Should I Convert $120,000 Per Year To A Roth To Avoid RMDs?

Yes, if $120,000 lands inside your target tax bracket after your other income; no, if it overflows the bracket or trips IRMAA or ACA subsidy cliffs. Converting a fixed round number every year until the IRA is gone is allowed, and for many married pre-retirees $120,000 is close to right, but the right amount comes from bracket math each year, not a number picked once.

What a Roth Conversion Actually Does to RMDs

A conversion moves money from a pre-tax account (traditional IRA, rollover IRA, or former 401(k)) to a Roth IRA. You pay ordinary income tax on the converted amount that year; in exchange, the Roth grows tax-free, has no RMDs during your lifetime, and passes to heirs income-tax-free.

RMDs begin at age 73 under current law (SECURE 2.0), calculated by dividing your prior-year-end balance by an IRS life-expectancy factor. A $2 million traditional IRA at 73 produces a first-year RMD around $77,000, rising each year. That stacks on Social Security and pension income, often landing in the 22% or 24% bracket, triggering IRMAA, and taxing up to 85% of Social Security benefits. Converting before 73 shrinks the balance the calculation runs on; done well, it can eliminate RMDs entirely.

Sizing the Number: Rules and Watchouts

The bracket ceiling governs. Size conversions to fill, but not overflow, a target bracket. For a married couple filing jointly in 2025, the 22% bracket runs to $206,700 of taxable income and the 24% bracket extends to $394,600.

IRMAA. Medicare premiums are set by your modified adjusted gross income two years prior. In 2025, the first surcharge kicks in at $106,000 for singles and $212,000 for married couples filing jointly; know the threshold before you convert, not after.

The ACA trap. Between 60 and 65 on marketplace coverage, conversions raise MAGI and can shrink or erase premium tax credits. A conversion that saves $15,000 in future tax can cost $10,000 in lost subsidies this year, so the net needs to be modeled, not assumed.

The 5-year rule. Each conversion starts its own 5-year clock for penalty-free withdrawal of converted principal if you're under 59½.

Time horizon. Converting at 62 with $2 million and decades of compounding ahead is a very different trade than converting at 71 with $400,000.

An Illustrative Example

Consider a hypothetical couple: both 64, recently retired, $1.8 million in a traditional IRA rollover, $85,000 of taxable income before any conversion, not yet on Medicare. In 2025, the top of the 22% bracket for married filing jointly is $206,700, so after the standard deduction they can convert roughly $105,000 to $115,000 before hitting 24%. Converting $120,000 pushes a small amount into 24%, which may still be worth it if their RMDs at 73 would be taxed at 24% or higher.

But they're on ACA marketplace coverage, and a $120,000 conversion could eliminate a premium tax credit worth $14,000 this year. They may be better served converting $95,000 and revisiting after Medicare eligibility at 65. This is clearly illustrative, not a projection for any actual client, but it shows how a round number becomes a real answer.

How This Connects to Roth Conversion Strategy

How much to convert each year is one piece of a larger sequence: whether to convert at all, and how to order Social Security, taxable liquidations, and conversions. I cover the full picture in Roth Conversion: A Practical Guide for High Earners and Pre-Retirees. Within the Sporos framework, conversions live in the Soil layer, the tax architecture that determines what every dollar of return actually keeps.

Frequently Asked Questions

Is converting $120,000 per year to a Roth the right amount?

It depends on your other income, your bracket, and factors like ACA credits and IRMAA. It should come from a bracket analysis, not a round number.

Can I convert my entire IRA to avoid RMDs?

Yes, but converting quickly can push you into the 32% or 37% bracket and cost more than the RMDs would have. Multi-year conversions across the 22% and 24% brackets usually work out better.

Do Roth IRAs have RMDs?

No, not during the account owner's lifetime under current law. Inherited Roth IRAs do have distribution requirements for non-spouse beneficiaries under the 10-year rule.

Should I convert before or after claiming Social Security?

Most clients are better served converting in the gap years between retirement and claiming, when other income is low and bracket headroom is widest.

What to Do Next

1. Pull your most recent traditional IRA and rollover IRA balances and project what your RMDs will look like at 73 using the IRS Uniform Lifetime Table.
2. Estimate your total taxable income in the years between now and 73, including any income from work, pensions, or planned Social Security claiming.
3. Map that income against 2025 bracket thresholds, IRMAA breakpoints, and, if applicable, ACA credit phaseouts to identify how much bracket headroom you actually have.
4. If the numbers suggest meaningful RMD exposure, bring those figures to a conversation with a fiduciary advisor who can model the multi-year conversion schedule before committing to a dollar amount.

The information provided is for educational purposes only and does not constitute investment, legal, or tax advice. Tax law changes frequently — verify current rules before acting. Consult with qualified professionals for guidance specific to your situation.