Converting $45,000 a year from a $520,000 traditional IRA between ages 63 and 72 can reduce the amount left for future required minimum distributions (RMDs), but the schedule is not automatically better than taking RMDs later. Each conversion generally becomes taxable income in the year it occurs, and the right answer depends on your filing status, other income, tax basis, state taxes, spending needs, investment returns and planning horizon.
The “average retiree” comparison in the headline is a scenario, not an established population statistic. No independent study in the cited IRS materials shows that retirees with this balance convert nothing. Treat the $520,000 balance and $45,000 annual conversion as assumptions to test against your own tax returns.
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What the proposed strategy actually does
At ages 63 through 72, a person following the proposal would convert $45,000 per year for 10 calendar years, or $450,000 before accounting for investment growth, withdrawals and conversion taxes. The money would move from a traditional IRA to a Roth IRA. The converted amount is generally included in taxable income for that conversion year.
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Required distributions are not optional once the applicable starting age is reached. The IRS states: “You must take your first required minimum distribution for the year in which you reach age 73.” The rule applies to traditional IRAs and other covered retirement accounts, subject to account-specific rules. See the IRS RMD FAQs.
How the RMD timeline works
Before age 73
There is generally no lifetime RMD for the original owner of a traditional IRA before the year the owner reaches 73. That creates a planning window for voluntary withdrawals or Roth conversions. A conversion performed in a calendar year before age 73 is not itself an RMD; it is a separate taxable transaction.
The year you turn 73
Your first RMD is for the year you reach 73. You may take it during that year or delay the first distribution until April 1 of the following year. Delaying does not eliminate the distribution. It can cause two RMDs in the following calendar year: the delayed first-year amount plus the RMD for that second year.
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How the amount is calculated
An IRA RMD is generally based on the account balance on the prior December 31 divided by an IRS life-expectancy factor. The applicable table depends on the owner’s circumstances, including certain spousal-beneficiary situations. A precise dollar amount cannot be calculated from the $520,000 starting balance alone because future balances, the relevant December 31 balance and the correct IRS factor are still unknown.
The IRS explains the general calculation and table rules in its RMD FAQ.
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Roth IRA treatment
The IRS says, “The RMD rules do not apply to Roth IRAs or Designated Roth accounts while the owner is alive.” Beneficiary distribution rules still apply after the owner’s death. Moving money to a Roth therefore changes the timing and type of required withdrawals; it does not guarantee a lower lifetime tax bill.
Why a $45,000 conversion is taxable
A Roth conversion is generally included in income for the calendar year in which the conversion occurs. The amount can push taxable income into a higher marginal bracket, affect state income tax and change the taxation or cost of other items tied to income. The federal rate schedule alone cannot tell you the actual rate on your next dollar.
For 2026, the IRS lists seven individual federal income-tax rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your filing status and taxable income determine which brackets apply. The rates are published in Internal Revenue Bulletin 2025-45; the schedule itself is not a calculation of the tax on this scenario.
IRS guidance identifies Form 8606 for reporting conversions and determining the amount included in income. Existing after-tax basis can affect the taxable portion. Publication 17 explains that reporting, while IRS Topic 451 covers the tax treatment of individual retirement arrangements.
The RMD restriction that changes the plan at 73
You cannot use a Roth conversion to satisfy an RMD. Publication 17 states: “You can’t convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 73 under the required minimum distribution rules (discussed later)).”
In practical terms, the RMD for age 73 must be distributed first and handled as a distribution. Only amounts above the required distribution can be considered for a conversion, and any additional conversion is taxable in that year. If you delayed your first RMD until April 1 of the next year, you still could not convert the delayed RMD amount.
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Converting versus taking RMDs later
The two paths should be compared using the same assumptions for investment returns, inflation, withdrawals and future tax law. The key differences are structural:
| Planning feature | Annual-conversion path | No-conversion path |
|---|---|---|
| Ages 63–72 | $45,000 conversion each year under the proposed scenario; each year’s taxable amount is reported for that year | No conversion income from this strategy |
| Total scheduled conversions before 73 | $450,000 over 10 years before growth, withdrawals and taxes | $0 under the scenario |
| Year owner reaches 73 | RMD is still required and cannot itself be converted | RMD is required under the same age rule |
| Traditional IRA balance at 73 | May be lower, higher or exhausted depending on returns, withdrawals, taxes and conversion funding | Remains subject to the account’s RMD calculation |
| Roth IRA owner RMDs | No lifetime RMDs for the original owner on Roth assets | No Roth assets are created by this strategy |
| Tax timing | Tax is accelerated into conversion years | Tax generally occurs when distributions are taken, including RMD years |
The table does not identify a winner. A conversion may reduce later RMDs, but the tax paid during the conversion years can be larger than the tax that would otherwise have been due. Conversely, if later taxable income is likely to be higher, paying tax during lower-income years may be useful.
