For a large portion of retirees, the decade between retirement and the start of required minimum distributions (RMDs) is the most valuable tax-planning window of their lives. Income drops. Taxable brackets open up. And the choices made during that window — especially around Roth conversions — ripple through the rest of retirement and into the next generation.
This is a framework for thinking about it. Every situation is different, and the actual execution requires modeling with your specific numbers.
The setup: why this window is different
During your working years, your income fills the brackets. You’re in the 24% or 32% or 37% bracket and there’s not much that can change it. You save into your 401(k) or IRA pre-tax, deferring the tax bill until later.
During retirement (but before RMDs start at age 73 or 75, depending on your birth year), several things change:
- Earned income is usually gone. Your taxable income drops dramatically unless you’re pulling heavily from pre-tax accounts.
- Lower brackets become available. The 10%, 12%, and 22% brackets open up in ways they haven’t since your early career.
- Social Security may not yet be on. Many retirees delay claiming to age 70. That further compresses taxable income for several years.
- RMDs haven’t started. Once they begin at age 73 (for those born 1951-1959) or 75 (those born 1960+), they’ll fill taxable income brackets involuntarily.
This creates a window. For most households, it’s 8 to 15 years long.
What a Roth conversion actually does
A Roth conversion moves money from a traditional (pre-tax) IRA to a Roth IRA. You pay income tax on the converted amount in the year you convert. After that, the money grows tax-free forever, and withdrawals (subject to the five-year rule and age 59½) are tax-free.
The strategy, simplified: convert at today’s rate to avoid a higher future rate.
Why it often makes sense
Three forces push toward conversions in the low-income retirement years:
- Bracket arbitrage. Paying 12% or 22% now to avoid paying 32% or 37% later is a direct win, assuming you have an outside source of cash to pay the tax.
- RMD suppression. Every dollar you convert is a dollar that won’t be subject to RMDs. For households with large pre-tax balances, RMDs can push Medicare premiums (IRMAA), Social Security taxation, and ordinary-income tax higher than expected.
- Legacy efficiency. Inherited Roth IRAs are vastly more favorable than inherited traditional IRAs — especially after the SECURE Act’s 10-year rule, which forces most non-spouse beneficiaries to empty the inherited account within a decade.
Why it sometimes doesn’t
Not everyone benefits. Situations where we generally don’t convert, or convert less:
- You’ll be in a lower bracket in retirement than today. Unusual for disciplined savers, but it happens.
- You don’t have outside cash to pay the tax. Converting and paying the tax with the converted funds is much weaker economically — you lose the “pay the tax from a different bucket” lever.
- You plan to give heavily to charity. Qualified charitable distributions (QCDs) from traditional IRAs after age 70½ are a very tax-efficient way to both give and reduce RMDs. Converting to Roth removes that option.
- Health or longevity concerns are short. Roth conversions are essentially a bet on longevity. The longer your remaining life, the more the tax-free compounding benefits you. Short horizons reduce the value.
How much to convert, and when
The mechanical question is “how much should I convert this year?” The usual framework:
- Estimate your 2025 taxable income without any conversion.
- Identify the next tax bracket boundary — the point at which the marginal rate jumps meaningfully (12% → 22%, 22% → 24%, 24% → 32%).
- Consider converting up to that boundary. This is “filling the bracket.”
- Check second-order effects. Does the conversion push you into IRMAA? Does it reduce ACA subsidies if you’re on an exchange plan? Does it affect state taxes?
- Repeat annually. Markets change, tax laws change, and your income can shift year to year.
Many clients find that the right conversion amount varies meaningfully from year to year. A market drawdown is often a great conversion year, because you convert more shares for the same tax cost.
SWA pilot and executive situations
Airline pilots facing the FAA Age 65 retirement often enter the Roth conversion window with unusually large pre-tax balances — driven by years of high 401(k) and profit-sharing contributions. The window is firm (retirement is known), peak earning years end definitively, and the 8-year gap to RMDs at 73 is prime conversion territory.
For executives retiring with significant deferred compensation, the picture is more complex: you may have involuntary income for years post-retirement (NQDC payouts), and that income fills your brackets in ways a pilot’s doesn’t. Modeling is essential.
The bottom line
The Roth conversion decade isn’t something to tackle casually. But for the right household, at the right rate, with outside cash to pay the tax, it’s one of the most valuable planning opportunities the tax code offers — and it expires when RMDs start.
If you’d like help modeling your own situation — with your real numbers, your real tax bracket, and your real goals — we’d be glad to help.
This article provides general information about Roth conversions and should not be interpreted as personalized tax or investment advice. Tax laws, contribution limits, and RMD ages change over time. Consult your tax professional for recommendations based on your specific situation.