Investors Urged to Shift $40,000 Dividend Streams Into Roth IRAs Before RMDs at 73 or 75
Updated
Updated · 24/7 Wall St. · Jun 4
Investors Urged to Shift $40,000 Dividend Streams Into Roth IRAs Before RMDs at 73 or 75
2 articles · Updated · 24/7 Wall St. · Jun 4
Summary
$40,000 in annual high-yield dividends can lose about $9,600 a year to federal tax at the 24% bracket when held in taxable accounts, prompting advisers to favor Roth placement before required withdrawals begin.
SECURE 2.0 sets RMDs at 73 for people born from 1951 to 1959 and 75 for those born in 1960 or later, making the retirement gap years the key window for phased traditional-to-Roth conversions.
$500,000 generating that $40,000 income keeps the full payout inside a Roth, versus roughly $30,400 after tax in the ordinary-income worst case; the benefit grows further at 32% and 37% brackets.
Altria and Verizon, both yielding about 6%, plus AT&T at 4%, were cited as the strongest candidates for Roth relocation because their larger income streams create the biggest annual tax drag outside sheltered accounts.
The strategy also leans on 2026 tax rules that allow qualified dividends at a 0% long-term capital gains rate up to roughly $96,000 of taxable income for joint filers, before future RMDs can push households higher.