I’m 63 With $1 Million in an IRA. Should I Convert $100,000 a Year to a Roth to Avoid RMDs?

If you’re 63 with $1 million in a traditional IRA, converting $100,000 per year to a Roth IRA could change how your retirement income is taxed for decades. The potential benefit is that Roth IRAs are not subject to required minimum distributions (RMDs) during the original owner’s lifetime, which may give you more control over future withdrawals, taxes and estate planning. But the tradeoff is immediate: each conversion adds taxable income in the year it is completed. Whether this strategy makes sense depends on more than the size of your IRA. Your current tax bracket, expected future income, Medicare premium thresholds, Social Security timing and ability to pay the tax bill from outside assets can all affect the outcome.

If you need help building a tax-efficient retirement strategy, consider working with a fiduciary financial advisor.

What RMDs Are and Why They Matter

Traditional IRAs, 401(k)s and other tax-deferred retirement accounts allow your investments to grow without paying taxes until you withdraw the money. However, that tax deferral doesn’t last forever: The IRS requires you to begin taking annual withdrawals known as RMDs at a certain point. For people born between 1951 and 1959, RMDs start at age 73. They begin at age 75 for people born in 1960 and after, so if you’re 63 in 2025, your RMDs will start at age 75.

The amount you must withdraw each year is based on your account balance at the end of the previous year and your life expectancy, as defined by the IRS Uniform Lifetime Table.

Each RMD is taxed as ordinary income in the year it’s withdrawn. If you fail to take the full amount, the IRS can impose a 25% penalty on the shortfall—though that penalty may be reduced to 10% if corrected in a timely manner. These mandatory withdrawals are meant to gradually draw down tax-deferred savings and generate tax revenue over time.

Use our RMD Calculator to see how your balance and age affect your annual distribution.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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RMD Amount for 401(k) #2

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

For many retirees, RMDs can create unintended ripple effects on taxes. Adding thousands of dollars in taxable income can push a retiree into a higher marginal tax bracket, increase Medicare Part B and Part D premiums through income-related monthly adjustment amounts (IRMAA) and make a larger portion of Social Security benefits taxable. In some cases, RMDs can also cause more of a retiree’s investment income to be subject to the 3.8% net investment income tax.

The timing and size of RMDs also influence broader planning decisions. Because withdrawals must begin at age 73 (or 75 for those born in 1960 or later), retirees often use the years between retirement and their first RMD as a “tax window” to convert portions of traditional IRAs to Roth IRAs at relatively low tax rates. Managing account balances before RMDs begin can smooth taxable income over time and reduce the likelihood of sharp increases in future tax obligations.

How Roth Conversions Work

RMDs create taxable income in retirement, so seniors often plan for how these withdrawals affect their overall tax bill.

A Roth conversion involves moving money from a pre-tax retirement account like a traditional IRA into a Roth IRA. When you do this, the amount you convert is added to your taxable income for that year, and you pay ordinary income tax on it. Converting a large IRA often results in a sizable current tax bill.

The trade-off is that Roth IRAs have no RMDs during the original account holder’s lifetime. Any qualified withdrawals in retirement are tax-free, and the account can continue to grow tax-free for as long as you hold it.

Weighing Your Options: Convert or Stick With Tradition?

How you handle a $1 million IRA in the years before RMDs begin can have a major impact on your retirement taxes, income flexibility and estate planning outcomes. If you were to convert $100,000 from a traditional IRA to a Roth IRA at age 63, the IRS would add the entire amount to your taxable income for that year. On the other hand, if you were to opt against a conversion, you would owe taxes when you begin taking RMDs.

With a Roth Conversion

Let’s say you converted $100,000 in 2025. After applying the standard deduction for someone under age 65, your taxable income would be about $83,900 (assuming you’re filing single).

Here’s the calculation:

The standard deduction for single filers under age 65 in 2025 is $16,100.
Converting $100,000 would result in a taxable income of approximately $83,900 ($100,000 − $16,100).

To estimate the federal tax on that amount using 2026 tax brackets:

10% on the first $12,400: $1,240
12% on income between $12,400 and $50,400: $4,560
22% on income between $50,400 and $105,700: $7,370

That would generate an estimated federal tax bill of roughly $13,170 on the conversion. This tax would be due for the year of the conversion, and the amount could be higher if you have additional income.

Without a Roth Conversion

If you decided against converting to a Roth IRA, your traditional IRA would continue to grow tax-deferred until you reach age 75, when RMDs begin under current law. Assuming an average annual growth rate of 5%, a $1 million IRA at age 63 could be worth approximately $1.795 million by age 75.

Your first RMD at age 75 would be calculated using the IRS Uniform Lifetime Table, which assigns a divisor of 24.6. That means your initial RMD would be about $73,000 ($1,795,000 ÷ 24.6).

Here’s how that might translate for taxes if you’re single and have no other income that year (we’ll use the 2026 standard deduction and tax rates for illustrative purposes):

Standard deduction (age 65 and older, 2026): $24,150
Taxable income: $48,850 ($73,000 − $24,150)

Estimated federal tax (using 2026 brackets):

10% on the first $12,400: $1,240
12% on income between $12,400 and $50,400: $4,374

That results in an approximate tax bill of $5,614 for your first RMD. Keep in mind this example assumes no other sources of income and no additional deductions or credits. The tax impact could be higher if you receive Social Security benefits, pension income, or have other taxable sources.

