Retired but Not Taking RMDs Yet? That’s Your Roth Conversion Window

Retired but Not Taking RMDs Yet? That’s Your Roth Conversion Window.

If you’ve recently retired, or you’re about to, you might be sitting in the lowest tax bracket you’ll see for the rest of your life. Most people don’t realize that, and the window closes on its own.

Think about it: your paycheck is gone, so earned income has dropped. You probably haven’t started Social Security yet. And required minimum distributions (RMDs) from your traditional IRA or 401(k) won’t kick in until age 73. That gap between retirement and RMDs? It’s prime time for Roth conversions, and it can reduce your tax burden for decades if you use it well.

What Is a Roth Conversion?

A Roth conversion moves money from a pre-tax retirement account (a traditional IRA, an old 401(k), etc.) into a Roth IRA. You pay income tax on whatever you convert that year, but after that, the money grows tax-free and comes out tax-free.

There’s no income limit on who can convert, and no cap on how much. The basic question is simple: would you rather pay taxes now at a rate you know, or later at whatever rate the IRS happens to charge?

Why This Window Is So Valuable

For most of your career, your salary ate up the lower tax brackets before you could do anything about it. Now, in early retirement, those brackets may be sitting there wide open.

Here’s what happens if you just let things ride. Your traditional IRA keeps growing. By the time RMDs start at 73, the balance is bigger, and the government tells you how much to withdraw each year. That money gets taxed as ordinary income whether you need it or not. You’ve lost the ability to choose when and how much to pay.

Roth conversions during this window flip that dynamic. You fill those lower brackets on your terms, shrink the traditional IRA balance, and set yourself up for smaller (or nonexistent) RMDs down the road.

The Bracket Math

Let’s walk through a hypothetical. A married couple, both 66, recently retired, no Social Security yet. They have $1.5 million in traditional IRAs and about $40,000 a year in pension and investment income.

For 2026, the standard deduction for married filing jointly is $32,200. If both spouses are 65 or older, they each get an additional $1,650, bringing it to $35,500. The One Big Beautiful Bill Act (OBBBA) also introduced a new senior deduction of up to $6,000 per qualifying taxpayer 65 and older, though it phases out for joint filers above $150,000 in income.

With only $40,000 in other income, a big portion gets absorbed by the standard deduction. That leaves a lot of room in the lower brackets:

• 10% on taxable income up to $24,800 (joint filers)
• 12% up to $101,400
• 22% up to $211,400

So this couple could reasonably convert $100,000 to $130,000 a year and keep most of it taxed at 12% to 22%. Compare that to waiting and eventually dealing with RMDs taxed at 24% or more, stacked on top of Social Security and pension income.

Do that for five to seven years and you’ve moved $500,000 to $900,000 into a Roth at rates you chose. That money will never generate an RMD. It grows and comes out tax-free for the rest of your life.

The Medicare Trap

This is where people get caught off guard. If you’re 65 or older and on Medicare, conversions don’t just affect your tax bracket. They can also jack up your Medicare premiums through something called IRMAA (Income-Related Monthly Adjustment Amount).

IRMAA looks at your income from two years ago to set your premiums. A conversion you do in 2026 shows up on your 2028 Medicare bill.

For 2026, the first IRMAA surcharge hits at $218,000 of modified adjusted gross income (MAGI) for joint filers. Go over by a dollar and you’re paying an extra $81.20 per month per person for Part B, plus $14.50 per month per person for Part D. For a couple, that’s about $2,300 a year in extra premiums.

So when you’re deciding how much to convert, you can’t just look at tax brackets. You need to know your total MAGI, including the conversion amount, and make sure you’re not accidentally stepping over an IRMAA cliff. Sometimes converting a few thousand dollars less saves you thousands in Medicare costs.

The 5-Year Rule (Probably Not a Problem)

You’ve likely heard about the “5-year rule” for Roth IRAs. There are actually two of them, but for most retirees, neither is a big deal.

The first one says you’ll owe a 10% penalty if you withdraw converted funds within five years. But that penalty only applies if you’re under 59½. If you’re in the retirement-to-RMD window, you’re past that age, so this rule doesn’t bite.

The second one says your Roth needs to be open for five years before you can pull out earnings tax-free. If you already have a Roth, even a small one, that clock is probably already ticking. If you don’t, it’s one more reason to get started.

Don’t Forget About State Taxes

Federal taxes get all the attention, but your state matters too. Some states tax Roth conversions as ordinary income. Others, like Texas and Florida, have no state income tax at all. And states like New York and California can add a real bite to the cost of a conversion. Where you live (or where you’re thinking about moving) should absolutely factor into how much you convert and when.

Key Takeaways

• The years between retirement and age 73 are often the cheapest tax years you’ll ever have. Don’t waste them.
• You pick the amount. Convert enough to fill the lower brackets without jumping into a higher one or triggering IRMAA.
• RMDs are on the IRS’s schedule. Roth conversions are on yours. A smaller traditional IRA means smaller mandatory withdrawals later.
• Medicare premiums are part of the math. IRMAA uses a two-year lookback, so today’s conversion affects premiums down the road.
• More years in the window means more room to spread it out. Starting earlier gives you more flexibility.

Worth a Conversation

This window doesn’t stay open forever. Every year you wait is a year of low-bracket space that’s gone for good. Whether Roth conversions make sense for you, and how much to convert, depends on the full picture: income sources, tax brackets, Medicare, and what you’re trying to accomplish long-term.

This article is for educational purposes only and does not constitute personalized financial, tax, or This article is for educational purposes only and does not constitute personalized financial, tax, or investment advice. Willcox Wealth Management is a registered investment adviser. Please consult with a qualified professional before making financial decisions based on the information presented here.