Most pre-tax account holders think about Roth conversions the same way they think about income tax — annually. The question is always some version of: how much can I convert this year before hitting the next bracket? That's the right question for the current year. It's the wrong frame for the overall decision.
The structural problem is compounding. A $600,000 pre-tax balance earning 6% annually becomes roughly $1.5 million over 15 years. At age 73, the IRS begins requiring minimum distributions from that balance whether you need the income or not. On a $1.5 million balance, the first Required Minimum Distribution is approximately $57,000 — taxable income you didn't choose, arriving in a year that may already have Social Security on top of it. If the 22% bracket is where you are before the RMD, it may not be where you land afterward.
Roth conversions before age 73 are the mechanism for controlling that outcome. Every dollar converted today reduces the future RMD. The question is how many dollars, at what rate, over what window — and the only way to answer it is to model the full projection, not just the current year's bracket headroom.
Why RMDs Change the Calculation
The Required Minimum Distribution rules exist to ensure tax-deferred accounts eventually generate taxable income. Starting at age 73, the IRS requires annual distributions from traditional IRAs and 401(k)s, sized by dividing the prior year-end balance by a life expectancy factor from the Uniform Lifetime Table.
The factor at age 73 is 26.5, producing a distribution of roughly 3.8% of the balance. The percentage rises each year as the divisor decreases: 4.4% at 80, 5.3% at 84, 6.3% at 88. On a large, compounding balance, the RMD dollar amount grows even as the rate increases — because the balance is growing faster than it is being drawn down.
Two consequences follow. First, taxable income in the RMD years is largely outside your control. Second, the balance that wasn't converted before 73 passes to heirs as ordinary income. Under the SECURE Act, most non-spouse beneficiaries must fully distribute an inherited IRA within ten years, potentially pushing large distributions into high-bracket years. The conversion window before 73 is the only period when you can structurally reduce both problems.
The Conversion Window
The gap between retirement and age 73 is typically the period when systematic conversions are most efficient. W-2 income has stopped, Social Security may not have started, and RMDs have not begun — taxable income is near a career low. That combination puts the marginal bracket lower than it was during peak earning years and lower than it may be again once RMDs and Social Security arrive together.
The annual optimization is straightforward: identify other income already in the picture, subtract the standard deduction, find how much conversion headroom remains before the next bracket boundary. The strategic question is harder — given the current balance and expected growth rate, how many years of conversions at what annual amount will reduce future RMDs to a manageable level? There is no general answer. A $250,000 balance and a $1.2 million balance call for completely different strategies even at identical growth rates.
IRMAA: The Rate That Doesn't Appear in the Tax Tables
Medicare Part B and D premiums are income-tested via the Income-Related Monthly Adjustment Amount. IRMAA uses Modified Adjusted Gross Income from two years prior to set a surcharge on top of the standard premium. At 2024 thresholds for married filing jointly, MAGI above $206,000 triggers a $69.90 per-person monthly surcharge — $1,678 per year for a couple. The top tier above $750,000 adds $419.30 per person per month.
Roth conversions increase MAGI directly and can push it across an IRMAA tier even in a year where the income tax impact looks efficient. The combination of income tax and IRMAA surcharge on a marginal conversion dollar can exceed the stated bracket rate. The tool tracks MAGI separately from taxable income and includes the IRMAA surcharge in total annual cost.
Set your current age, pre-tax balance, and an annual conversion amount. The model runs two scenarios — with and without that conversion — across the full projection window and shows the cumulative tax outcome including what your heirs would owe on the remaining balance.
What the Numbers Show
The total tax burden row — your income taxes plus IRMAA plus the inheritor's tax on the remaining pre-tax balance — is the number that determines whether systematic conversion was economically justified. For most people with significant pre-tax balances ($400,000 and above) and a 10-plus year conversion window, the conversion strategy reduces combined burden. Below that threshold, or with a short window, the conversion tax cost can roughly offset the benefit.
Two outputs are worth examining separately. First, the IRMAA row: in some scenarios, aggressive conversion reduces lifetime income tax while increasing Medicare surcharges — the two numbers move in opposite directions, and a strategy that looks optimal on brackets alone may be suboptimal when IRMAA is included. Second, the inheritor's tax: a large remaining pre-tax balance distributed within ten years under the SECURE Act can produce a concentrated taxable event for heirs at their marginal rate, which may exceed the rate at which conversions could have been done today.
Toggle to the Effective Rate view to see how the two strategies diverge over time. The no-conversion scenario typically shows a relatively flat effective rate until age 73, then a step up as RMDs stack on top of Social Security. The conversion scenario shows a higher effective rate earlier, which steps down or holds steady after 73 as the RMD base is smaller.
Takeaways
• RMDs beginning at age 73 create mandatory taxable income from pre-tax accounts; the conversion window before that age is the only mechanism for reducing how large that income becomes
• The annual bracket optimization and the multi-year strategic question require different analyses — the former tells you how much to convert this year, the latter tells you whether to convert at all and for how long
• IRMAA surcharges apply to MAGI before the standard deduction; conversions that look efficient from a bracket perspective can push across an IRMAA tier and increase the effective marginal cost
• The correct metric for evaluating a conversion strategy is total tax burden: your income taxes and IRMAA over the projection, plus the inheritor's tax on the remaining pre-tax balance
• This tool assumes constant return, inflation-adjusted brackets at 2.5% per year, ordinary income only, and current-year MAGI for IRMAA — actual outcomes will vary with investment returns, legislative changes, and income sources not modeled here