Dave Ramsey Just Gave You Two Hidden Reasons to Move Everything to a Roth: No RMDs and No Inherited-IRA Forced Withdrawal
Dave Ramsey just gave away the two reasons most people convert to a Roth too late, if they convert at all. The part of his pitch that lands hardest is not about your own tax bill. It is about what…
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Dave Ramsey just handed listeners the two reasons most people convert to a Roth too late, if they convert at all. The sharpest part of his argument is not about your own tax bill. It is about what happens to the account after you die. Below is the math behind both of his claims, and the one variable that decides whether converting is brilliant or expensive.
The quote that reframes the Roth debate
On the April 10, 2026 episode of The Ramsey Show titled Start Telling Your Money Where To Go, Dave Ramsey said: “moving everything to Roth people, that ain’t bad or overtime, that’s the move. It gives you two things I had not considered early on. And that’s no RMDs and no inherited IRA forced withdrawal.”
He then walked through the upside for heirs: “think about the what if they held, let’s take a million dollars and they hold that seven years, years after you die because they don’t have to withdraw it under the Biden rule, it’s going to double. It’s going to be another million dollars. The million will be 2 million.”
If your retirement savings sit in a traditional 401(k) or IRA, the IRS will eventually force money out, first while you are alive and then again from your heirs. Every forced dollar is taxed as ordinary income in the year it comes out. Roth dollars never get that treatment, and that difference compounds dramatically over a decade or more.
Ramsey is right on the mechanics
The two rules he is pointing at are real. Under SECURE 2.0, traditional 401(k) and IRA holders born between 1951 and 1959 must begin required minimum distributions at age 73, whether they want the cash or not. Those born in 1960 or later get a longer runway, with RMDs not kicking in until age 75. The SECURE Act then forces most non-spouse heirs of traditional accounts to drain an inherited balance within 10 years of the original owner’s death. Roth IRAs sidestep both rules entirely. SECURE 2.0 also eliminated pre-death RMDs for designated Roth accounts inside 401(k) and 403(b) plans beginning in 2024, closing a gap that had previously put Roth workplace accounts at a disadvantage relative to Roth IRAs.
One important nuance the Ramsey clip skips: IRS final regulations issued in July 2024 clarified that if the original IRA owner had already started taking RMDs before dying, heirs cannot simply wait until year 10 to pull everything out in a lump sum. Annual distributions are required in years one through nine of the 10-year window, with the full remaining balance due by December 31 of year 10. That compressed timeline creates a predictable tax crunch for heirs unless the inherited account is a Roth.
Run the numbers on a 73-year-old with $1 million in a traditional IRA. Using the IRS Uniform Lifetime Table divisor of 26.5 for age 73, the first RMD comes to $37,736, stacked on top of Social Security and any pension income. For a married couple filing jointly in 2026, the 22% federal bracket kicks in on taxable income above $100,800. That forced withdrawal landing on top of other income can push a meaningful slice into the 22% range and generate roughly $8,000 to $9,000 of federal tax on money the retiree did not need or request. Because the IRS divisor shrinks each year, RMDs grow automatically as you age, even when the market is flat.
The inheritance side of the ledger is even starker. Leave that same $1 million traditional IRA to an adult child earning $150,000. For 2026, single filers enter the 24% bracket on income above $105,700. Forced to empty the inherited account over 10 years, each $100,000 annual withdrawal lands on top of the child’s salary and pushes some of that income into the 32% bracket. The federal tax drag alone can shave $250,000 to $300,000 off the inheritance, before state income tax takes its additional share.
Convert that same $1 million to a Roth and the picture flips. The original owner faces no lifetime RMD. The heir still faces a 10-year window to empty the account, but if the Roth’s 5-year seasoning clock has elapsed, every dollar comes out tax-free and the balance compounds untouched the entire time. Ramsey’s seven-year doubling assumes roughly a 10% annual return, which is aggressive but not historically unreasonable for an all-equity portfolio left alone to grow.
The variable that decides everything
Conversions carry an upfront cost: you pay ordinary income tax on every dollar you move from traditional to Roth in the year you move it. The whole strategy rests on one comparison, the rate you pay to convert today versus the rate you or your heirs would pay on those same withdrawals later.
One piece of context that sharpens that comparison: the One Big Beautiful Bill Act, signed in 2025, made the seven-bracket tax structure permanent. Before it passed, today’s rates were scheduled to revert to higher pre-2018 levels after 2025. With permanence in place, the future-rate advantage of converting is less automatic than it once seemed. The math still works, but it depends more on individual bracket trajectories than on a guaranteed scheduled increase.
Scenario A: You are 67, retired, drawing on savings and Social Security, and your taxable income sits at $40,000. You can convert roughly $60,000 a year and stay inside the 12% bracket, which tops out at $100,800 for joint filers in 2026. Your kids are physicians sitting in the 32% bracket. Every dollar you convert at 12% saves them roughly 20 cents when they eventually withdraw the same dollar. That gap is a straightforward arbitrage.
Scenario B: You are 55, still earning $300,000, sitting firmly in the upper brackets, and your kids are teachers who will inherit during their 50s while semi-retired at a 12% effective rate. Converting now means paying a higher rate than anyone in the family is likely to pay on that money again. The smarter move is to wait for a low-income gap year, when the rate spread actually tilts in your favor.
For savers who cannot convert efficiently because their income is already high, a Qualified Charitable Distribution offers a parallel path. The QCD limit for 2026 is $111,000 per person, inflation-indexed under SECURE 2.0. Directing RMDs straight to charity satisfies the withdrawal requirement without the dollars ever hitting taxable income, which preserves bracket room for other planning.
What to do this week
- Pull your most recent 1040 and find your marginal bracket. Compare it to the 2026 brackets. If you are sitting in 12% or 22%, you have room to convert at relatively low cost.
- Project your first RMD: at age 73, divide your expected traditional balance by 26.5. That is roughly your first forced withdrawal. If that number plus Social Security pushes you into a higher bracket than you occupy today, conversions now are arbitrage worth considering.
- Ask your heirs their bracket. The conversation is uncomfortable, but the information is valuable. If they earn more than you do, the inherited-IRA math alone may justify converting.
- Use a Roth conversion ladder, not a one-time switch. Convert just enough each year to fill the top of your current bracket without spilling into the next one, then repeat annually until the traditional account is gone or the math stops working.
Ramsey is right that escaping lifetime RMDs and shielding heirs from a 10-year forced drain changes the calculus. The discipline is paying the conversion tax at the lowest rate any family member will ever see on that money, then letting the Roth compound untouched for the next generation. That is the move he was pointing at, and the math backs it up.
Editor’s note: This pass adds context from the One Big Beautiful Bill Act, signed in 2025, which made the current seven-bracket tax structure permanent and removes the previously scheduled rate reversion that had made future-rate arbitrage a near-certainty for Roth converters. It also adds the 2026 Qualified Charitable Distribution limit of $111,000 per person as a parallel strategy for savers who cannot convert efficiently.
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I've spent more than 15 years inside enterprise software, working alongside the finance, sales operations, and HR leaders who run the revenue engines at some of the largest tech companies in the country.
My day job is helping enterprise executives make smarter decisions about retention, compensation, and growth. These are the same operational levers that show up in every earnings report investors actually read. That perspective shapes my writing for 24/7 Wall St.
The headline numbers are easy. The interesting stuff is underneath: how companies make money, what executives are worried about, and what any of it means for the person checking their 401(k) on a Sunday afternoon. I write about personal finance and business as someone who has spent her career inside the rooms where these decisions get made.
