Why Roth Conversions Before RMD Age Could Save You Thousands in Taxes

One of the smartest moves you can make before turning 73 is something called a Roth IRA conversion. It sounds complicated, but it’s actually a straightforward tax strategy that could help you keep more of your retirement money. If you’re in your 50s or 60s and have most of your savings in a Traditional IRA or 401(k), this could be a big win for your financial future.

Let’s walk through what this means, why it matters, and how it might work for you.

What Is a Roth Conversion?

A Roth conversion means moving money from a Traditional IRA or 401(k) into a Roth IRA. You do have to pay income taxes on the amount you move in the year you do it. But after that, the money grows tax-free and you can take it out in retirement without paying taxes again. It’s like paying taxes now so you don’t have to later—especially when tax rates might be higher.

Why Do This Before Age 73?

At age 73, the IRS requires you to start taking money out of your Traditional IRA or 401(k) every year. These are called Required Minimum Distributions or RMDs. You don’t get to choose how much—you have to withdraw a certain percentage based on your age and account size.

The problem? These withdrawals count as taxable income and can cause a ripple effect:

• They might push you into a higher tax bracket, meaning more of your income is taxed at a higher rate.

• They could increase your Medicare premiums because Medicare charges higher premiums to people with higher incomes. These extra charges are called IRMAA, which stands for Income-Related Monthly Adjustment Amount.

• They can also cause more of your Social Security benefits to be taxed.

• And they reduce your ability to decide how much income you take from each account.

By converting some of your Traditional IRA into a Roth before age 73, you shrink your Traditional IRA balance. That means lower RMDs later—and potentially lower taxes over your lifetime.

What Is IRMAA?

IRMAA is an extra monthly charge that gets added to your Medicare Part B and Part D premiums if your income is above certain levels. The more income you show on your tax return—whether from work, investments, or IRA withdrawals—the more you might have to pay.

But if you spread the conversions out over several years and stay under the IRMAA limits, you can avoid those extra charges.

When Is the Best Time to Convert?

There’s a “sweet spot” for many people: after you retire but before you start taking Social Security or hit age 73. During these years, your income may be lower than it was when you were working, and you haven’t yet started RMDs or Social Security payments.

This gives you the chance to convert money at lower tax rates.

For example, if you’re married and your taxable income is under about $94,000 in 2025, you’re in the 12% tax bracket. That’s a good opportunity to convert some money to Roth without pushing into the next bracket, which jumps to 22%.

An Example of How It Works

Let’s say you’re 62 and recently retired. You have:

• $800,000 in a Traditional IRA

• $200,000 in a regular taxable investment account

• $100,000 in a Roth IRA

You don’t plan to take Social Security until age 70. You could convert $30,000 to $50,000 each year from your Traditional IRA to your Roth IRA between now and age 73. This spreads out the taxes and keeps you in a reasonable tax bracket.

Later, when RMDs begin at age 73, your Traditional IRA will be smaller, so your required withdrawals—and the taxes that come with them—will be lower. You’ll also have a growing Roth IRA that you can use anytime without worrying about taxes or RMDs.

Why Roth IRAs Are Great in Retirement

Roth IRAs offer a lot of flexibility. Here’s why people love them:

• No required minimum distributions

• Tax-free withdrawals in retirement

• Tax-free growth

• You can leave them to your heirs, who can also take the money out tax-free (over 10 years)

Having some of your money in a Roth can make it easier to manage your taxes later and give you more options when you need income.

What to Be Careful About

Roth conversions can be a great move, but they aren’t always the right choice. Here are a few things to watch out for:

• Don’t convert too much at once—doing so could push you into a much higher tax bracket.

• Large conversions might also raise your Medicare premiums because of IRMAA.

• If you’re already taking Social Security, a big conversion could make more of your benefits taxable.

• It’s best to have cash outside your IRA to pay the taxes due on the conversion. That way, your retirement money can keep growing.

Should You Consider This Strategy?

If you’re between retirement and age 73, and you’ve built up a sizable Traditional IRA, it may be worth looking at Roth conversions. They give you more control over how much you pay in taxes—not just this year, but over the next 10, 20, or 30 years.

A financial planner can help you look at your current and future tax situation and figure out whether this strategy makes sense for you. It’s not about avoiding taxes altogether—it’s about paying them at the right time and at the right rate to lower your lifetime taxes!

Want to find out if Roth conversions could work for your retirement plan? Schedule a free consultation today, and let’s build a strategy that fits your goals.

*We believe the information provided is accurate, but it’s not intended as tax or legal advice and shouldn’t be used to avoid federal tax penalties. For guidance on your specific situation, please consult your own tax or legal advisor. If you’re doing estate planning, it’s important to work with professionals, including your attorney or tax expert. This content does not include specific investment advice or recommendations to buy or sell any securities. Also, while strategies like asset allocation and diversification can help manage risk, they do not guarantee profits or protect against losses in a declining market.