Why should those with large traditional IRAs convert to Roth?
Posted on September 19, 2025
The pain of traditional IRAs is IRMAA. It’s important to work to beat IRMAA – not pay it. The top 10% of retirees have large RMDs that cross an income level that triggers IRMAA. The typical retiree paying IRMAA crosses two tripwires and pays roughly $3,000 per taxpayer in higher Medicare premiums. That’s year after year. And the chance of crossing an IRMAA tripwire (or crossing the next one) increases over time: at expected returns for stocks and bonds, your initial RMD will double in real terms by age 85 .
IRMAA really is the only pain. I’m not happy when I pay our taxes, but I realize that Patti and I are coming out ahead of the game from ordinary taxes on our distributions. All of our contributions to our traditional IRA were in years of much higher marginal tax rates than now: prior to 2018. I’d guess Patti and I on average avoided 26% marginal tax when we contributed. If we pay 22% tax now, that means 4% of our initial contribution was not taxed then, grew tax free, and is not taxed now. Fantastic!
You really don’t want to cross an IRMAA tripwire if you can avoid it. Your top action to beat IRMAA – to lower future RMDs – is to convert traditional to Roth. The 2018 tax act flattened marginal tax rates and changed the game – making conversion to Roth a MUST for those with larger IRAs to avoid the ills of IRMAA.
You can have a significant impact if you are not yet 65 and have not started on Medicare or Social Security (SS); you may be able to convert enough to never have to worry about IRMAA. When you’re older like Patti and me on Medicare and SS, you shoot for small improvements each year.
You have three basic actions to lower your traditional IRA and avoid IRMAA.
• Starting at age 59½, convert stocks in your traditional IRA to your Roth each year. In my view, you would not be making a mistake to convert up to the top of the 24% marginal bracket or up to the next IRMAA tripwire if you are on Medicare.
If you are younger, I’d suggest you have a goal of traditional IRA no greater than $1 million (in todays dollars) per taxpayer at age 73 – when you start to take RMD – and the balance in Roth. You would not have to worry about IRMAA.
• If you haven’t started, consider delaying the start of Social Security (SS) to age 70. Replace the amount you would have gotten from SS with distributions from your traditional IRA. These distributions are taxed at much lower rate than are after you start SS; this tax benefit shortens the number of years for delay to be better than taking SS early.
• After age 70½, contribute more to charities using QCD if you are inclined to charitable donations.
== Summary: Timeline and Actions ==
I think this table a useful timeline for decisions and actions. It’s impossible to read in this post. The full sheet is here.
Details:
== Convert traditional to Roth every year ==
• After age 59½, convert to traditional to Roth each year. In my view, you are not making a mistake to convert up to the top of the 24% marginal tax bracket. If are you on Medicare, you are constrained by a nearby IRMAA tripwire.
The steps to correctly convert traditional IRA to Roth are simple and painless after age 59½. Your employer plan almost certainly allows you to rollover your traditional there to your own traditional IRA, and you can convert that. You are not changing the after-tax value of your IRA. You will avoid the ills of IRMAA. See here.
You likely can convert larger amounts each year to Roth before your start on Medicare and run into IRMAA tripwires that you don’t want to cross: you likely have more headroom before you reach a point of income that you don’t want to cross. The top of the 24% tax bracket is a lot of headroom for most folks.
Those on Medicare have far less headroom; the first IRMAA tripwire is at about half the income of the top of the 24% bracket; income at the top of the 24% bracket crosses four tripwires.
== Consider delaying SS ==
• If you haven’t started Social Security, consider delaying the start to age 70. If you choose to delay, distribute an amount equal to the amount from your traditional IRA that you would have received from SS.
This distribution is taxed much less than when you would otherwise distribute it after you start SS. This tax benefit shortens the number of years for delaying to be financially better than taking SS early. When I include the tax benefit, I calculate ~17 years to breakeven. That’s a long time. Still, I’d delay the start of SS to age 70; I hate the thought of IRMAA that much!
== QCD ==
• After 70½, you can lower your traditional IRA by contributing more QCD. (After age 70½, you should only contribute with QCD to get the full tax benefit.) Contributing more than you normally would lowers your IRA and all future RMDs. You would have to be inclined to charitable contributions and be confident that you have “more than enough” (Chapter 10, Nest Egg Care) – you are really giving this money away. The QCD limit is $108,000 per taxpayer in 2025.
Conclusion. About 10% of retirees have large traditional IRAs and RMDs that trigger IRMAA. You may be on that track. You can lessen or avoid this ill. You want to lower the amount of your traditional IRA.
You want to convert traditional to Roth every year after age 59½. If you are younger, you have more years to convert a large portion of traditional to Roth. You are not making a mistake, in my view, to convert the amount each year that keeps taxable ordinary income below the top of the 24% marginal tax bracket. If you are already on Medicare, you’ll be constrained by a nearby IRMAA tripwire.
If you are younger, you can delay the start of Social Security (SS) to age 70, when you get the maximum benefit. You replace the amount you would have gotten from SS with an equal distribution from your traditional IRA. Very little is taxed; this tax benefit shortens the number of years to breakeven, the point where it pays to delay SS. When I include that tax benefit, I calculate the breakeven as 17 years. That’s a long time, but I’d still delay the start of SS.
If you are inclined to charitable donations, after age 70½ you can contribute QCD that lowers your traditional IRA and therefore future RMDs.