Converting 401Ks to Roth

Do I have this correct?

Say I’m retired and 60. Down the road I know I’ll be getting additional income via other pensions (age 65) and social security (67+) but until then my actual income is likely to be quite low (say $40,000 for this question). Then a good strategy would be to convert money from 401K accounts (rollover accounts) to Roth accounts?

With current brackets for a married couple then up to ~$83K would only be taxed at 12%. So for a few years I could do around $43K per year.

In retirement I seriously doubt I would ever been above the 22% bracket (with current laws anyhow) so doing additional conversions would be unlikely to net me anything.

All of this retirement thinking has me more and more inclined to just retire at the end of the year and not work another year as a contractor since I’m not sure how much I’d be trading income for more taxes down the road.



As you live in Arizona shouldn’t you be using 14.55% as the tax rate? This would leave only 85% of $43K being converted to a Roth IRA.

If your 401k balance is hefty RMDs after age 72 can be large. They start at a modest 2% or so but gradually step to bigger numbers. Take a look at when you might hit that 22% bracket and work at stretching that out for a lifetime.

I was not aware that RMD percentages increase over time. Can someone enlighten me on this?

RMD is based on your life expectancy and your account balance on Dec 31 each year. If account balance is constant your life expectancy is one year shorter the following year. So your RMD increases. The numbers become large at age 90 or so. You will find life expectancy tables in irs booklets.

Of course none of this is constant. Life expectancy changes and the tables can be revised.

If your broker knows your birthdate they can calculate your RMD number for you as soon as your Dec 31 balance is known.

Thanks for info. I never realized that. I thought it was a fixed percentage of income in retirement account. Thank for info.

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That’s exactly what I did starting at age 60…filled up the lower brackets with partial Roth conversions to pay taxes at the 12% and 22% rate now rather than 25% and 28%+ rates later. When I start taking social security at age 68 (maybe, will revisit in a few years), I will draw from my regular IRA and Roth in a combination that makes 50% of my SS taxable, rather than 85% which it would otherwise be. So, I hope to not only pay a lower tax on IRA withdrawals (either to live off or convert to a Roth now), but also minimize the amount that taxable IRA withdrawals drive SS into a more highly taxed situation.

Too much guessing in this thread. Guessing and taxes do not mix well!

Here is a link to the real info on RMD’s:

IRS RMD web info

In IRS Pub 590B, Appendix B, Table III is the “most used” table. It pertains to:

  • Unmarried Owners,
  • Married Owners Whose Spouses Aren’t More Than 10 Years Younger, and
  • Married Owners Whose Spouses Aren’t the Sole Beneficiaries of Their IRAs)

The rates begin at 72 at a 3.65% distribution required.

  • (100 / 27.4 = 3.6496)

The RMD rises to 3.77% at 73, 3.92% at 74, 4.07% at 75, etc. If you live to be 120, your RMD will be 50%!

RMD’s only mean that the amount must be withdrawn from the retirement account. It does not require you to spend it.

If you hold stock or other securities that you want to retain, you can transfer shares to your taxable account rather than selling, waiting for settlement, transfer cash, wait for availability then buying back the securities that you sold. Much simpler.

Yes, you have to pay tax on the amount of the distribution.

For transferred securities, your cost basis will be the value on the day of the transfer. That date will also be the acquisition date. When you eventually sell the asset, the basis and date will determine gain/loss on the investment and whether it will be long or short term for the capital gain.

Like @CuriousQ, I started conversions in 2010. I made my first and LAST RMD in January 2022 followed by my last Roth conversion of the small remainder in the IRA. Our assets are now:

  • Roth IRA 99.85%
  • Taxable brokerage 0.15%
  • Traditional IRA 0.00%

Does that help you?

All holdings and some statistics on my Fool profile page (Click Expand)


To make the decisions more interesting, someone posted, before The Great Change, that monies from TRADITIONAL IRAs could be used TAX FREE for health related expenses… IIRC, LT Care.
Therefore the recommendation was to keep some dry powder in traditonal IRA for use in paying those type expenses.
If all the monies dont get transferred before its too late, all is not lost? Those still untaxed dollars can potentially be used, tax free, for heath related exoenses?

Similar to @gdett2, I have no traditional IRA funds, therefore I didn’t pay a lot of attention.
If this applies to you, then do your own DD?

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I am envious. I have been doing Roth conversions aggressively for a number of years and had hoped to finish up before having to take my first RMD. I have about three more years to go to eliminate my TIRA but alas RMDs start next year for me.

There is talk in Congress about delaying the onset of RMD’s for a couple of years so fingers crossed. It would not be the worst thing if I have to take a couple of RMD’s but I would rather not.

Hi @bighairymike,

I don’t see a big issue for you.

You take your RMD to your taxable account then finish your target amount as a Roth conversion.

  • Same drain on the TIRA.
  • Same amount of tax paid.

The only difference is a little in the taxable bucket …

All holdings and some statistics on my Fool profile page (Click Expand)

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The worst of RMDs and Roth conversions is you do them at your highest incremental tax rates. Thats because your regular income fills the lower rate brackets.

Agree. It is a tiny issue but every dollar taken as an RMD is a dollar that will NEVER make it into my Roth so in that sense it is sub optimal.