The 401(k) Tax Hack Couples Between 62 and 70 Use to Save Tens of Thousands Without Touching Social Security

A couple posted a retirement question this summer: he is 66, she is 63, they have roughly $1.4 million in traditional 401(k) balances, the mortgage is gone, and neither has filed for Social Security. Should they turn on benefits now, start drawing from the 401(k), or do something else entirely? The Clark Howard show recently fielded a nearly identical setup from a listener with $1.5 million in a 401(k) and $200,000 in a Roth, wrestling with the same trade-off between RMD pain later and tax pain now.

The answer for most couples in this age band is the same: use the years before Social Security and before required minimum distributions to move traditional 401(k) money into Roth at bracket rates you will never see again.

Why the Gap Years Are the Cheapest Tax Years of Your Life

Once you stop working, ordinary income can drop close to zero. If you also delay Social Security to age 70, provisional income stays low, so no benefits get pulled into taxation. That opens a window where the only income on the return is whatever you choose to create.

For a married couple filing jointly in 2026, the standard deduction is $32,200. The 12% bracket runs to $96,950 and the 22% bracket runs to $206,700. A couple with no wages and no Social Security can pull roughly $129,000 out of a traditional 401(k), convert it to a Roth, and pay an effective federal rate in the low double digits.

Math That Makes the Strategy Work

Take the 66 and 63 couple with $1.4 million pretax. Converting about $130,000 a year for four years moves more than half a million dollars into Roth at a blended rate close to 12% (we sized up this quiet stretch between the last paycheck and the first RMD in a free Roth conversion guide here). When Social Security kicks on at 70, plus RMDs at 73 or 75, the base of taxable retirement assets is smaller and the taxable share of Social Security stays capped.

Do nothing, and the sequence flips. A $1.4 million balance compounding untouched to age 75 can throw off an RMD well above $80,000. Add two Social Security checks (the 2027 COLA is tracking near 3.3%, so benefits will not be small), and provisional income sails past the threshold that makes 85% of benefits taxable. The IRMAA surcharge lookback pulls Medicare Part B and D premiums up by hundreds a month per spouse. The effective marginal rate on that last dollar of RMD can hit 40%.

Where the Conversion Money Should Sit

Converted dollars still need to be invested. The 10-year Treasury yield is 5%, near a one-year high of 5.01% touched on September 18, 2026. A short Treasury ladder inside the Roth locks in tax-free income at rates that did not exist during the last decade of conversions.

One Wrinkle for Couples Still Working

If either spouse is still earning W-2 wages above $150,000 in 2025, SECURE 2.0 forces 401(k) catch-up contributions into a Roth 401(k). The base deferral is $24,500, with an $8,000 catch-up for ages 50 to 59 and 64 or older, and $11,250 for ages 60 to 63. For a 62-year-old high earner, that super catch-up alone puts $35,750 into a Roth bucket every year.

Three Moves to Make Before Year-End

1. Run a projection of your RMD at age 75 on the current balance. If it lands above $96,950 combined with a projected Social Security benefit, you have a future tax problem that only shrinks if you act during the gap years.
2. Convert enough traditional 401(k) money each year to fill the 12% bracket at minimum, and the 22% bracket if the projected future rate is higher. Pay the tax from a taxable account, not from the conversion itself, so every converted dollar lands in the Roth.
3. Delay Social Security to 70 if health and cash flow allow. Each year of delay past full retirement age adds 8% to the benefit and keeps provisional income low enough that the conversion strategy is not undone by taxable benefits and IRMAA surcharges two years later.

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