How Much of a $1.15 Million IRA Should a 66-Year-Old Convert to Roth to Collect $5,900 a Month Tax-Free?

You’re 66, you’re on Medicare, and you hold $1.15 million in tax-deferred retirement savings. You want $5,900 a month ($70,800 a year) that the IRS can’t touch. A Roth conversion moves pretax IRA money into a Roth IRA. You pay the tax now and never pay it again.

The good news is that you still have time. If you were born in 1960, required minimum distributions (the withdrawals the IRS forces from an IRA) start at age 75. That gives you nine tax years, 2026 through 2034, to convert.

Two Conversion Paths and What Each One Costs

The math assumes a single filer who delays Social Security, has no other income, pays the tax from savings outside the IRA, and faces 2026 rules every year. All yields and prices reflect current levels.

Path A: Convert It All in 2026

Your standard deduction is $18,150, which includes the extra amount for filers 65 and older. The new $6,000 senior deduction shrinks by 6% of income above $75,000, so a conversion this size wipes it out. More than 40% of it lands in the 37% bracket, which starts above $640,600. Federal tax comes to about $375,000, roughly 33% of the account.

Medicare also takes a cut. Its premium surcharges, called IRMAA, are based on your income from two years earlier. Income of $500,000 or more would push your 2028 Part B premium to $690 a month under today’s table. The standard premium is $203.

Path B: Convert $109,000 a Year

For a single filer, $109,000 is the highest income that avoids any Medicare surcharge. At that level, you keep $3,960 of the senior deduction and stay in the 22% bracket, which ends at $105,700 of taxable income. You owe about $13,800 a year, near 13%. Over nine years, you move $981,000 for about $124,000 in total tax. That’s roughly $250,000 less than Path A, and $169,000 stays in the traditional IRA.

Already collecting Social Security? Conversion income raises your combined income. Once that tops $25,000 for a single filer, part of your benefit becomes taxable. Above $34,000, up to 85% of it can be taxable. Path A takes the bigger hit.

Roth withdrawals are tax-free once you’re past age 59½ and five tax years have passed since your first Roth contribution or conversion.

Why $1.15 Million Falls Just Short

The portfolio below yields about 6.1%. At that yield, $70,800 a year takes about $1.17 million, which is more than the whole IRA. Path A pays about $5,800 a month. Path B, once it’s finished in 2034, pays about $4,950 a month at today’s yields. To hit the full target, you need a bigger conversion or more years of growth.

NEOS S&P 500 High Income ETF Delivers the Biggest Yield

NEOS S&P 500 High Income ETF (CBOE:SPYI) owns S&P 500 stocks and sells index options for extra cash. At a 15% weight and an 11.9% yield, it supplies about 30% of the income. Its expense ratio is 0.68%. The fund is built to be tax-efficient, but that edge does nothing inside a Roth. Selling options also caps your profits in strong rallies.

iShares Core Dividend Growth ETF Supplies the Growth Engine

iShares Core Dividend Growth ETF (NYSEARCA:DGRO) owns U.S. companies that keep raising their dividends. Its 20% piece yields just 1.8% and covers only about 6% of the income. Its fee is 0.08%. Shares have been the growth engine, with a total return of about 244% over the past ten years.

Agree Realty Pays a Rising Monthly Dividend

Agree Realty (NYSE:ADC) is a net lease real estate investment trust (REIT), meaning its retail tenants pay the property taxes, insurance, and maintenance. With a 4.6% yield on its 15% share, it provides about 12% of the income. The monthly dividend just rose to $0.271, up from $0.253 two years ago.

Blackstone Secured Lending Offers High Yield With Weakening Loans

Blackstone Secured Lending (NYSE:BXSL | BXSL Price Prediction) is a business development company that lends to private businesses. It gets 15%, yields 10% on the new lower dividend, and supplies about 25% of the income. Its loans are getting weaker. Non-accruals (loans that have stopped paying interest) reached 2%, net asset value (NAV) fell to $25 from $27, and the quarterly dividend dropped to $0.60 from $0.77 in 2027.

Enterprise Products Partners Brings Pipeline Income and a Tax Wrinkle

Enterprise Products Partners (NYSE:EPD) is a pipeline master limited partnership. A 15% allocation at a 6.1% yield makes about 15% of the income. Its quarterly distribution rose to $0.56 from $0.545 a year earlier.

Holding it in a Roth is a real complication. Partnerships send K-1 tax forms, and their business income counts as unrelated business taxable income inside an IRA. If the account has $1,000 or more of that gross income, the IRA must file Form 990-T and can owe tax on its own. Ask your custodian how it handles this.

iShares 0-3 Month Treasury Bond ETF Serves as the Cash Buffer

The iShares 0-3 Month Treasury Bond ETF holds Treasury bills that mature within three months. A 20% position yielding about 3.9% adds about 13% of the income. Its fee is 0.09%. It’s your cash buffer when markets fall. Treasury interest is usually free of state income tax, but that perk is wasted inside a Roth.

One Deadline Decides Your 2026 Move

The numbers favor Path B. It costs about $250,000 less in tax, avoids Medicare surcharges, and builds toward roughly $4,950 a month tax-free by 2034. Growth can close the gap to $5,900, and in the meantime the leftover IRA and Social Security cover the difference. Before December 31, finish this year’s conversion of up to $109,000. Once the year ends, the room you had in 2026’s 22% bracket is gone for good.

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