Bo Hanson Warns $1.3 Million RMD Tax Hit at 75, Urges Roth Conversions

1 articles · Updated · 24/7 Wall St. · May 17

$1.3 million in lifetime taxes could be avoided if retirees shift money from traditional accounts to Roths before required minimum distributions begin at 75, Bo Hanson said.
A couple with $1.5 million in a traditional 401(k) at 45 could see that balance swell to $6 million-$8 million by 75; a first-year RMD on $7 million would be about $285,000 and could push them from a 12% to 32% bracket.
$150,000 annual Roth conversions between retirement and 75 can fill lower 22% and 24% brackets while earned income is gone, with converted assets then growing tax-free and avoiding future RMDs.
Hanson said the key test is whether the tax rate paid on conversions now is lower than the projected marginal rate at 75; if retirement income stays in a lower bracket, conversions can backfire.
The broader playbook is to run a 30-year tax projection, map the post-retirement conversion window, and pair it with tax-loss harvesting in taxable accounts to offset gains during rebalancing.

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