Retire at 64 as a Couple With $540,000 in Two IRAs and Live on Her Pension for Nine Years, and the First Required Withdrawals Come to About $31,600. Converting $40,000 a Year Through Those Nine Years Cuts It Roughly in Half

Sizing a Roth conversion comes down to one number a year. For a couple living on a pension, you find that number by starting where the pension stops. This article walks through how a couple who retire at 64 with $540,000 in two IRAs should make some decisions. The decision-making starts by assuming they live on her pension for nine years until required withdrawals begin at 73.

If they leave the IRAs alone, the first required minimum distribution (RMD), the amount the IRS requires them to take out each year, is about $31,600. If they convert $40,000 a year, it drops to roughly $15,000.

A conversion transfers traditional IRA funds into a Roth, and the IRS counts the converted amount as gross income in the year you convert it. The pension already fills the lowest brackets, so every converted dollar gets taxed at whatever rate applies above the pension.

Building the Annual Number Step by Step

Start with the year’s total income: the pension, any taxable interest or dividends, and Social Security if it’s begun. Next, subtract the standard deduction. For married couples filing jointly in 2026, that’s $32,200. Each spouse who’s 65 or older also gets an extra standard deduction, and the One Big Beautiful Bill added a separate senior deduction. That means the amount you subtract increases once both spouses turn 65.

What’s left is taxable income, and it falls into the 2026 joint brackets:

• 10% up to $24,800
• 12% over $24,800
• 22% over $100,800
• 24% over $211,400

The conversion is whatever fills the space between that taxable income and the ceiling you pick. Picking the ceiling is the real decision. It comes down to comparing today’s rate with the rate you’d pay later.

Estimating the Rate Later

This step estimates the future rate. A projection grows the untouched $540,000 for nine years with no withdrawals, then applies the IRS Uniform Lifetime Table at 73. That’s how it gets to the $31,600 first withdrawal. Add that amount to the pension and Social Security, see which bracket it lands in, then run the same test on the converted path’s $15,000.

If the $31,600 path lands in the 22% bracket and today’s conversions are taxed at 12%, you’re converting too little, but if both paths land in the same bracket you’re filling now, the number is about right. The best annual conversion makes the marginal rate (the rate on the last dollar of income) the same in both periods. Filling a bracket just because it’s there misses that point. We sized up those low-tax years between the last paycheck and the first RMD in a free Roth conversion guide.

When a Higher Bracket Still Makes Sense

Converting into a higher bracket can still be the right call in three situations: first, when the projected RMD would land higher anyway. Second, when one spouse is likely to become a widow. A survivor files single, where 22% starts above $50,400 and 24% above $105,700. The survivor keeps the larger Social Security check, often keeps part of the pension, and still has to take the full RMD. Income shrinks a little while the brackets get much narrower.

Third, when an heir in peak earning years will inherit the account. Under a 10-year rule, non-spouse beneficiaries must empty the account within a decade, so those withdrawals pile on top of a salary.

Ceilings That Aren’t Tax Brackets

Medicare charges higher premiums once joint modified adjusted gross income goes above $218,000, adding $81 a month to Part B at the first level (from $202.90 to $284.10). That surcharge applies per person, and Medicare bases it on your tax return from two years ago.

A conversion at 64 shows up in premiums at 66. These thresholds work like cliffs: go one dollar over and you owe the whole level. That’s why a Medicare threshold often limits a couple in their sixties before the next tax bracket does.

After Social Security starts, conversion income also increases the share of benefits taxed, up to 85%. That drives the effective rate on those conversion dollars above the bracket rate.

Doing It Across Two IRAs

If there’s an age gap, convert from the older spouse’s IRA first, since that account hits required withdrawals sooner. Pay the tax with money outside the IRAs so the full amount ends up in the Roth. Recalculate every autumn, once you know the year’s income, instead of setting the number on day one. When markets fall, convert more: the same number of shares moves over at a lower taxable value, and the rebound happens inside the Roth.

Repeating the Exercise Every Fall

1. Add up the year’s income and subtract the deductions that apply at your ages.
2. Update the RMD projection and find its bracket on top of the pension.
3. Set the ceiling where today’s rate matches that future rate, then lower it if needed to stay under the next Medicare threshold.
4. Convert up to that ceiling and pay the tax from savings.

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