What It Means for You

In the examples above, the Roth conversion results in a much larger tax bill in the year of conversion compared with simply taking an RMD later on, $13,170 with a conversion versus $5,614 without. This is balanced by the fact that, once those funds are in a Roth IRA, they can grow tax-free and also be withdrawn tax-free.

Because there are no RMDs, you don’t have to withdraw the money at any set time, or at all. This can provide greater flexibility in retirement, help manage future taxable income and reduce taxes your heirs might pay.

By contrast, keeping the full balance in a traditional IRA means smaller tax bills in the short term but ongoing taxable withdrawals every year once RMDs begin. Over time, those annual taxes can add up, especially if your IRA continues to grow or if RMDs push you into a higher tax bracket.

Whether a conversion is the right move depends on your current tax bracket, your expected future income and your long-term retirement goals. For some retirees, paying more in taxes upfront is worth the future flexibility and potential savings. For others, the immediate cost outweighs the benefit.

Other Factors to Consider

Beyond the immediate tax implications, several broader considerations can influence whether a Roth conversion makes sense for you. The following are some things you may want to consider:

Current vs. future tax rates: Most people are in lower tax brackets after retirement. However, if you expect your rates to rise, paying taxes now could be advantageous.
Impact on Medicare and Social Security: Higher income during conversion years could temporarily increase Medicare premiums or make more of your Social Security taxable.
Lifestyle and spending needs: Consider whether paying the extra taxes now will affect your retirement budget or lifestyle plans.
Longevity risk: If you live a long life, avoiding RMDs and maintaining tax-free growth in a Roth could pay off substantially.

The Case for Converting $100,000 Per Year

Converting $100,000 per year from a traditional IRA to a Roth IRA, rather than making a single large conversion, allows you to spread out the tax burden over several years. This gradual approach smooths taxable income, reduces the risk of a large tax bill in any single year and may keep you from moving into a higher bracket. It can also be an effective way to manage your tax liability if you have other sources of income in retirement.

For many retirees, the strategy offers meaningful long-term tax savings. This may be the case if you anticipate being in the same or higher tax bracket in later years, perhaps due to RMDs, pension income or other investment earnings. If you anticipate that scenario, paying taxes at today’s rates could prove less expensive.

A gradual Roth conversion can also offer valuable estate planning advantages. With no RMDs during the account holder’s lifetime, Roth account balances can grow tax-free for longer.

And, when passed on to heirs, a Roth IRA can be inherited tax-free, although beneficiaries must still follow applicable distribution rules. This can make the value of the inheritance more predictable and often greater after taxes compared to leaving a large pre-tax IRA.

How Much Should You Consider Converting Each Year?

There is no single Roth conversion amount that works for everyone. While converting $100,000 per year may be a reasonable starting point to analyze in this example, the right amount will depend on your income, tax bracket, retirement timeline, cash flow needs and broader estate planning goals.

One common approach is to model several conversion amounts rather than focusing on a fixed annual target. For example, you might compare the tax impact of converting $50,000, $100,000 or $150,000 in a given year. This can help illustrate how each amount may affect your marginal tax bracket, Medicare premiums, Social Security taxation and future RMDs.

It may also be helpful to revisit the decision each year. A conversion amount that makes sense in one year may be less attractive in another if your income changes, investment values rise or fall, or tax rules shift. Paying the conversion tax with funds outside the IRA, when possible, may also preserve more of the converted balance for potential tax-free growth.

Because Roth conversions create immediate taxable income, it’s generally worth running tax projections before converting. A financial advisor or tax professional can help compare different conversion scenarios and evaluate how each option could affect your long-term retirement income plan.

Potential Drawbacks of Roth Conversions

While converting to a Roth IRA can offer long-term benefits, it also comes with some immediate challenges. Converting $100,000 from a traditional IRA in a single year will increase your taxable income, which could push you into a higher tax bracket and affect your eligibility for certain deductions or credits.

In some cases, the added income may also trigger IRMAA for Medicare Part B and Part D premiums. Because these surcharges are based on your modified adjusted gross income from two years prior, the impact might not show up right away. But when it does, it can be significant.

There’s also the risk of market timing. If you convert when the market is near a peak, you’ll pay taxes on the full value of your assets. Should the market drop soon afterward, you may end up paying taxes on gains that have disappeared.

Finally, how you pay the taxes on a conversion matters. The most efficient approach is to use funds outside your IRA to cover the tax bill, allowing the full converted amount to remain invested for future growth. If you use IRA funds to pay taxes, that withdrawal will be taxable and, if you’re under age 59½, may also incur penalties. Even if penalties don’t apply, tapping into your IRA to cover taxes reduces the amount of money working for you in retirement.

Bottom Line

An advisor can help seniors plan RMD withdrawals to manage taxes and preserve retirement income.

Converting $100,000 annually from a $1 million IRA to a Roth could help you avoid RMDs, reduce your long-term tax burden and provide more flexibility in retirement. But it comes with immediate tax consequences and potential Medicare impacts. Before committing, it’s wise to run detailed tax projections and explore how different conversion amounts might affect your overall plan. A financial advisor can help you build a customized Roth conversion strategy that balances today’s tax costs with tomorrow’s benefits.

Retirement Planning Tips

A financial advisor can help you create a retirement plan to grow and manage your nest egg. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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