Retirees Eye Roth Conversions in the Years Before Required Withdrawals
A married couple with $900,000 in a traditional 401(k) can use the period before age 75, when required minimum distributions start, to convert funds to a Roth. Converting about $200,000 a year may keep income below the IRMAA threshold and reduce future Medicare surcharges and Social Security taxation. Paying conversion taxes from a taxable account can help preserve the retirement balance.
A couple both 66 with $900,000 in a traditional 401(k) may have nine years before required distributions start at 75 under SECURE 2.0. Converting about $200,000 yearly before Social Security begins could keep joint MAGI below the $218,000 IRMAA threshold, which uses a two-year lookback.
For 2026, joint filers face a 22% rate up to $211,400 of taxable income and a $32,200 standard deduction. IRMAA’s first tier can raise Part B premiums from $202.90 to about $284 monthly per person. Paying conversion tax from taxable funds, such as Treasuries near 5%, may preserve retirement assets.
This strategy may matter most to retirees with large pre-tax accounts and enough taxable savings to cover conversion taxes. It could reduce future Medicare surcharges and Social Security taxation for some households, potentially lowering lifetime tax bills and altering retirement income planning. However, benefits may be uneven, since those without cash outside retirement accounts or with lower balances may find conversions harder to execute. It may also influence how financial advisers discuss timing of Social Security and RMDs.