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 lets the traditional IRA keep compounding until future RMDs grow large enough to push her into higher tax brackets, trigger larger Medicare IRMAA surcharges, and increase the taxation of Social Security income. Here is why I would tell her to begin drawing down the traditional IRA now, rather than 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 for age 73, 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, the $137,000 to $171,000 income band under 2026 CMS thresholds, which surcharges her Medicare Part B and Part D premiums on a rolling two-year lookback. The first surcharge tier alone for 2026 begins at $109,000 for single filers, and each dollar over a threshold triggers a full year of higher premiums. Those surcharges do not show up on a brokerage statement, which is exactly why retirees routinely 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 inexpensive tax-bracket space she can fill on her own terms, rather than waiting for the IRS to fill 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

The current rate environment makes this strategy more compelling than it would have been a few years ago. The Fed held its benchmark rate at 3.50% to 3.75% at its June 2026 meeting, even as the 10-year Treasury sits near 4.5% and the 30-year has cleared 5%. That steep yield curve means she can fund two years of withdrawals from short Treasuries yielding above 3.5% without selling equities, then redeploy converted Roth dollars into longer-duration bonds where yields are more generous. The spread between short and long maturities is wide enough to reward that sequencing.

Persistent inflation reinforces the same logic. When price levels keep climbing, the real value of every dollar sitting inside a tax-deferred wrapper erodes year by year. Paying tax now in known brackets beats paying tax later on a larger nominal balance in brackets that may or may not be as favorable.

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. For 2026, the first cliff sits at $109,000 and the second at $137,000 for single filers.
3. Layer in Qualified Charitable Distributions. She has been QCD-eligible since age 70.5. Routing up to $111,000 of future RMDs directly to a qualifying charity in 2026 satisfies the distribution requirement without adding to AGI, which protects the IRMAA tier she chose. QCDs are also unaffected by recent 2026 tax law changes that limit itemized charitable deductions, making them an even more efficient giving tool this year.

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

Editor’s note: This article has been updated to reflect the correct 2026 IRMAA single-filer bracket bands (the second tier runs from $137,000 to $171,000, replacing earlier estimates), the current Federal Reserve target rate of 3.50% to 3.75% following the June 2026 FOMC hold, and the increased 2026 QCD annual limit of $111,000 per individual (up from $108,000 in 2025), along with added context on the 2026 tax law changes that make QCDs more advantageous.