A 75-year-old retiree already taking RMDs wonders whether they’ve missed the boat on Roth conversions — the strategy could raise their tax rate and Medicare premiums. This week’s Kiplinger Wealth Wise column puts the question to financial experts, and their answer is nuanced. Here’s what they said.
Roth conversion timing after RMDs begin (Image: Kiplinger)
Roth Conversions After RMDs: What the Experts Say
Retiring with a large traditional IRA balance sounds great in theory, but in practice it can mean large required minimum distributions (RMDs), higher taxes, and income-related monthly adjustment amounts (IRMAAs) that can raise Medicare premiums by hundreds of dollars per month. Non-spouse heirs must also empty an inherited IRA within 10 years, often during their peak-earning years.
Al Kingan, an estate and business planning executive with MassMutual, tells Kiplinger he “would not say that this person missed a Roth conversion opportunity.” He recommends measured, partial conversions rather than all-or-nothing: fill up the current tax bracket — especially at the 22% or 24% rates — and see what conversion amount that allows each year.
One key rule Kingan notes: RMDs must be withdrawn first and cannot themselves be converted. Only after the RMD is taken can additional money be converted to a Roth. As an example, the reader might move roughly $50,000 a year into a Roth IRA without landing in a higher tax bracket — if it’s also manageable from an IRMAA standpoint.
Other Strategies the Column Mentions
Kingan also points to two companion ideas: investing unneeded RMDs in a taxable account, where appreciation gets a step-up in basis at death with no 10-year rule for heirs, and using qualified charitable distributions (QCDs) to satisfy RMDs while supporting a partial-conversion plan. Note this is reporting on Kiplinger’s experts, not personal financial advice — retirement tax strategy depends on individual circumstances.
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Source: Kiplinger — read the full story there.
