Roth Conversions to Reduce RMDs

Converting your traditional IRA to Roth before age 73 isn't just about paying a lower rate today. Every dollar you move out of the traditional IRA is a dollar that will never generate a required minimum distribution. For a couple with $2M+ in traditional accounts, planned conversions can cut their future RMD income in half — keeping them in a lower bracket, below IRMAA thresholds, and in control of their tax bill through their 80s.

Why RMDs can be a tax ambush

A traditional IRA grows tax-deferred — but only until you're forced to take it out. Required minimum distributions begin at age 73 for anyone born before 1960, and at age 75 for those born in 1960 or later (SECURE 2.0, § 107).¹ The IRS Uniform Lifetime Table sets the fraction you must distribute each year based on your age.

The problem: if you spend your 60s leaving a $2M traditional IRA untouched while it grows at 6–7% annually, by 73 that IRA may be worth $3.8M–$4.3M. At that point:

• Your first RMD is roughly $143K–$163K (balance ÷ 26.5 divisor at age 73).²
• By 80, the divisor shrinks to 20.2 — so even if the balance has been drawn down, each dollar remaining generates a larger percentage as mandatory income.
• Social Security, which you've been receiving for several years, stacks on top.
• The combination can push a couple into the 22–24% bracket — or above the Medicare IRMAA tier 1 threshold ($218,000 MAGI for MFJ in 2026),³ adding $4,200–$8,400 per year in Medicare surcharges.

None of this is inevitable. The window to act is now, while you're still in the years before RMDs begin.

The Roth escape hatch

Roth IRAs are explicitly exempt from lifetime required minimum distributions under IRC § 408A(c)(5).⁴ Money in a Roth IRA is never forced out during the original owner's lifetime. It can stay there — growing tax-free — for decades, distributed only when you choose.

The same now applies to Roth 401(k)s: the SECURE 2.0 Act (§ 325) eliminated lifetime RMDs from designated Roth accounts in 401(k) and 403(b) plans, effective 2024.¹

Every dollar you convert from a traditional IRA to a Roth IRA permanently removes that dollar from your future RMD calculation. The converted amount — and all its subsequent growth — will never generate a forced distribution again.

The math: a before-and-after projection

Carol and Don are both 63 and recently retired. They have a combined $2.3M in traditional IRAs. Social Security is deferred to 70; they'll collect $54,000/year combined when it starts. No pension. They have enough in taxable accounts to pay conversion taxes without touching the IRA.

Scenario A: No conversions

Their IRA grows at 6.5%/year, untouched, until age 73:

• $2.3M × (1.065)¹⁰ ≈ $4.32M at age 73
• Year-1 RMD: $4,320,000 ÷ 26.5 = $163,019
• Taxable SS (85% rule once income exceeds $44K MFJ): $54,000 × 85% = $45,900
• Total AGI: $163,019 + $45,900 = $208,919
• Standard deduction (both 65+, MFJ): $32,200 + $1,650 + $1,650 = $35,500⁵
• Taxable income: $173,419 → in the 22% bracket (2026 MFJ 22% bracket: $100,801–$211,400)⁵
• IRMAA exposure: $208,919 is approaching — and by age 77–80, growing RMDs push them above — the $218,000 MFJ Tier 1 threshold

Scenario B: $150K/year conversions, ages 63–72

Carol and Don convert $150,000 per year for 10 years, paying taxes from their taxable accounts each year. Their IRA receives both the compounding growth and the annual outflows:

• IRA balance at 73: $4.32M − $150K × ((1.065¹⁰−1) ÷ 0.065) ≈ $4.32M − $2.02M = $2.30M
• Year-1 RMD: $2,300,000 ÷ 26.5 = $86,792
• Total AGI: $86,792 + $45,900 = $132,692
• Standard deduction: $35,500
• Taxable income: $97,192 → in the 12% bracket (2026 MFJ 12% bracket: $24,801–$100,800)
• IRMAA: $132,692 is well below the $218,000 Tier 1 threshold → no IRMAA surcharge

The bracket differential: paying now vs. paying later

During their conversion years (63–72), Carol and Don's taxable income is modest — SS hasn't started, no pension, low investment income. Converting $150K/year raises their taxable income to roughly:

