A 70-Year-Old With a $1.5 Million IRA Has Three Years Left to Convert at 22%. At 73 the RMD Fills the Bracket on Its Own and the Window Shuts for Good, and Here’s the Math Advisors Run Every November
A $1.5 million IRA looks perfectly managed at 70, but a single birthday three years away triggers a cascade of tax events that closes every cheap conversion opportunity at once. Advisors run the same November projection to find what the…
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Advisors see a composite client like this every fall. He’s a 70-year-old widower who files single, with a $1.5 million traditional IRA, a $50,000 pension and $36,000 a year in Social Security. Right now his tax return looks calm, and he sits comfortably in the 22% bracket.
That calm runs out on a set date. Under the required minimum distribution rules in Section 401(a)(9), his withdrawals start at age 73, and the IRS life-expectancy table sets the size of each one. His first RMD will fill what’s left of his 22% bracket without any help. That leaves 2026, 2027 and 2028 as his last three years to convert to a Roth at 22%.
His First RMD Overflows the 22% Bracket on Day One
Say his IRA earns 6% a year and he converts nothing. By December 31, 2028, it has grown to $1,786,524. The IRS life-expectancy divisor at 73 is 26.5, which makes his 2029 RMD $67,416.
Next, list his income, using 2026 figures as a stand-in. Brackets will rise with inflation, and so will his account. His pension plus the taxable 85% of his Social Security ($30,600) comes to $80,600. Subtract the 2026 standard deduction of $16,100 and the $2,050 extra deduction for filers 65 and older, and his taxable income is $62,450.
For single filers in 2026, the 22% bracket ends at $105,700. That leaves him $43,250 of room. The RMD uses all of it and pushes $24,166 into the 24% bracket. Brackets work like fill lines, so only those top dollars are taxed at 24%. The problem grows over time, because the divisor shrinks every year.
| Line item | Age 70 (2026) | Age 73 (2029, no conversions) |
|---|---|---|
| IRA withdrawal | $0 | $67,416 |
| AGI | $80,600 | $148,016 |
| Taxable income | $56,786 | $129,866 |
Why Advisors Run This Math Every November
A conversion counts in the calendar year it happens, so the deadline is December 31. Since 2018 you can’t undo one, because 26 U.S.C. § 408A(d)(6)(B)(iii) bars recharacterizing it. That’s why advisors wait until November, when the year’s income is mostly known, and then convert right up to the line.
2026 also adds a temporary catch: the new senior deduction of up to $6,000. It shrinks by 6% of MAGI above $75,000. At his income he keeps $5,664 of it. Each dollar he converts trims another 6 cents from that deduction.
To fill the 22% bracket he’d convert about $46,145, for $10,761 in federal tax. That works out to an effective 23.3%. The deduction expires after 2028, so his room at 73 is smaller than it is today.
A $109,000 Medicare Line Turns the Last Dollars Into 30% Money
The full conversion raises his AGI to about $126,745. Medicare looks back two years to set premiums, so his 2026 income decides his 2028 bill. Using 2026 tiers, single filers over $109,000 pay an extra $81.20 a month for Part B and $14.50 for Part D. The tier works as a cliff. Going $1 over adds $1,148.40 for the year.
Advisors therefore price two options. If he converts $28,400, he stops right at the line and pays about $6,623 in tax. Converting the next $17,745 costs about $5,287 once you count the surcharge, an effective 29.8%. It’s a close call, because at 73 his AGI of $148,016 puts him in tier 2 regardless. That means monthly surcharges of $202.90 for Part B and $37.50 for Part D, or $2,884.80 a year.
At 73, the First Dollars Out Can’t Go to a Roth
Treasury regulations close the cheap window. Under 26 CFR 1.408A-4, A-6, you can’t convert an RMD, and the first dollars out each year count toward the RMD until it’s met. Once the RMD is out he can still convert, but every converted dollar then starts at 24%. If he skips the RMD, the excise tax is 25% of the shortfall.
Three full conversions cut his first RMD to about $61,872, which is still more than his room in the bracket. What the conversions buy is relief later on. Roth IRAs have no lifetime RMDs under 26 U.S.C. § 408A(c)(4), and heirs inherit money that’s already been taxed. As CNBC noted this week, heirs who inherit a traditional IRA can get stuck with a tax bill.
Three Steps Advisors Model Before December 31
- Advisors project 2026 income first, including interest and capital gains. The conversion amount is typically whatever room is left below the 22% line or the IRMAA line.
- Many advisors pay the conversion tax from a taxable account, because every dollar withheld from the IRA is a dollar that never reaches the Roth.
- For a client like this, the same analysis repeats in 2027 and 2028, with brackets and IRMAA tiers rechecked each November.
State income tax can shift the numbers, since most states that tax income treat a conversion as ordinary income. A three-year projection like this is worth running with a fiduciary financial advisor or CPA before the year ends (the low-tax gap between retiring and the first RMD is the whole subject of our free Roth Window guide, which sizes up how to use it).
Contact [email protected] for any questions or corrections.
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.
