Dave Ramsey Has a One Word Strategy for Big Roth Conversions and It Quietly Saves Retirees Six Figures in Lifetime Tax

Dave Ramsey spent time on his show walking a caller through one of the most overlooked moves in retirement tax planning: converting a traditional IRA to a Roth in small annual slices instead of one giant taxable event. The difference between doing this well and poorly can run into six figures of lifetime tax.

Here is what Ramsey said, verbatim:

“It’s tempting to move the money that you have in traditional gradually to Roth to keep you from having bracket creep… you could run those numbers out… you could run like bump a couple of brackets but not go all the way to 40, not go all the way to 39. Right. That’s one way of doing it. And do a little bit a year and kind of dribble it out.”

The verdict: Ramsey is right, and the math is brutal if you ignore him

Dribbling beats dumping. The U.S. tax code is progressive, so every additional dollar of conversion income piles on top of your existing income and gets taxed at the next bracket up. Convert a $1.2 million IRA in one year and you pay top marginal rates on most of it. Convert $100,000 a year for twelve years and you stay in the cheap brackets the whole time.

I have been studying retirement tax mechanics for years, and the bracket structure is what does the damage. For 2026 married filing jointly under the One Big Beautiful Bill, the 12% bracket runs to $100,800, the 22% bracket to $211,400, the 24% bracket to $403,550, the 32% bracket to $512,450, and 35% kicks in above that up to $768,700, where 37% begins. The standard deduction is $32,200.

A real scenario with real dollars

Take a couple, both 65, with $1.5 million in traditional IRAs, which is roughly six times the average baby boomer IRA balance of $257,002 and a reasonable target for a diligent saver. They draw $80,000 a year combined from Social Security and a small pension. After the standard deduction, taxable income sits near $48,000, well inside the 12% bracket.

Option one, the dump. Convert the whole $1.5 million in one year. Stacked on top of existing income, that conversion blows through the 22%, 24%, 32%, and 35% brackets and parks the top slice at 37%. Federal tax bill on the conversion lands around $475,000 to $500,000, plus state tax and a guaranteed IRMAA Medicare premium surcharge.

Option two, the dribble. Convert roughly $150,000 a year for ten years. Each year, the conversion fills the rest of the 12% bracket and most of the 22% bracket, with a small slice in the 24% bracket. Blended federal rate on each year’s conversion lands around 18% to 20%. Over a decade, total federal tax on the same $1.5 million comes in around $290,000 to $310,000.

That is roughly $175,000 in federal tax saved, and the Roth balance grows tax-free for the rest of their lives and their heirs’ ten-year inherited window.

The variable that flips the answer

The whole strategy hinges on one number: your marginal tax rate in your 70s versus today. If you will be in a lower bracket once RMDs and Social Security stack up, conversions cost you money. If you will be in a higher one, they save you money.

Required minimum distributions start at age 73. On a $1.5 million traditional balance that has compounded through your 60s, the first-year RMD lands near $60,000 and grows from there. Add Social Security, a pension, and any portfolio income, and a couple in the 12% bracket at 65 can easily find themselves in the 24% or 32% bracket at 75. That is the bracket creep Ramsey is warning about.

Rates also matter on the return side. With the 10-year Treasury near 4.6%, around a 12-month high and the fed funds upper bound at 3.75%, every dollar moved to the Roth today compounds tax-free against a real yield backdrop.

What to do this week

1. Pull last year’s tax return and identify your current marginal federal bracket. Note how much room you have before the next bracket kicks in.
2. Project your RMD-era income. Estimate your traditional balance at 73, multiply by roughly 4% for the first RMD, and add Social Security and any pension.
3. Pick a target ceiling. Ramsey’s framing of bumping a bracket or two without touching 32%, 35%, or 37% is the right instinct for most retirees.
4. Watch the IRMAA cliffs. Medicare premium surcharges trigger at specific MAGI thresholds and can add thousands per year if a conversion pushes you over.
5. Coordinate with Social Security timing. Conversions before claiming benefits avoid making more of those benefits taxable.

Ramsey’s word for it was dribble. Picture a steady faucet. The faucet is how you keep the IRS out of the top of your stack.