At 74 He Still Converts to a Roth Every Year. The Rule Nobody Tells Retirees: Take the RMD First, and Everything Above It Can Still Go In
Most retirees hear "take your RMD" and assume the conversation is over, but there is a second move that can shrink a future tax bill for decades, and almost no one at the bank volunteers it.
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If you are 73 or older and still have money in a traditional IRA, here is the rule almost no one at the bank will volunteer: you can keep doing Roth conversions for the rest of your life. There is no age ceiling. The catch that trips up most retirees is small but strict: you have to take your required minimum distribution first, and only the dollars above that RMD are eligible to move into the Roth.
That is why a 74-year-old can still convert every single year, steadily shrink a future tax bill, and hand heirs a tax-free account. Most retirees never hear about it because the conversation stops at “you have to take your RMD.” It does not have to stop there. The One Big Beautiful Bill Act, enacted July 4, 2025, locked in current federal tax brackets permanently, removing the old urgency to convert before rates were set to expire. The pressure has shifted, but the opportunity for retirees who are already in RMD territory is just as real. (For the mirror-image play, using the low-tax years before RMDs kick in, we sized up that window in a free Roth conversion guide.)
Buried Rule Hiding Inside Your Traditional IRA
Congress killed the old age-70½ contribution cap years ago, but the Roth conversion rules were never age-limited. A conversion is a taxable transfer of money already sitting in a pre-tax IRA into a Roth IRA, which makes it fundamentally different from an annual contribution. You can do it at 45, 65, or 95. The IRS does not care how old you are.
What the IRS does care about is the RMD. Once you reach RMD age, the first dollars you pull from your traditional IRA each year count as your required distribution. Those dollars must land in a taxable account, not a Roth. Everything you take beyond that threshold is eligible to convert. The numbers suggest this opportunity is underused: at year-end 2025, traditional IRA assets totaled $15.9 trillion nationwide, compared with just $2.4 trillion sitting in Roth IRAs, according to the Investment Company Institute. That gap represents a vast pool of pre-tax money that could, in principle, be gradually shifted to tax-free status.
Where This Rule Actually Lives
The credibility anchor is Treasury Regulation §1.408A-4, which governs Roth IRA conversions. Its Q&A-6 spells it out: an RMD from a traditional IRA is not eligible for rollover, and therefore cannot be converted to a Roth. The underlying statute is IRC §408(d)(3)(E), which explicitly denies rollover treatment to any amount required to be distributed under the RMD rules. Because a Roth conversion is itself treated as a rollover under the code, RMD dollars can never make the trip.
SECURE 2.0 reinforced the rule by pushing the RMD start age to 73 for anyone born between 1951 and 1959, and to 75 for those born in 1960 or later. Put those two facts together and the strategy is straightforward: take the RMD, then convert.
Who Gets to Use This, and Who Does Not
Any owner of a traditional IRA, SEP IRA, or SIMPLE IRA can convert at any age. Earned income is not required. There is no income ceiling on conversions, either. High earners are phased out of direct Roth contributions, but that restriction has never applied to conversions.
Two groups are shut out entirely. Beneficiaries of an inherited traditional IRA can never convert those dollars to a Roth. They must take the distributions and pay ordinary income tax on every dollar. The RMD itself, regardless of whose IRA it comes from, is also permanently off the table for conversion.
How a 74-Year-Old Runs the Play
- Calculate this year’s RMD using the IRS Uniform Lifetime Table and your December 31, 2025 balance. Withdraw that amount to a taxable brokerage or checking account before doing anything else.
- Decide how much additional pre-tax money you want to convert. Most retirees stop at the top of the 12% or 24% federal bracket to avoid pushing income into the next tier.
- Instruct your IRA custodian to move that additional amount directly to your Roth IRA as a conversion. Same institution, same day, one form.
- Set aside cash from a non-IRA account to pay the tax on the converted amount. Paying the tax from the IRA itself defeats the purpose and, for anyone under 59½, triggers a 10% early-withdrawal penalty.
- Track the five-year clock. Each conversion starts its own five-year holding period before the converted principal can be withdrawn penalty-free. At 74, the 10% early-withdrawal penalty is already off the table, so the clock matters mainly for accessing earnings tax-free.
Gotcha That Wrecks the Strategy
The single biggest trap is sequencing. If your custodian processes the conversion before the RMD leaves the account, the IRS treats the first dollars converted as your RMD. Those dollars then become an excess contribution to the Roth, and the penalty is 6% per year until the mistake is corrected.
Two other hazards are worth sizing before acting. A large conversion raises your modified adjusted gross income, and Medicare uses MAGI from two years prior to set current-year premiums. For 2026, the Income-Related Monthly Adjustment Amount (IRMAA) surcharge begins at $109,000 of MAGI for single filers and $218,000 for married couples filing jointly. At the first tier, Part B premiums jump from $202.90 to $284.10 per month, and the surcharges climb to as high as $689.90 per month at the top tier. A retiree who converts aggressively in 2026 could face higher Medicare bills in 2028. Sizing the conversion to stay below the next IRMAA threshold is often worth more than filling the bracket to its ceiling. The pro-rata rule also applies: if you hold any after-tax basis across your traditional IRAs, every conversion is treated as a proportional mix of pre-tax and after-tax dollars.
Take the RMD first, size the conversion second, pay the tax from outside the IRA, and the rule works exactly as advertised. The strategy is gaining traction: as of March 31, 2026, Roth conversions were running 41% ahead of the same period in 2025, based on Fidelity’s analysis of 19.6 million IRA accounts.
Editor’s note: This article was updated to reflect the One Big Beautiful Bill Act’s permanent extension of current federal tax brackets, 2026 IRMAA thresholds (first tier at $109,000 single / $218,000 joint, with Part B premiums ranging up to $689.90/month), Fidelity data showing Roth conversions up 41% year-over-year as of March 2026, and Investment Company Institute figures showing $15.9 trillion in traditional IRA assets versus $2.4 trillion in Roth IRAs at year-end 2025.
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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.
