The Roth Conversion Strategy Affluent Couples Over 60 Are Using to Drain a $1.4 Million 401(k) Before RMDs Begin

A married couple, both 61, just walked away from W-2 income with $1.4 million in a traditional 401(k). They plan to defer Social Security until 70. That decision, paired with the fact that required minimum distributions don’t begin until 73, hands them something most retirees never get: a roughly 12-year window where their taxable income is essentially whatever they choose to make it.

Affluent couples in this exact position are using that window to move the pre-tax 401(k) systematically into a Roth, paying tax voluntarily at today’s rates rather than waiting for forced withdrawals at tomorrow’s. The math has long favored this approach. Two recent developments sharpen the case further: the 2026 brackets are well-indexed for inflation, and the One Big Beautiful Bill Act, signed into law on July 4, 2025, made the lower TCJA income tax rates permanent. Multi-year conversion plans now have a degree of certainty they have rarely enjoyed before.

The bracket-fill math on a $1.4 million balance

Start with the 2026 numbers for a married couple filing jointly. The standard deduction is $32,200. The 22% bracket extends up to $211,400 of taxable income, the 24% bracket runs to $403,550, and the 32% rate doesn’t arrive until taxable income clears that $403,550 threshold.

With no wages, no Social Security yet, and only modest brokerage income, this couple can convert roughly $240,000 per year and keep their taxable income near the top of the 22% bracket. Pushing to the 24% ceiling stretches the annual conversion to somewhere between $375,000 and $435,000. At the 22% pace, the entire $1.4 million balance clears in about six to seven years, well inside the runway, with every dollar taxed at 22% to 24% rather than the 32%-plus rates a swollen RMD could force later.

There is an additional wrinkle worth sizing before either spouse reaches 65. The OBBBA introduced a new $6,000-per-person senior bonus deduction for filers aged 65 and older, available from 2025 through 2028. When both spouses qualify, the combined benefit reaches $12,000. The catch is a tight phaseout: the deduction erodes at 6 cents for every dollar of MAGI above $150,000 for joint filers and disappears entirely at $250,000. A large Roth conversion that pushes MAGI into that phaseout band produces an effective marginal cost noticeably above the nominal 22% rate, so couples in their mid-60s should model the conversion amount carefully against the phaseout before committing to an annual figure.

The central insight holds regardless: timing and rate are the only variables that matter. The tax on that pre-tax balance is unavoidable in some form. Financial commentator Wes Moss made the same point on a recent Clark Howard segment, noting that retirees with pensions and large IRAs often “find yourself today in the 15% tax bracket, but in retirement you’re going to be in the 20% bracket” once Social Security and RMDs stack on top of each other.

Pay the tax from the brokerage, not the IRA

A $240,000 conversion at a 22% effective federal rate generates roughly $50,000 of tax. Pulling that $50,000 directly from the 401(k) defeats most of the strategy, because it reduces the asset base that will compound tax-free inside the Roth going forward. Couples executing this well fund the tax bill from a taxable brokerage account, often parked in six-month Treasury bills currently yielding 4.00%, keeping the cash accessible when quarterly estimated payments come due.

The IRMAA trap waiting at 63

The conversion plan collides with Medicare at age 65, and the rules reach back two years into income history. A large conversion at 63 sets the IRMAA surcharge for Medicare at 65. A large conversion at 71 sets it at 73, exactly when RMDs arrive on top. In 2026, the first IRMAA income threshold for joint filers is $218,000 of modified adjusted gross income. Cross that line and the standard Part B premium of $202.90 per month climbs with each successive bracket, reaching as high as $689.90 per month at the top tier. The Part B premium itself rose from $185.00 in 2025 to $202.90 in 2026, making the compounding cost of IRMAA even harder to absorb. The cleanest pattern is to front-load conversions in the early 60s, then taper sharply before the 63rd birthday, accepting that the final tranche may need to stretch into the 24% bracket to clear the balance in time.

Two more rules carry real weight. Each conversion starts its own five-year clock before earnings can be withdrawn penalty-free. Suze Orman has raised this point repeatedly: “the time clock on a Roth 401 does not transfer with you to a Roth IRA.” And Roth IRAs carry no RMDs during the original owner’s lifetime, which is the entire reason this exercise pays off.

Three moves to make this quarter

1. Model the 22% versus 24% fill, accounting for the senior bonus deduction. Run both scenarios against your actual 2026 income. The 22% plan stretches roughly seven years; the 24% plan compresses to four or five years and may be the better fit if one spouse has a pension arriving at 65. If either of you will reach 65 before 2028, layer in the OBBBA senior deduction phaseout: conversion income above $150,000 of MAGI begins eroding that benefit at 6 cents per dollar, raising your true marginal cost well above the posted bracket rate.
2. Build the tax-payment bucket now. Move enough from equities into six-month Treasuries or a money market fund to cover two years of conversion taxes. At a current yield of 4.00%, the position pays while it waits, and a market drawdown won’t force you to sell equities into weakness just to meet an April tax bill.
3. Stop conversions cold the year you turn 63. The two-year IRMAA lookback means income in that year sets Medicare premiums at 65. If your combined income will exceed the first IRMAA threshold of $218,000, the surcharge cost alone justifies a fee-only CPA review before December 31.

Editor’s note: This pass updated the six-month Treasury bill yield to the current 4.00% (as of September 15, 2026) and added the 2025-to-2026 Medicare Part B premium increase from $185.00 to $202.90, giving readers fuller context for the IRMAA discussion. Phrasing and sentence structure were tightened throughout for clarity.

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