Retire at 63 With $520,000 and Convert $45,000 a Year Until 73. The Average Retiree With the Same Balance Converts Nothing and Meets a Required Withdrawal Instead

At 63, paychecks stop, and taxable income often drops to its lowest level for the rest of a person’s life. A retiree leaving work with $520,000 in a traditional IRA opens a window until required minimum distributions begin at 73.

Converting $45,000 a year into a Roth IRA, where growth and withdrawals are tax-free, uses that window. The typical retiree with the same balance converts nothing and faces a $32,000 required withdrawal instead. This covers how the conversion schedule gets built and changes year to year.

A Window With a Fixed Number of Years

The window gives ten conversion years, and at $45,000 each, that’s $450,000 moved before any growth. The closing age depends on birth year. RMDs start at 73 for people born from 1951 to 1959 and 75 for those born in 1960 or later, so many people retiring now get two extra years.

The low-bracket room in each year expires on December 31, and unsurprisingly, you can’t recover an unused year. That’s why this works as a year-by-year schedule (we sized up this quiet stretch between the last paycheck and the first RMD in a free guide to the Roth window).

Sizing Each Year’s Conversion

The method starts with other taxable income: pension, interest, dividends, part-time wages, taxable Social Security, and whatever space remains under the target bracket is the conversion. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

The 12% bracket covers taxable income up to $50,400 for singles and $100,800 for couples. When you add the deduction to the bracket ceiling, a single filer can reach $66,500 of income before any dollar is taxed at 22%, and a couple can reach $133,000.

A $45,000 conversion leaves a single filer $21,500 for everything else and a couple $88,000. The 22% bracket runs to $105,700 for singles and $211,400 for couples. Using it now can still make sense if RMDs plus Social Security would push income into that bracket or higher later anyway.

What Moves the Number Each Year

• Taking Social Security. Benefits add income and reduce room. Once combined income passes $25,000 for individuals or $32,000 for joint filers, benefits become taxable, eventually up to 85%. Each converted dollar can push benefit dollars into taxable income.
• A spouse still working. Wages use up joint room until that spouse retires.
• Severance or deferred pay. These reduce that year’s conversion.
• Medical bills. Large deductible expenses open extra room.
• Market declines. Shares carry smaller taxable value, so a downturn lets the same tax cost cover more shares converted.

The plan gets revised every fall once most of the year’s income is known.

Two Ceilings Beyond the Brackets

Medicare’s income-related monthly adjustment amount, or IRMAA, adds a surcharge once modified adjusted gross income passes $109,000 for single filers or $218,000 for joint filers. The first level adds $95.70 a month per person, or about $1,148 a year for a couple.

Premiums are based on the tax return from two years earlier, so a conversion at 63 sets the premium at 65. Each threshold is absolute: going over by one dollar triggers the full surcharge, and between the mid-60s and RMD age, this limit can bind before the brackets do.

Starting Late Means Larger Annual Amounts

Starting at 69 leaves fewer years to move the same balance, requiring bigger annual conversions and higher brackets, and at some point, the rate paid on a conversion passes the rate RMDs would face later. With only a couple of years left, converting less and taking RMDs is often better.

Paying the Tax From Outside the Account

The math works best when you pay the tax from savings outside the IRA. Tax withheld from the conversion itself never reaches the Roth, and the portion not rolled over is taxed as a distribution. Before 59½, that portion also owes the 10% additional tax. Withheld dollars lose decades of tax-free growth. Without outside cash, a smaller conversion is better.

Coordinating the Year the Window Closes

The first RMD is due by April 1 of the year after turning 73. Waiting until spring puts two distributions into one tax year. You can’t convert an RMD to a Roth, so it must come out first. The last conversion at 72 and the first distribution year need to be planned together.

A Short Calculation Every Autumn

Each fall, add up the year’s other income. Check that year’s bracket ceiling and deduction, check the IRMAA threshold for two years ahead, set the conversion, and pay the tax from cash. Repeat these steps from 63 to 73; together, they make up the whole plan.

Contact [email protected] for any questions or corrections.