Inputs you need before deciding how much to convert
A $520,000 balance is not enough to produce a reliable recommendation. Gather these facts for every year from 63 through at least the first RMD year:
- Whether the entire balance is in a traditional IRA, or whether other account types are involved.
- Any after-tax basis and the records supporting it.
- Filing status and the income of a spouse, if applicable.
- Wages, pensions, Social Security, interest, dividends, capital gains and other taxable income.
- Federal and state tax residence, including whether a move is planned.
- Planned annual spending and which accounts will fund it.
- Expected investment return, inflation assumptions and the date conversions occur.
- Whether conversion taxes will be paid from cash outside retirement accounts or withheld from the transaction.
- Spouse age, beneficiary designations and the intended planning horizon.
- Health-care or other costs that may change as income changes.
Do not assume that a conversion tax can be paid from the IRA without consequences. Using retirement money for tax reduces the amount moved to the Roth and can create additional taxable effects. Model the source of the tax payment explicitly.
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A practical way to model the decision
1. Establish a no-conversion baseline
Project the traditional IRA balance each December 31 using the same return, inflation and withdrawal assumptions you will use for the conversion case. Calculate the RMD beginning in the year the owner reaches 73, and show the optional April 1 delay separately so the two-RMD calendar-year effect is visible.
2. Add the conversion schedule
For the alternative case, subtract each $45,000 conversion on its actual conversion date, add any investment growth on the remaining balances, and show the tax payment as a separate cash flow. Do not reduce the balance by an assumed tax amount unless the scenario specifies that retirement funds pay the tax.
3. Calculate annual taxable income
For each year, combine conversion income with the household’s other taxable income. Apply the filing status and the federal and state rules in effect for that year. Record marginal and effective rates rather than looking only at the headline bracket.
4. Apply RMD rules at 73
Use the prior December 31 balance and the applicable IRS life-expectancy factor. Keep the RMD separate from any optional conversion. If the first RMD is delayed, include both the delayed amount and the next year’s amount in the later calendar year.
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Compare cumulative federal and state tax, annual taxable income, RMD amounts and timing, account balances after tax payments, spending flexibility and survivor or beneficiary outcomes. A plan that lowers RMDs but leaves too little cash for spending may be unsuitable. A plan that pays more tax early may still be attractive if it improves later flexibility, but that is a household-specific result.
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Execution checklist for a conversion year
- Confirm the traditional IRA balance, basis records and beneficiary information with the custodian.
- Estimate total taxable income before selecting a conversion amount.
- Choose an amount that fits the intended federal and state tax range rather than automatically using $45,000.
- Decide how the tax will be paid and reserve cash for the liability.
- Request a direct trustee-to-trustee conversion when available, and verify the destination Roth IRA account.
- Keep the conversion confirmation, date, amount and tax forms with the year’s records.
- File Form 8606 when required and reconcile the conversion with the tax return.
- Recalculate the next year’s plan using the new balances and updated income.
Common mistakes and how to avoid them
Treating the headline as a recommendation
The $45,000 figure is a proposed schedule, not an IRS limit or a generally optimal amount. A smaller conversion may use available tax capacity; a larger one may cross a bracket or affect other income-sensitive items.
Calling the “average retiree” a measured fact
The cited official sources do not establish a study showing that retirees with a $520,000 balance convert nothing. Use that comparison only as a hypothetical no-conversion case unless a separate, identified study supplies a population, year, sample and definition of “average.”
Converting the RMD
The year-73 RMD must be taken separately. A custodian’s ability to move money between IRA accounts does not override the rule that the required amount cannot be converted.
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Ignoring the first-year delay consequence
Delaying the first RMD until April 1 can create two taxable RMDs in the following calendar year. Include both when estimating that year’s income.
Using the wrong life-expectancy table
The IRS table depends on the owner’s circumstances, including certain spousal-beneficiary cases. Verify the applicable table rather than dividing by a factor copied from a generic example.
Assuming Roth means tax-free in every respect
The lifetime RMD advantage for the original owner does not erase taxes paid on conversion, and beneficiary distribution rules still apply. Evaluate the household’s entire tax and estate horizon.
When professional help is worthwhile
A tax preparer or tax-planning professional experienced with Roth conversions can model the actual return, basis, state tax and RMD schedule. Ask for a year-by-year projection showing both conversion and no-conversion cases, the source of conversion-tax payments, the first-RMD delay option and beneficiary assumptions. Review current IRS materials before executing because tax law and account rules can change.
Bottom line
Retiring at 63 with $520,000 does not by itself justify converting $45,000 a year through age 72. The strategy creates up to $450,000 of scheduled conversions before growth and withdrawals, accelerates taxable income, and still leaves an RMD obligation at 73. Its value depends on whether the early tax cost is justified by lower future RMDs, different income timing, spending flexibility and survivor objectives. Build both projections with your actual income, basis, filing status, state and cash needs, then verify the transaction and reporting with a qualified professional.
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