• $150,000 conversion − $32,200 standard deduction = ~$117,800 taxable income
• Marginal rate on conversion: 22% (2026 MFJ bracket)

Without conversions, they'd pay 22%+ on $163K of RMDs at 73 — a rate differential of roughly zero on those dollars. But that misses what actually matters:

1. Every converted dollar at 63 grows 87K worth of RMD-free Roth assets over 10 years — the IRA balance that would have generated $163K of RMDs instead generates $87K, freeing $76K of forced income annually.
2. The RMD problem compounds with age. At 80, the ULT divisor drops to 20.2. On a $4M balance, that's $198K of mandatory income — likely pushing firmly into the 24% bracket and above IRMAA Tier 1. On a $2.3M balance, the same age yields $114K — still manageable.
3. Bracket and IRMAA savings multiply over a long retirement. A couple who retires at 63 and lives to 90 will face 17+ years of RMDs. Managing the annual amount has a 17× multiplier on the per-year tax and Medicare savings.

The IRMAA amplification

Medicare IRMAA surcharges are a second tax that large RMDs can trigger. For 2026, the first tier kicks in above $218,000 MAGI (MFJ) and adds $70.90/month per person — $1,702 per year per person, or $3,404 per year for a couple.³ Higher tiers accelerate quickly.

Because IRMAA uses a two-year lookback (2026 Medicare premiums are based on 2024 MAGI), RMD growth can push a couple into IRMAA surcharges several years before they realize it. Once triggered, the surcharges are recalculated annually based on the prior year's MAGI — meaning large RMDs in your late 70s and 80s create a persistent IRMAA cost that is difficult to escape.

Conversions that shrink the future IRA balance are the primary lever for IRMAA avoidance in retirement. The IRMAA and Roth Conversions guide covers this in detail, including the SSA-44 appeal process for one-time income spikes.

What this looks like in practice

Most pre-retirees doing RMD-reduction conversions follow a version of this framework:

1. Start converting in the first year of retirement — earned income stops, the window is open, and every year you delay is a year the traditional IRA compounds toward a larger RMD problem.
2. Fill the bracket strategically. Use the tax bracket calculator to find your conversion room at 22% without spilling into 24%, accounting for all other income sources.
3. Project the IRMAA impact. Two years before Medicare starts, model what conversion income does to your 65-year-old premiums. The IRMAA tiers are a hard cliff, not a slope — $1 over the threshold costs the same as $10,000 over it.
4. Use the lifetime calculator to find the optimum. Some couples benefit most from converting aggressively early (high rate differential, long Roth growth runway). Others are better served converting less and preserving the traditional IRA for years when they need the RMD deduction. The lifetime NPV calculator models both scenarios.
5. Reassess annually. Brackets inflate, Social Security starts, health care costs change. The right conversion amount each year is not the same as last year's amount.

What about inherited RMDs?

There's a second layer to the RMD story: what happens to the account after you're gone. For traditional IRAs, the SECURE Act (2019) eliminated the stretch IRA for most non-spouse beneficiaries — heirs must distribute the full account within 10 years of the original owner's death, and if the decedent had already begun RMDs, heirs must also take annual distributions during those 10 years (per T.D. 10001, 2024).⁶ A large unconverted traditional IRA inherited by your adult children — who may be in their peak earning years — is taxed at their highest marginal rate, often 32–37%.

Inherited Roth IRAs, by contrast, have no annual RMD requirement for the heir — they simply must empty the account by year 10. There is no forced annual income. The heir can let the account grow tax-free until year 9 if they choose. This asymmetry — inherited Roth vs. inherited traditional — is one of the strongest estate planning arguments for conversions. See the Roth Conversion as Estate Planning guide for worked scenarios.

When RMD-reduction conversions make the most sense

• Large traditional balance ($750K+). The bigger the balance, the larger the future RMD mountain, and the more valuable it is to shrink it now.
• Early retirement at 60–65. More years of conversion runway before RMDs begin = more dollars moved to Roth at favorable rates.
• Delayed Social Security. The years before SS starts are the lowest-income years in the window — lowest effective conversion rate.
• No pension or modest pension. A large pension already fills the bracket; converting on top reduces the rate advantage.
• Heirs in high tax brackets. The estate-planning benefit multiplies when children are high earners who would pay 32–37% on inherited traditional IRA distributions.