Here Is Why I Would Tell a 71-Year-Old With $4 Million to Spend Down the Traditional IRA First

The retiree we are modeling is single, 71, and sitting on $4 million split across a $2.5 million traditional IRA, an $800,000 Roth IRA, and a $700,000 taxable brokerage account. Required minimum distributions hit in two years, and the standard withdrawal sequence, taxable assets first, traditional IRA second, Roth IRA last, is about to become far more expensive than it appears on paper.

That conventional approach can allow the traditional IRA to keep compounding until future RMDs become large enough to trigger higher tax brackets, larger Medicare IRMAA surcharges, and increased taxation of Social Security income. Here is why I would tell her to begin drawing down the traditional IRA now instead of waiting for the IRS to force the issue later.

The RMD problem coming into focus at 73

If she leaves the traditional IRA alone and lets it compound at a modest 5% for two years, the balance grows to roughly $2.76 million. Divide that by the IRS Uniform Lifetime Table factor of 26.5, and her first RMD lands at $104,151. Add $42,000 in Social Security and her AGI clears $146,000.

That number is the trap. It pushes her into the 22% to 24% bracket and into IRMAA tier 2 for single filers (an estimated $133,000 to $167,000 band for 2026), which surcharges her Medicare Part B and Part D premiums for the rest of her life on a rolling two-year lookback. Those surcharges do not show up on a brokerage statement, which is why retirees miss them.

Why front-loading the traditional IRA at 71 and 72 works

Her income is structurally lower right now than it is likely to be again for the rest of retirement. She is no longer working, required minimum distributions have not started, and Social Security is currently her only forced income source. That creates a rare two-year window of relatively cheap tax-bracket space she can fill on her own terms instead of waiting for the IRS to do it later.

Withdraw $80,000 annually from the traditional IRA at ages 71 and 72, and she can largely fill the 22% bracket voluntarily while reducing future RMD pressure. The traditional balance falls by roughly $160,000 plus the future growth that money would have generated, pushing the first projected RMD at 73 down to about $98,000. The larger lever is Roth conversion. Move $150,000 annually from the traditional IRA into the Roth at 71 and 72, converting $300,000 total, and the first RMD falls closer to $93,000. Combined with lower future IRMAA exposure, the lifetime tax savings could land in the $65,000 to $80,000 range while shifting more long-term growth into the account with the most favorable tax treatment.

The yield backdrop matters here

Rates make this strategy more attractive than it would have been three years ago. The Fed Funds upper bound sits near 4%, the 10-year Treasury is around 4.5%, and the 30-year is near 5%. She can fund two years of withdrawals from short Treasuries yielding close to 4% without selling equities, then redeploy converted Roth dollars into longer duration where yields are more generous.

Inflation argues the same direction. Core PCE is at the 90th percentile of its 12-month range and still rising, which erodes the real value of every dollar sitting inside a tax-deferred wrapper. Paying tax now in known brackets beats paying tax later on a bigger nominal balance in unknown brackets.

What I would tell her to do this month

1. Model both paths with after-tax cash flow projections. Run age 71 through 90 under (a) the default spend-taxable-first order and (b) a $150,000-per-year Roth conversion at 71 and 72. Compare lifetime federal tax, IRMAA surcharges, and ending Roth balance. The Roth column is what your heirs inherit tax-free.
2. Map the IRMAA tier transitions before you click convert. The single-filer tiers are cliffs. Going one dollar over a threshold raises Medicare premiums for a full year. Size each conversion to land safely inside a tier, not on the edge.
3. Layer in Qualified Charitable Distributions. She has been QCD-eligible since 70.5. Routing up to $108,000 of future RMDs directly to charity satisfies the distribution requirement without adding to AGI, which protects the IRMAA tier she chose.

The default withdrawal order is just a heuristic. At 71 with $2.5 million in a traditional IRA, the heuristic costs her money.