Roth Conversions Before RMDs: The Age 65-73 Window

The decision: convert now or pay the RMD later

Meet Margaret and Tom. Margaret is 65, retired this year, born in 1955. Tom is 64 and still drawing a small pension. They file jointly, live in Texas (no state income tax), and Margaret holds $1.2 million in a traditional IRA. Their only other income for now is Tom’s $40,000 pension; they plan to delay Social Security to 70 to lock in the 8%-per-year delayed credits.

Here is the problem hiding in that $1.2M. Margaret was born in 1955, so under SECURE 2.0 §107 her first required minimum distribution hits at age 73. If the IRA grows to roughly $1.5M by then and she does nothing, her first RMD is $1,500,000 ÷ 26.5 = $56,604 — forced out, taxed as ordinary income, stacked on top of two Social Security checks. That single distribution can push them into the 24% bracket and past the $206,000 MFJ IRMAA tier, raising their Medicare premiums two years later.

The fix is the eight-year window in front of them. From 65 through 72 — before that first RMD — their taxable income is at a lifetime low. That is the cheapest time in their lives to pull money out of the traditional IRA and convert it to Roth. The decision resolves clearly in their case: convert about $100,000 a year for eight years, drain $800,000 out of the pre-tax bucket at 12–22% rates, and shrink the RMD that would otherwise arrive at 24%-plus.

Why the 65-73 window exists (and why it closes)

Three things line up only in this window:

• Wages have stopped. No salary means no high-bracket income crowding out conversion room.
• Social Security can be delayed. If you wait until 70, no benefit income lands in the 65–69 years — and the 8%/year delayed credits make waiting worth it on their own.
• RMDs have not started. The traditional IRA is not yet forcing taxable dollars out, so you control the timing and amount of every withdrawal.

The window closes the year you turn 73. SECURE 2.0 §107 set the required beginning age at 73 for anyone born 1951–1959 and 75 for those born 1960 or later. A 1955-born retiree who stops work at 65 gets eight conversion years (ages 65, 66, 67, 68, 69, 70, 71, 72). Someone born in 1962 who retires at 65 gets ten. Miss the window and the IRS sets the withdrawal schedule for you — on the agency’s terms, at the worst rates.

The 8-year conversion plan, year by year

Margaret and Tom’s other taxable income is about $40,000 (Tom’s pension, less the standard deduction). For 2026 the MFJ 22% bracket runs to $206,700 and the 24% bracket to $394,600. They have enormous headroom — but they cap each conversion at roughly $100,000 for two reasons: it keeps their total taxable income comfortably inside the 22% band, and it keeps their MAGI under the $206,000 MFJ IRMAA tier so they never trigger a Medicare surcharge in the lead-up to enrollment.

The forced first-year distribution drops from $56,604 to about $26,415 — a $30,000 reduction in forced taxable income, repeated and compounding every year thereafter because each future RMD is a percentage of a smaller base. Meanwhile the $800,000 that moved to Roth keeps growing with no lifetime RMD at all (IRC §408A; Roth IRAs are exempt from owner RMDs), and every dollar comes out tax-free for them and for their heirs under the inherited-Roth 10-year rule.

The RMD math, spelled out

RMDs are not a flat percentage you choose — they are mandatory and rise each year as the divisor shrinks. The first-year mechanics:

1. Take the prior-year-end balance of the traditional IRA.
2. Divide by the Uniform Lifetime Table divisor for your age (IRS Pub. 590-B, Table III). At 73 the divisor is 26.5, which works out to roughly 3.77% of the balance.
3. The result is the minimum you must withdraw and report as ordinary income that year.

So $1.5M ÷ 26.5 = $56,604. The next year the divisor falls to 25.5, the year after to 24.6, and so on — meaning the percentage forced out climbs steadily into your late 70s and 80s. Missing an RMD carries a 25% penalty on the shortfall under SECURE 2.0 (down from the old 50%), reduced to 10% if you correct it inside the correction window. The point of converting early is to shrink the base before this escalator starts.

