RMDs News & Analysis

Roth IRA Conversion Plan Saves $600,000 Before Age 73 RMDs

A 63-year-old couple with $1.5 million in a traditional 401(k) plans to convert $600,000 to a Roth IRA at $75,000 annually over eight years. This strategy allows them to lock in a tax rate below 22% before required minimum distributions (RMDs) combine with Social Security benefits at age 73. Spreading conversions helps them avoid Medicare surcharges, which can reach $6,900 per person. This careful tax planning could save the couple tens of thousands of dollars in avoidable taxes, making it beneficial for ordinary investors approaching retirement to consider similar strategies.