Warren Buffett’s Deputy Ted Weschler Paid About $28 Million in Taxes in 2012 to Convert His IRA to a Roth. It’s Now Worth $264 Million, Will Never Owe an RMD, and the $500,000 Version Has a Deadline of Age 73
Warren Buffett's right-hand man once wrote the IRS a check most retirees would never dare, and the account he protected from future taxation has since grown into a fortune that owes nothing at withdrawal. What he did in 2012 is…
In 2012, Ted Weschler sent the IRS a check most retirees would call unthinkable: more than $28 million in federal income tax, on money no rule forced him to touch. He moved his IRA into a Roth without selling a single holding.
By 2018, that Roth held $264 million. He’ll never owe a required minimum distribution on it, and his withdrawals come out tax-free. Savers with $500,000 can make the same move, but most face a deadline at age 73.
How a $70,000 Retirement Account Became a $264 Million Roth
Weschler opened his account in 1984, at 22, making $22,000 a year as a junior analyst at W.R. Grace. Business Insider reported the details from his interview with Washington Post columnist Allan Sloan. He maxed out his contributions, collected the employer match, and had over $70,000 by the end of 1989. That year he moved the money into a self-directed IRA.
He went on to run a hedge fund and joined Buffett at Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) in 2012. He converted to a Roth that same year.
The tax owed on such a retirement account grows with the balance. Weschler paid tax on his 2012 balance, so every dollar of growth after that became permanently tax-free.
Two IRC Sections Behind Every Roth Conversion
Section 408A(d)(3) of the Internal Revenue Code counts a conversion as taxable income in the year you make it. Section 408A(c)(5) then exempts Roth IRAs from the RMD rules in Section 401(a)(9) for as long as the owner is alive. IRS Publication 17 says it simply: “You aren’t required to take distributions from your Roth IRA at any age.”
Traditional IRAs remain subject to RMDs. If you turn 72 after 2022, you must start RMDs by April 1 of the year following the year you reach age 73. SECURE 2.0 raises that age to 75 for anyone born in 1960 or later. Weschler, born in 1962, is in that group, though his Roth makes the question irrelevant.
Watch the two five-year clocks. If you’re under 59½ and pull out converted dollars within five years, you can owe a 10% penalty. Earnings come out tax-free only after the Roth has been open five years and you’ve reached 59½.
Why the $500,000 Conversion Window Closes at 73
Once RMDs start, you must take each year’s required amount before converting anything. On a $500,000 IRA, the first RMD at 73 uses a Uniform Lifetime Table divisor of 26.5. This amounts to about $18,868 of income you didn’t choose, growing as the divisor shrinks.
The cheap window falls between retirement and 73. Your paycheck has stopped, Social Security may be on hold, and RMDs haven’t started (we sized up that window, and how to use it, in a free Roth conversion guide).
A $45,900 Gap Between One Big Conversion and Five Smaller Ones
Take a married couple on a joint return in 2026. Both are 65 and retired, with a $60,000 pension, planning to start Social Security at 70. After the $32,200 standard deduction, their taxable income is $27,800.
| Strategy | Top Bracket Reached | Federal Tax on Conversion |
|---|---|---|
| Convert $500,000 at 65 | 35% | $119,428.50 |
| Convert $100,000 a year, ages 65 to 69 | 22% | $14,700 a year, $73,500 total |
Spreading the conversion over five years saves about $45,928. Each $100,000 piece brings taxable income to $127,800. Only dollars above $100,800 are taxed at 22%, and everything below pays 12% or less. Converting everything at once spills top dollars past $512,450 into the 35% bracket.
Paying the whole bill at once suited Weschler’s situation. With $500,000, spreading the conversion over several years does the heavy lifting.
Three Moves to Make Before Age 73
- Convert up to a bracket line. In 2026, the 22% bracket for joint filers ends at $211,400 of taxable income. Size each year’s conversion to stop below the line you choose.
- Check Medicare’s two-year lookback. IRMAA surcharges on Part B premiums are based on MAGI from two years earlier, so conversions from age 63 onward count. If you claim Social Security in a conversion year, up to 85% of benefits can become taxable.
- Pay the tax with cash from outside the IRA. Withholding the tax from the conversion leaves less in the Roth, and before 59½ the withheld amount can trigger the 10% penalty if the withholding is not replaced this could be treated as a distribution.
State tax rules differ. Some states exempt retirement income, while others tax a conversion like a paycheck. Run a multiyear conversion plan by a CPA or fiduciary advisor before you convert the first piece.
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Vilma Rios is a tax professional and tax content contributor with more than 15 years of experience in tax and accounting. She specializes in federal tax research, tax education, and translating complex tax rules into clear, practical information for individuals, families, and small-business owners.
Vilma is a Content Tax Contributor II with the National Association of Tax Professionals (NATP), where she contributes to tax education and professional content. She has also presented tax information through webinars, including Spanish-language tax education, and has appeared on Telemundo 47 discussing tax topics and helping viewers understand important tax-filing requirements.
Her experience also includes tax and accounting work, tax research, IRS-related matters, and public tax education. While in college, Vilma volunteered in an IRS-sponsored tax assistance program and was recognized for her community service by local and state officials.
Known as “Your Tax Geek,” Vilma is passionate about making taxes easier to understand and helping people navigate an increasingly complex tax system.