Filling the brackets: how much to convert

The conversion amount is a bracket-management decision, not a round number. The goal is to convert up to — but not past — the top of the bracket you are willing to pay now. For a MFJ couple in 2026:

Margaret and Tom could legally convert far more than $100,000 a year — the 24% bracket alone gives them $355,000 of room. But they hold their conversions to $100K because the binding constraint is not the income bracket; it is the $206,000 MFJ IRMAA cliff. Crossing it raises their Medicare Part B and Part D premiums two years later. The right conversion size is the smaller of (a) the top of your chosen bracket and (b) the IRMAA tier you do not want to cross. For most retirees, IRMAA binds first.

What most people miss: the front-end IRMAA trap

The biggest mistake is treating conversions as pure upside. They are not free — you pay tax today and you spike your MAGI in the conversion year. Three things people miss:

• IRMAA looks back two years. A $250,000 conversion at 65 sets your Medicare premium at 67. The $206,000 MFJ tier (2026) is the first cliff; cross it and your combined Part B + Part D surcharge jumps for a full year. This is why a steady $100K/year often beats one giant conversion.
• Conversions are irreversible. TCJA eliminated recharacterization — once you convert, you cannot undo it. If a market drop or a job offer changes your year, you are stuck with the conversion you already made. Convert late in the year when your income is known.
• The deadline is December 31, not April 15. Unlike an IRA contribution, a Roth conversion must be completed by year-end to count for that tax year. Waiting until tax season is too late — the window for the prior year has already closed.

The myth worth killing: “I’ll just wait and convert after RMDs start.” You cannot. Once RMDs begin, the required distribution must come out first and cannot be converted — only the amount above the RMD can go to Roth. The RMD itself is taxable income you no longer control. The eight-year gap is the only stretch where every dollar of withdrawal timing is yours.

When this does not pay off

Conversions in the gap years are not universal. Skip or shrink them if:

• Your tax rate today is higher than it will be at 73. If a large pension or rental income already keeps you in the 24%+ bracket through retirement, converting now does not save anything — you are paying the same rate either way.
• You will leave the IRA to charity. A traditional IRA left to a qualified charity passes tax-free, and Qualified Charitable Distributions (QCDs) at 70½+ satisfy RMDs without tax. Converting first would waste that.
• You need the IRA money to live on soon. Conversion tax is paid from outside funds, ideally a taxable account. If you have to pull conversion taxes from the IRA itself, the math weakens sharply.

Coordinating conversions with Social Security and Medicare

The reason the gap years work so well is that conversions, Social Security, and Medicare all collide if you let them. Sequencing matters:

1. Delay Social Security to 70 while you convert. Every year you wait past full retirement age adds an 8% delayed credit, and keeping benefits off your return through 69 leaves the brackets clear for conversions. Once a benefit lands, up to 85% of it is taxable (the $44,000 MFJ threshold is not inflation-indexed), and it stacks on top of every converted dollar.
2. Front-load conversions into the early gap years. Converting more at 65–68, before Social Security starts and while the brackets are emptiest, is cheaper per dollar than waiting until 71–72 when you may already be drawing benefits.
3. Watch the two-year IRMAA lag at every step. Your conversion at 65 sets your Medicare premium at 67. Map each year’s projected MAGI against the $206,000 MFJ tier before you convert, not after.

Done in that order, an early-retiree couple can convert several hundred thousand dollars at 12–22% rates, keep Medicare premiums at the base tier, and arrive at 73 with a traditional IRA small enough that the forced RMD barely registers.

The lever to pull

If you retired before 73 and hold a seven-figure traditional IRA, the eight-year (or ten-year) gap before your first RMD is the most valuable tax window of your life — and it is closing one year at a time. Run the number that decides it: estimate your IRA balance at 73, divide by 26.5, and ask whether that forced $50,000–$60,000 distribution — stacked on Social Security — will push you into 24% and past the $206,000 IRMAA tier. If it will, convert each year up to the smaller of your target bracket and your IRMAA tier, complete it by December 31, and pay the tax from a taxable account. Every $100,000 you move now is a dollar that never shows up on a future RMD.