Should You Do a Roth Conversion Before RMDs Start?
By Bill Wolfson, licensed insurance professional · Paramount Financial Group, Haddonfield, NJ · NJ License #1003681
For many retirees, the years between retirement and the start of required minimum distributions are a window to convert traditional IRA money to a Roth at a lower tax rate than they'll face once RMDs begin. Whether it makes sense depends on your current bracket, your projected RMD size, and where the tax money will come from.
Watch: the Roth conversion tax trap most people miss.
Why the years before RMDs matter
Once RMDs begin, you must withdraw a set amount from traditional IRAs each year, and that amount is taxed as ordinary income. If your IRA has grown significantly, RMDs can push you into a higher bracket, raise Medicare premiums, and increase the taxable portion of Social Security. Converting some of that money to a Roth before RMDs start can reduce the future RMD amount and shift future growth to a tax-free account.
The rules to know
The conversion is taxable. The amount you convert is added to your taxable income for that year and taxed at your marginal rate.
It can't be undone. Since 2018, Roth conversions can't be recharacterized back to a traditional IRA.
RMDs come first. In a year you owe an RMD, you must take it before converting. You cannot convert an RMD.
Each conversion has its own five-year clock. If you're under 59½ and withdraw converted funds within five years of the conversion, a 10% penalty may apply.
Medicare looks back two years. Medicare's income-related surcharge (IRMAA) is based on your income from two years earlier. A large conversion can raise premiums two years later.
The trap: where does the tax money come from?
Paying the conversion tax out of the IRA itself means less money actually reaches the Roth. Paying it from outside money — a taxable savings or brokerage account — preserves the full converted amount. This is one of the most important variables in whether a conversion makes financial sense.
A common approach: convert in pieces
Instead of converting everything at once, many people convert a set amount each year — enough to fill up a lower bracket without crossing into a higher one or triggering IRMAA. This requires modeling your income, deductions, and bracket thresholds each year, ideally with a tax professional.
Free Guide
Roth Conversion & Liquidity Matrix
Bill's one-page matrix lays out conversion amount, tax cost, and liquidity trade-offs side by side so you can compare scenarios at a glance.
