The Strategy Retirees Over 65 Are Using to Empty a $900,000 401(k) Into a Roth Before Their First RMD
A nine-year gap before required withdrawals begin sounds like breathing room, but most retirees let it slip by paying tax on the IRS's schedule instead of their own. Three hidden triggers can push the effective rate on every converted dollar…
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Picture a married couple, both 66, retired, with $900,000 in a traditional 401(k) and neither spouse claiming retirement benefits yet. Born in 1960, they face no required minimum distribution (RMD) until age 75 under SECURE 2.0. That nine-year gap is the most valuable tax window they will ever get. The strategy I would push them toward is converting the entire 401(k) to a Roth before required withdrawals begin.
A listener named Sue described a small version of this on Suze Orman’s podcast. At 68, she had converted $15,000 and had $75,000 left in her IRA. A $900,000 balance runs on the same idea at a much larger scale, and scale is where the tax traps show up.
Why Waiting Until 75 Costs More
Leave the $900,000 alone and it compounds. At 75, IRS rules set the RMD divisor at 24.6, meaning a larger balance causes larger forced withdrawals annually. Those withdrawals stack on top of benefits claimed at 70, which grow through delay credits and annual raises. The 2027 inflation adjustment is already tracking toward 3.3%.
Wes Moss put it simply on the Clark Howard podcast: retirees “find themselves in higher tax brackets because they might have a pension and when they get into their 70s, they have big IRAs. And those IRAs produce RMDs.” Converting early means paying tax on your schedule instead of the IRS’s.
Where the Real Ceiling Sits
For 2026, joint filers pay 22% on taxable income up to $211,400 and 24% from there to $403,550. Joint filers get a standard deduction of $32,200.
The bracket is only half the picture. Three other lines create a tax cascade that can push the effective rate on a conversion dollar toward 40%:
- IRMAA: Medicare surcharges kick in when joint modified adjusted gross income (MAGI) tops $218,000. The lookback is two years, so a 2026 conversion sets 2028 premiums. The first tier lifts Part B from $202.90 to roughly $284 per person per month.
- Social Security taxation: Once benefits start, joint provisional income above $44,000 makes up to 85% of benefits taxable. Each dollar transferred to Roth then draws extra benefit dollars into taxable income.
- Senior deduction phaseout: The OBBB senior deduction shrinks as MAGI rises past $150,000 for couples.
Because the deduction sits above the bracket, filling the 22% bracket completely pushes MAGI past the $218,000 IRMAA line. So the IRMAA threshold is the true ceiling.
A Four-Year Sprint, Then Smaller Chunks
Here is the sequence that works for this couple. From 66 through 69, with Social Security switched off, they convert roughly $200,000 a year (an example figure) while keeping MAGI just under $218,000. With no benefits flowing, the benefit-tax trap never causes. That pace moves most of the balance before age 70.
Starting at 70, benefits begin and provisional income jumps, so conversions shrink to whatever fits under the IRMAA line. Moss’s advice fits this phase: “Typically the right way to do Roth conversions is in chunks spread out over time.” By 75, little or nothing is left to force out. That quiet stretch before required withdrawals begin is the cheapest tax rate most retirees will ever see again, which is why we sized up the whole window in a free Roth guide here.
The five-year rule barely matters at this age. As Orman explained to Sue, because she was over 59 and a half, “The 10% penalty does not apply to you.” Only early withdrawals of earnings carry tax exposure.
The tax — about 22 cents per dollar converted — should come from a taxable account. With the 10-year Treasury near 5.1%, cash set aside for each year’s tax bill earns a real return while it waits.
Three Moves to Make This Year
- Confirm your RMD start age. Born 1951 through 1959 means 73. Born 1960 or later means 75. Count the years in between; that is your conversion window.
- Convert in December, with your number in hand. Once dividends, capital gains, and any part-time income are known, size the conversion to land just under $218,000 of joint MAGI. Remember that 2026 income sets your 2028 Medicare premiums.
- Hold off on Social Security if you can. Each year before you claim is a year of conversions free of the 85% benefit taxation hit. If your Social Security, pension, and conversions together push past the first IRMAA tier, the planning alone justifies paying a fee-only advisor to model it.
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Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
