How to Use the Years Between 62 and 75 to Turn a $1.05 Million IRA Into $5,100 a Month Tax-Free

Picture a 62-year-old couple who just left their last jobs with a $1.05 million traditional IRA. The paychecks stopped, and Social Security can wait. For a few years, their taxable income could sit near zero, which makes this the cheapest window they’ll ever get to move money into a Roth IRA, where it grows and comes out tax-free. The goal: a Roth paying $5,100 a month with nothing owed to the IRS.

Age 75 Sets the Deadline

Someone turning 62 this year was born in 1964, which means that required minimum distributions (forced annual IRA withdrawals) start for that group at age 75, with the first due by April 1, 2040. At 75, the IRS divides the balance by 24.6 and taxes the result. Roth IRAs face no such rule while the owner is alive. Every dollar converted before 75 reduces what the IRS can force out later.

Eight Slices That Stay in the 12% Bracket

For 2026, a married couple gets a $32,200 standard deduction, and the 12% bracket runs to $100,800 of taxable income. With no other income, they can convert $133,000 a year and owe about $11,600 in federal tax. Seven slices like that plus a final $119,000 slice (about $9,920 in tax) empty the IRA by age 69. Total federal bill: roughly $91,120. Pay it from outside savings and the full $1.05 million lands in the Roth, assuming the balance holds flat. State taxes vary.

Marketplace health insurance subsidies before Medicare depend on income, and the enhanced credits expired on December 31, 2025. Converted dollars count as income and can reduce the credit. Medicare also sets premium surcharges based on income from 2 years earlier, so conversions at 63 and 64 affect premiums at 65. The 2026 joint surcharge starts above $218,000, and a $133,000 portion stays under it.

Roth earnings come out tax-free only after a 5-taxable year period starting with the first Roth contribution, plus age 59½. Open the Roth with the first conversion to start the clock. The quiet years between the last paycheck and the first RMD are the cheapest conversion window most people will ever see, and we sized up how to use it in a free Roth guide here.

Does $1.05 Million Pay $5,100 a Month?

The seven holdings below produce a weighted yield of about 7.3%. Divide the $61,200 annual target by that yield, and the Roth needs roughly $843,000. The plan builds $1.05 million, throwing off about $76,200 a year, so it gets to this couple’s number with room to spare.

NEOS Nasdaq 100 High Income ETF

NEOS Nasdaq 100 High Income ETF (NASDAQ:QQQI) holds Nasdaq-100 stocks and sells index call options for cash. Weight: 15%. Yield: about 14.7%, providing roughly 30% of the income. Know this: selling calls caps gains in sharp rallies, and the fund classified about 94% to 99% of fiscal 2025 payouts as return of capital, a perk that doesn’t matter inside a Roth.

iShares Core High Dividend ETF

iShares Core High Dividend ETF (NYSEARCA:HDV) holds established U.S. dividend payers for 0.08% a year. Weight: 15%. Yield: about 4.1%, roughly 9% of the income. Know this: monthly payouts swing from $0.06 to $0.11 per share lately.

Omega Healthcare Investors

Omega Healthcare Investors (NYSE: OHI) is a REIT that holds skilled nursing and senior housing facilities rented to operators. Weight: 15%. Yield: about 5.7%, roughly 12% of the income. Know this: the dividend held at $0.67 per share from 2020 through 2025 before edging to $0.68. Expect steady income, little growth.

Hercules Capital

Hercules Capital (NYSE:HTGC) is a business development company lending to venture-backed firms. Weight: 15%. Yield: about 11.8%, roughly 24% of the income. Know this: the quarterly payout is a $0.40 base plus a $0.07 supplemental, and the extra can disappear. A 25-basis-point Prime Rate cut trims about $0.03 per share of annual income.

Bristol Myers Squibb

Bristol Myers Squibb (NYSE:BMY | BMY Price Prediction) is a drugmaker paying $2.52 a share annual after its 17th consecutive increase. Weight: 15%. Yield: about 4.0%, roughly 8% of the income. Know this: the last raise was 2%, and generics hit older drugs. Revlimid fell 47% last quarter.

iShares iBoxx $ Investment Grade Corporate Bond ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD) holds investment-grade bonds from large U.S. companies. Weight: 10%. Yield: about 4.7%, roughly 6% of the income. Know this: its price falls when long-term rates rise, and the 10-year Treasury sits near 5%.

Janus Henderson AAA CLO ETF

Janus Henderson AAA CLO ETF (NYSEARCA:JAAA) buys top-rated slices of collateralized loan obligations: pools of corporate loans where the AAA portion gets paid first. Weight: 15%. Yield: about 4.9%, roughly 10% of the income. Know this: payouts track short-term rates, from about $0.03 monthly in early 2022 to above $0.27 in 2024.

One Number to Set Every January

The annual decision is how much to convert. Fill the 12% bracket, check the Marketplace and Medicare income lines, and stop there. Once Social Security starts, it uses up bracket room, so the portion reduces.

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