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

The question I hear most often from pre-retirees sitting on a large traditional IRA is some version of this: "Can I just convert $120,000 a year until it's gone?" It's a reasonable instinct. Required minimum distributions feel like a tax ambush waiting in your seventies, and Roth conversions feel like a way to defuse it. The answer is yes, you can, but "can I" and "should I" are different questions, and the $120,000 figure is usually a guess, not a calculation.

What a Roth Conversion Actually Does to RMDs

A Roth 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 in the year of conversion. The payoff is that the Roth account grows tax-free, is never subject to RMDs during your lifetime, and passes to heirs income-tax-free.

RMDs begin at age 73 under current law (SECURE 2.0), and the annual amount is calculated by dividing your prior-year-end account balance by an IRS life-expectancy factor. A $2 million traditional IRA at age 73 produces an RMD somewhere around $77,000 in year one, rising each year as the divisor shrinks. That RMD stacks on top of Social Security, pension income, and any other taxable income you have, often pushing a retiree into the 22% or 24% bracket, triggering IRMAA surcharges on Medicare premiums, and sometimes taxing up to 85% of Social Security benefits. Converting before 73 reduces the balance subject to that calculation. Done well, it can reduce or eliminate RMDs entirely.

The Rules, Tradeoffs, and Watchouts

The mechanics are straightforward. The tradeoffs are not.

The bracket ceiling is the governing rule. The point of converting is to pay tax now at a lower rate than you'd pay later. That means your conversion amount should be sized to fill, but not overflow, a target bracket. For a married couple filing jointly in 2025, the 22% bracket runs up to $206,700 of taxable income and the 24% bracket extends to $394,600. Converting $120,000 a year is only sensible if that amount actually lands within your target bracket after accounting for other income sources.

IRMAA is the most overlooked watchout. Medicare Part B and Part D premiums are determined by your modified adjusted gross income two years prior. In 2025, the first IRMAA surcharge kicks in at $106,000 for singles and $212,000 for married couples filing jointly. A large conversion can push you over a threshold and cost thousands in added premiums, sometimes for two consecutive years. Many clients see this as an acceptable cost if the long-term tax savings are large enough. The key is knowing the threshold before you convert, not after.

The ACA trap applies if you're converting before Medicare. If you're between 60 and 65 and purchasing insurance through the ACA marketplace, conversions increase MAGI and can reduce or eliminate premium tax credits. A conversion that looks like it saves $15,000 in future tax can simultaneously cost $10,000 in lost ACA subsidies in the current year. The net may still be positive, but it needs to be modeled, not assumed.

The 5-year rule still applies to each conversion. Each conversion starts its own 5-year clock for penalty-free withdrawal of converted principal if you're under 59½. If you're already past 59½, this is largely a non-issue for accessing the funds, though a separate 5-year rule applies to earnings.

The time horizon is everything. Conversions front-load the tax cost in exchange for back-end tax freedom. If you convert in your late sixties and expect significant longevity, you have roughly a decade or more for that Roth account to compound tax-free before your heirs inherit it. Shorter time horizons narrow the math. Converting at 71 with a $400,000 balance is a different calculation than converting at 62 with a $2 million balance.

An Illustrative Example

Consider a hypothetical couple: both 64, recently retired, with $1.8 million in a traditional IRA rollover. Their current taxable income before any conversion is $85,000 (Social Security not yet claimed, small pension, modest dividends). They are not yet on Medicare.

In 2025, the top of the 22% bracket for married filing jointly is $206,700 of taxable income. After their standard deduction, they can convert roughly $105,000 to $115,000 before hitting the 24% bracket. Converting $120,000 would push a small amount into 24%. That may still be worth doing if their projected RMDs at 73 would otherwise be taxed at 24% or higher.

But here is what the raw number misses. They are on ACA marketplace coverage. A conversion of $120,000 could eliminate their premium tax credit, costing them an additional $14,000 in health premiums in the current year. The net tax cost of that conversion rises meaningfully. They may be better served converting $95,000, staying under the ACA threshold, and revisiting the strategy after Medicare eligibility at 65.

This is a clearly illustrative scenario, not a projection for any actual client, but it captures the kind of analysis that turns a round number into a real answer.

How This Connects to Roth Conversion Strategy

The question of how much to convert each year is one piece of a larger set of decisions: whether to convert at all, in what order to draw down accounts, and how to sequence Social Security, taxable liquidations, and Roth conversions to minimize lifetime tax. I cover all of that in Roth Conversion: A Practical Guide for High Earners and Pre-Retirees. That pillar page is the right starting point if you want to understand the full picture before zeroing in on a number.

Within the Sporos framework, Roth conversions live in the Soil layer of the plan, the tax architecture that determines what every dollar of return actually keeps. The Harvest stage is where the sequencing pays off, because a lower RMD burden in your seventies means more control over your taxable income in the years that matter most.

Frequently Asked Questions

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

It depends entirely on your other income, your tax bracket, and external factors like ACA credits and IRMAA. $120,000 is a reasonable starting point for many married pre-retirees but it should be derived from a bracket analysis, not picked as a round number.

Can I convert my entire IRA to avoid RMDs?

Yes, but converting a large IRA quickly can push you into the 32% or 37% bracket, producing a tax bill that may exceed what the RMDs would have cost. Multi-year conversions spread across the 22% and 24% brackets usually produce better outcomes than a single large conversion.

Do Roth IRAs have RMDs?

No. Roth IRAs are not subject to RMDs 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.

What happens if I convert too much in one year?

You cannot undo a conversion. Before 2018, recharacterizations were allowed; they are no longer permitted. Excess conversions cannot be reversed, which is one reason careful planning before year-end matters.

Does converting affect my Social Security taxation?

Yes. Roth conversion income is included in the provisional income calculation that determines how much of your Social Security benefit is taxable. Large conversions before you claim Social Security can push more of your benefit into taxable territory in that year.

Should I convert before or after claiming Social Security?

Most clients are better served converting in the gap years between retirement and Social Security claiming, when other income is low and the bracket headroom is widest. This is one of the most valuable planning windows available to pre-retirees.

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.