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A Kiplinger report says starting required minimum distributions does not automatically mean a retiree has missed the chance to make Roth conversions. Conversions must come after the year’s RMD and may raise taxes or Medicare premiums, so the report’s experts describe partial conversions and other inheritance strategies as options to discuss with tax and financial professionals.
A 75-year-old already taking required minimum distributions from a traditional IRA has not necessarily missed the opportunity to convert some additional IRA money to a Roth, according to a Kiplinger report. The report’s experts say partial conversions may still be considered, but the tax bill and possible Medicare premium increases can limit how much makes sense to convert.
The reader who wrote to Kiplinger said a large traditional IRA could create a difficult inheritance for heirs, but worried that converting assets would push them into a higher tax bracket and raise income-related monthly adjustment amounts, or IRMAAs, which affect Medicare premiums. Al Kingan, an estate and business planning executive with MassMutual, said the reader should not assume the opportunity has passed. He suggested evaluating measured, partial conversions rather than treating the choice as all or nothing.
Under the approach described in the report, the account owner takes the year’s RMD first; that required withdrawal cannot itself be converted to a Roth IRA. Additional traditional IRA funds may then be converted. Kingan suggested considering an amount that uses room in the current tax bracket without moving into a higher one. The report’s example of a possible $50,000 annual conversion is illustrative, not a recommendation or an amount shown to fit every taxpayer’s circumstances.
The report also describes alternatives for money withdrawn as RMDs but not needed for living expenses. Kingan said investing excess funds in a taxable account could offer heirs more flexibility; he noted that appreciation in such an account may receive a step-up in basis at the owner’s death. He also discussed qualified charitable distributions (QCDs), which can satisfy eligible RMD amounts and reduce adjusted gross income when requirements are met. The report cites a $111,000 QCD limit for 2026; the applicable limit and eligibility should be verified for the taxpayer’s year and circumstances.
Balancing Conversion Costs and Heirs’ Taxes
The decision matters because a large traditional IRA can affect both the account owner’s retirement taxes and the eventual tax burden on beneficiaries. The report says large RMDs can increase taxable income and may lead to higher Medicare premiums through IRMAAs. For many non-spouse beneficiaries, inherited IRA rules generally require the account to be emptied within 10 years, potentially concentrating taxable withdrawals in years when heirs have substantial earnings.
A Roth conversion can shift tax from heirs to the account owner: converted funds are generally included in the owner’s taxable income for the conversion year, while qualified Roth withdrawals can be tax-free. That trade-off does not make conversion automatically beneficial. The amount converted, the owner’s tax bracket, Medicare premium effects, time horizon, and beneficiaries’ likely tax situations all affect the result. The source report offers strategies, not a finding that any one approach will save a particular household money.
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RMDs Change the Conversion Calculation
Required minimum distributions are annual withdrawals that generally apply to owners of traditional IRAs once they reach the applicable starting age under current law. A person who is already subject to RMDs cannot count the required withdrawal as a Roth conversion; the RMD must be distributed first. A conversion of additional assets is a separate taxable transaction.
The report frames the question around a reader who is 75, has a large traditional IRA, and is already taking RMDs. It presents several possible responses rather than a single prescription: convert a limited amount, use eligible charitable distributions to manage taxable income, invest unneeded RMD proceeds outside the IRA, consider life insurance, or coordinate which assets go to which heirs. It also notes that a complete conversion may no longer be practical for some retirees once RMDs are underway.
Charles Czajka, founder of Macro Money Concepts, suggested that some people might use RMD money not needed for expenses to buy life insurance, with a death benefit intended to help beneficiaries cover taxes. The report does not provide policy terms, costs, or an assessment of suitability. Such policies have individual underwriting and expense considerations that would need separate review.
“I would not say that this person missed a Roth conversion opportunity.”
— Al Kingan, estate and business planning executive with MassMutual, as quoted by Kiplinger
The report does not establish how much this reader could convert without increasing taxes or IRMAAs. That depends on income, filing status, deductions, state taxes, Medicare circumstances, and the size and timing of any conversion. The $50,000 conversion example is hypothetical, and the report does not calculate a tax outcome for the reader.
It also does not provide enough information to determine whether QCDs, taxable investing, life insurance, or allocating assets among heirs would be suitable or produce a better result. Rules and limits can change, and individual eligibility matters. The reader’s account balances, charitable intentions, health, beneficiaries’ finances, and estate plan are not described in detail.
Review the Plan Before Converting
The practical next step is to review projected income and RMDs with a tax professional, including the effect of any proposed conversion on federal and state taxes and Medicare premiums. A financial or estate-planning professional can also compare a partial conversion with charitable giving, taxable investments, insurance, and how assets might be assigned among beneficiaries. Any conversion amount should be checked against the taxpayer’s actual income for the year, rather than relying on the report’s illustrative figure.
There is no new rule or deadline announced in the report. The decision is an ongoing planning question, and the appropriate approach may change from year to year as income, tax law, account values, and family circumstances change.
Key Questions
Can I convert money to a Roth IRA after RMDs begin?
The Kiplinger report says RMDs do not automatically rule out later conversions. The required distribution must be taken first; additional eligible traditional IRA funds may then be converted, with the conversion generally adding taxable income.
Can my RMD itself be converted to a Roth IRA?
No. As described in the report, the RMD must be withdrawn from the traditional IRA and cannot be counted as a Roth conversion. A conversion can involve additional funds after the RMD is taken.
Not necessarily. A partial conversion may limit the amount of extra income, but its tax and IRMAA effects depend on the person’s full financial situation and the applicable rules. The report does not calculate those effects for its reader.
What can I do with RMD money I do not need?
The report discusses investing excess withdrawals in a taxable account, making eligible QCDs, or considering life insurance as possible strategies. Each has different rules, costs, and tax consequences, so suitability depends on personal circumstances.
Source: kiplinger.com
