Suze Orman Shows the Exact Steps on a $1.6 Million Roth Conversion to Shrink Future RMDs

Most retirees with seven-figure 401(k) balances never run the math on what their Required Minimum Distributions will look like when the IRS starts requiring them. They should. A $1.6 million pre-tax balance can throw off enough forced income to push Medicare premiums into surcharge territory, drag heirs into the top bracket, and undo decades of careful tax planning in a single year. That is exactly the trap Suze Orman walked a caller named Gina through on a recent episode of her podcast, and her answer is a clinic in how to think about Roth conversions.

Gina’s situation had a clean setup and a messy plan. She is 56, recently retired with a pension, sitting on $1.6 million in a pre-tax 401(k) and another $200,000 in a Roth 401(k). She wanted to convert the pre-tax money to a Roth IRA over 10 years without touching her liquid savings to cover the tax bill. Her company benefits person suggested a three-step workaround: do an in-plan rollover from the pre-tax 401(k) to the Roth 401(k), then roll the Roth 401(k) to a Roth IRA, then take a separate 401(k) withdrawal with 100% tax withholding to cover the bill.

Suze’s reaction was direct: “this is the stupidest thing I’ve ever heard in my Life, to put it mildly.” Her fix came down to one sentence: “just take $100,000 out of your pre tax 401k, put it directly converting it into your Roth IRA and pay the taxes on it because there is no way for you to get around the taxes.”

Why the simple path wins: the RMD math nobody shows you

Suze is right. The benefits person’s plan added two custodial steps that change nothing about the tax owed. An in-plan Roth rollover is a conversion, full stop. It triggers ordinary income tax that year regardless of where the money lands next. Stacking a Roth 401(k) to Roth IRA rollover on top introduces a separate five-year clock on earnings withdrawals without saving a single dollar of tax.

The real prize is shrinking that pre-tax balance before mandatory distributions begin. Because Gina is 56 and was born around 1969 or 1970, she falls under SECURE 2.0’s updated rules: for anyone born in 1960 or later, Required Minimum Distributions start at age 75, not 73. That gives her a slightly longer runway than the original SECURE Act allowed, but a longer runway is a double-edged sword. If she leaves the account untouched, a larger balance compounds toward an unavoidable taxable event. The IRS Uniform Lifetime Table assigns a divisor of 24.6 at age 75, and that divisor only shrinks with each passing year. On a $1.6 million traditional IRA at the age-75 starting point, a first-year RMD works out to roughly $65,000 ($1.6 million divided by 24.6), taxed as ordinary income stacked on top of her pension and Social Security.

Now run Suze’s plan. Converting roughly $160,000 per year for 10 years pulls the entire pre-tax balance into a Roth IRA, where there are no RMDs during her lifetime. By the time distributions would otherwise be required, her traditional balance is zero, her RMD is zero, and the Roth grows tax-free for her, her spouse, and ultimately her heirs (subject to the 10-year drawdown rule for non-spouse beneficiaries).

The IRMAA cliff most people don’t see coming

Large RMDs do two damaging things at once: they raise your income tax bill and they inflate your Medicare premiums through IRMAA, the Income-Related Monthly Adjustment Amount. The standard 2026 Part B premium is $202.90 per month, but cross an IRMAA threshold by one dollar and that figure jumps for the entire calendar year. The first surcharge tier kicks in at $109,000 of modified adjusted gross income for single filers and $218,000 for joint filers. Because Medicare uses a two-year lookback, income realized today sets premiums two years later. A large Roth conversion this year shows up in your 2028 premium calculation, which means the sequencing of conversions matters as much as the amounts themselves.

Converting in your late 50s and early 60s, while you control your income, is how you stay under those cliffs when you reach your 70s. Every year a traditional IRA grows untouched, the eventual RMD grows with it in nominal terms while the window to act tax-efficiently narrows.

The variable that flips the answer

The single factor that determines whether Suze’s plan works is whether you have non-retirement cash to pay the conversion tax. If Gina pays the tax from outside savings, every dollar of the $1.6 million lands in the Roth and compounds tax-free. If she withholds the tax from the conversion itself, and she is under 59.5 on some of those dollars, she shrinks the Roth and may owe a 10% early withdrawal penalty on the withheld portion. Someone sitting on a taxable brokerage account or a money market fund yielding something close to the 10-year Treasury’s current rate of approximately 4.7% has the ammunition to execute this cleanly. Without outside cash, the better move is to convert smaller amounts each year or wait until after-tax reserves are in place.

What to actually do this week

1. Pull your latest 401(k) and IRA statements and add up every pre-tax dollar. That total is your eventual RMD base.
2. Check your RMD starting age under SECURE 2.0. Those born between 1951 and 1959 start at 73. Those born in 1960 or later start at 75.
3. Run a projected RMD using the IRS Uniform Lifetime Table divisor and a conservative growth assumption. Most custodians offer a free calculator for this.
4. Map your marginal bracket against the next IRMAA threshold. For 2026, the first cliff sits at $109,000 for single filers and $218,000 for joint filers. The gap between your income and that threshold is your annual conversion budget.
5. Open a direct conversion path from your pre-tax 401(k) or rollover IRA to a Roth IRA at the same custodian. Skip the in-plan gymnastics entirely.
6. Earmark outside cash for the tax bill and make quarterly estimated payments to avoid the underpayment penalty Suze highlighted.

Gina’s instinct to spread $1.6 million over 10 years was sound. The execution her benefits person proposed was not. Shrink the pre-tax balance now, pay the tax from outside money, and the outcome at the far end is a smaller forced distribution, a lower Medicare premium, and a larger tax-free inheritance for the people who come after you.

Editor’s note: This pass corrects the Uniform Lifetime Table divisor reference from the age-73 figure (26.5) to the age-75 figure (24.6) that actually governs Gina’s first RMD, making the $65,000 RMD estimate explicit; it also updates the 10-year Treasury yield reference from approximately 4.6% to approximately 4.7%, reflecting mid-August 2026 market data.

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