Affluent Investors Over 55 Shift $80,000-a-Year to Roths to Cut RMD and IRMAA Hits
Updated
Updated · 24/7 Wall St. · May 22
Affluent Investors Over 55 Shift $80,000-a-Year to Roths to Cut RMD and IRMAA Hits
2 articles · Updated · 24/7 Wall St. · May 22
$1.8 million traditional 401(k) balances are prompting many investors in their mid-50s to start annual Roth conversions before retirement income and required withdrawals spike taxes.
At 6% growth, that balance can reach about $4.85 million by age 73, producing a first RMD near $183,000 that can tax up to 85% of Social Security and trigger Medicare IRMAA surcharges.
A 17-year bracket-filling plan converts roughly $80,000 a year while staying inside the 22% bracket—up to $105,700 single or $211,400 joint in 2026—and can split the account about 50-50 by age 73.
That approach spreads about $300,000 of conversion tax over time, cuts first-year RMDs roughly in half, and can save about $400,000 in lifetime taxes versus waiting until withdrawals land in 24% or higher brackets.
Execution matters: keep MAGI below the $109,000 single or $218,000 joint IRMAA threshold, use market pullbacks for conversions, pay taxes from taxable accounts, and preserve Roth assets as the more tax-efficient inheritance vehicle.
How does 2025's OBBBA senior deduction change the ideal timing and amount for pre-RMD Roth conversions?
Is a Roth conversion a smart hedge against future tax hikes or a gamble that backfires if rates fall?
Could new 401(k) private market rules offer a better way to manage retirement wealth than tax-focused conversions?