Why Affluent Investors Over 60 Are Emptying Their 401(k)s Into a Roth Before the IRS Sets the Withdrawal Schedule
The IRS has already scheduled when it will start pulling taxes from your 401(k), but most retirees never realize there is a narrow window before that clock starts when converting costs a fraction of what it will later.
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Picture a married couple, both 62, recently retired with about $1.6 million in a traditional 401(k), a paid-off house, and a plan to hold off on Social Security until age 70. Their taxable income this year is close to zero. Their 401(k) is the largest tax liability they own, and the IRS has already set the schedule for collecting it.
Because they were born after 1959, required minimum distributions start at 75. Until then, they control the timing. After that, the IRS does. The most expensive mistake happens years before the first distribution: letting the low-income window close without converting.
Bracket Room Most Retirees Leave Empty
For 2026, a married couple filing jointly gets a $32,200 standard deduction. With no wages coming in, every converted dollar above that deduction fills the lowest brackets first.
The 22% bracket tops out at $211,400 of taxable income. The 24% bracket extends to $403,550, and only above that does the 32% rate begin. This couple can move a six-figure sum into a Roth each year without leaving the 24% bracket.
What Waiting Until 75 Actually Costs
Leave the $1.6 million alone and it compounds tax-deferred. At 75, the first RMD adds on top of two full benefit payments and any portfolio income, setting off a tax cascade.
Up to 85% in Social Security benefits becomes taxable once a couple’s combined income passes $44,000. Each extra RMD dollar can drag more benefit into taxable income, so a couple nominally in the 22% bracket can hit a marginal rate around 40%.
A second layer comes from Medicare. IRMAA surcharges of roughly $70 to $400+ per month per person are set by income from two years earlier. Large RMDs can keep a couple paying surcharges for the rest of their lives.
Why 60 to 62 Is the Cheapest Conversion Window
The two-year lookback creates a clean advantage. Income at 62 sets premiums for 64, a year before Medicare enrollment. Conversions at 60, 61, and 62 carry zero IRMAA cost. Starting at 63, every conversion shows up on a Medicare bill two years later.
Those pre-63 years are the time to convert aggressively, filling the 24% bracket. From 63 until Social Security starts, conversions still make sense, but size them to land under the first IRMAA tier. (We sized up this quiet stretch from the final paycheck to the first RMD in a free Roth conversion guide here.)
Once money reaches a Roth, it leaves the RMD math for good. Since 2024, there has been no requirement to start taking money out of a Roth 401(k) after a certain age. Every dollar converted today is a dollar that can never increase a future RMD, the taxation of benefits, or an IRMAA bracket.
Paying the Tax Bill From the Right Bucket
Pay conversion taxes from taxable savings. Withholding tax from the conversion itself reduces the amount that reaches the Roth and gives up years of tax-free growth.
With the 10-year Treasury near 5.1%, that cash has a real opportunity cost. Over a decade or more, the Roth side wins that comparison for anyone expecting to land in the same or higher bracket later.
Still Working at 60 to 63
If you’re still on payroll, 2026 allows an extra $11,250 super catch-up at ages 60 to 63, for a total of $35,750. Workers who earned more than $150,000 in 2025 must send catch-up dollars to the Roth side. Treat that rule as a head start on the same strategy.
Three Moves Before the Withdrawal Clock Starts
- Map your timeline on one page. Write down the year RMDs begin (73 or 75, depending on birth year), the year you claim benefits, and the year you turn 63. The years before all three arrive are the cheapest conversion years you will ever get.
- Convert to the top of the 24% bracket before 63. For married filers, that ceiling is $403,550 of taxable income in 2026. Run a projected return in November, once dividends and capital gains distributions are mostly known, and convert up to that line with a small buffer.
- Set an IRMAA ceiling from 63 forward. Pull the current Medicare IRMAA table each fall and size conversions to stay under the first tier. If your projected RMD at 75 would push you past the 32% bracket, a fee-only advisor who runs multi-year tax projections can pay for the engagement with a single well-sized conversion.
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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!)
