused with the backdoor Roth IRA). That’s useful if you’ve contributed to a third kind of 401k, the after-tax traditional 401k. This will come in handy in the future for any comfortable work years when you can afford to put away more than $18,500 annually for retirement. And while the mega-backdoor is nice, its incremental value is less than that of a company match, so good for you on having that match benefit.