A 72-Year-Old Couple With $900,000 in IRAs Converts Nothing. Their Kids Inherit the Tax Bill Instead.
Skipping Roth conversions feels like the safe play until you see what bracket your kids will be forced into when they inherit a six-figure IRA during their peak earning years. The tax bill does not disappear, it just changes hands.
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A 72-year-old couple sitting on $900,000 in traditional IRAs has a decision most retirees never make consciously. They can pay tax on that money now, at rates they know, over a decade or two of measured Roth conversions. Or they can pay nothing extra, take their required minimum distributions on schedule, and let the balance pass to their children under the SECURE Act’s 10-year rule. The second option feels like the easy one. It also quietly hands the next generation the largest possible tax bill.
This article walks through what that trade actually looks like using current federal tax brackets, the IRS inflation adjustments for 2026, and the inherited IRA rules that took effect after 2019. The numbers are the evidence. The story is about who ends up paying.
Why $900,000 Is a Meaningful Threshold
According to Fidelity’s Q3 2025 retirement analysis, the average IRA balance for a baby boomer participant comes in at $257,002. A couple with $900,000 spread across two IRAs is well above that typical mark. By estate tax standards, they are still a long way from the 2026 basic exclusion of $15,000,000, so that is not a concern. But they are holding enough pre-tax money that their required minimum distributions alone will keep pushing their taxable income higher every single year they live.
Under SECURE 2.0, required minimum distributions begin at age 73 for this couple. Their Social Security check will also rise: the 2027 cost-of-living adjustment is tracking at 3.1%. Combined benefits, RMDs, and any pension or dividend income stack on top of each other. Once RMDs start, the couple loses control over how much taxable income they realize each year. The IRA dictates the schedule.
What a Roth Conversion Would Cost Today
For a married couple filing jointly in 2026, the standard deduction lands at $32,200. The 22% bracket covers taxable income up to $206,700 for joint filers, and the 24% bracket stretches all the way to $394,600. A couple with modest Social Security benefits and no wages could convert a decent chunk of their IRA each year and stay comfortably within that 22% or 24% range. Over a five to ten-year window, they could move most of that $900,000 into a Roth IRA at a predictable, mid‑bracket tax cost.
The reason to do it now is that the 22% and 24% brackets are wide, and the couple controls the timing. The reason not to do it is the check written to the IRS today. That is the actual trade.
What the Kids Inherit
When the surviving spouse dies, the traditional IRA passes to non-spouse beneficiaries. Under the post-2019 rules, adult children must empty the inherited IRA within 10 years. Every dollar withdrawn is taxed as ordinary income at the child’s marginal rate, on top of the child’s salary, spouse’s income, and any bonuses.
Children in their 50s are typically in their peak earning years. A household already at $206,701 of taxable income is in the 24% bracket. Add $90,000 or $100,000 a year of forced IRA distributions, and the top slice lands in the 32% bracket at $403,550 or the 35% bracket at $512,450. The parents avoided a 22% or 24% conversion. The kids pay 32% or 35% of the same amount.
Opportunity Cost of Waiting
The interest-rate environment matters here in a specific way. The 10-year Treasury yield sits at 4.71%, and the federal funds target upper bound is 3.75%. Money used to pay conversion taxes today is money that will not compound in a bond ladder or money market. That is the real cost of converting. That is also why the calculation isn’t automatic.
What tips the math for most households at this balance is the bracket differential between the parents and the children. A couple with $900,000 pretax and mid-earning heirs is usually the textbook case for staged conversions, the same window between retirement and RMDs we walked through in a free guide to timing Roth moves. A couple whose heirs earn less than they do is usually the case.
What This Couple Actually Faces
Three questions decide the outcome. First, what marginal bracket will the surviving spouse land in once one Social Security check disappears, and the standard deduction drops from $32,200 to $16,100? Second, what bracket are the children in today, and where will they be in their 60s? Third, is there taxable brokerage money outside the IRA to pay the conversion tax so the full conversion amount actually lands in the Roth?
Doing nothing is a choice with a price. Whoever inherits the account pays the price at whatever rates apply in the year they empty it. That is what the rules require.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
