The 401(k) Roth Conversion Math That Saves $41,000 in Taxes Before RMDs Kick In

A 65-year-old on the Bogleheads forum recently laid out a familiar problem: $1.6 million in a traditional 401(k), Social Security deferred to 70, and eight quiet tax years before required minimum distributions kick in at 73. The real question is how much to convert. The answer, for a single filer in this exact spot, lands very close to $43,000 a year, and the reason is pure arithmetic.

Why the Number Is $43,000

The 2026 federal brackets for a single filer put the top of the 12% bracket at $50,400 of taxable income. The next dollar is taxed at 22%. That cliff is the entire game. Every dollar of conversion below it costs 12 cents. Every dollar above it costs 22 cents at the margin, and often more once Medicare and Social Security enter the picture.

Assume this retiree has roughly $23,500 of taxable brokerage income: qualified dividends, some interest, a bit of realized gain. After the $16,100 single standard deduction, taxable income from those sources is about $7,400. The room left inside the 12% bracket is $43,000. Convert exactly that much from the 401(k) to a Roth IRA, and taxable income lands right at the top of the 12% bracket. Federal tax on the conversion itself works out to roughly $5,200, or about 12 cents on the dollar.

Repeat that for eight years. Total converted: about $344,000. Total federal tax paid on those conversions: roughly $41,000.

What Happens If You Do Nothing

Skip the conversions and let the account grow. At a 6% blended return, that $1.6 million balance compounds to roughly $2.55 million by age 73. The first RMD divisor is 26.5, which produces a required withdrawal near $96,000 in year one, growing every year after.

Now layer in Social Security. A high earner who delays to 70 can collect around $50,000 a year, and 85% of that becomes taxable at this income level. The 2.8% 2026 cost of living adjustment tells you those checks will keep rising. Add the RMD and the taxable Social Security, and taxable income lands in the 24% bracket, which starts at $105,700 for a single filer in 2026.

The 12-point spread between the 12% bracket you paid on conversions and the 24% bracket the RMDs would occupy is worth roughly $41,000 on the $344,000 you moved. That is before IRMAA. A single filer whose modified AGI crosses the first Medicare surcharge tier pays several hundred dollars a year in extra Part B and Part D premiums. RMDs plus delayed Social Security can push a retiree through two or three IRMAA tiers at once.

The window closes hard at 73. Once RMDs begin, the conversion math inverts: you are pulling taxable money out anyway, so converting on top of it stacks brackets rather than smoothing them. That is why the eight years between 65 and 73 are treated as a distinct planning phase in most retiree tax playbooks, including our Roth Window research.

Where the Plan Can Break

Two things move the target. First, if the 10-year Treasury at 4.62% keeps interest income climbing on cash and short bonds, that pushes taxable brokerage income up and shrinks the room inside the 12% bracket. Second, capital gains stacking matters. Long-term gains sit on top of ordinary income for bracket purposes, so a big realized gain in a conversion year can cost 15% on the gains and still leave you with less room to convert cheaply.

For married filers the same logic runs with different numbers: the top of the 12% bracket is $100,800, and the standard deduction is $32,200. A couple with modest brokerage income can typically convert $80,000 to $110,000 a year at the same 12% cost.

Three Things to Do This Quarter

1. Pull your most recent 1099s and estimate your 2026 taxable income before any conversion. Subtract that from $50,400 (single) or $100,800 (married filing jointly). That difference is your annual conversion ceiling at 12%.
2. Model the RMD you would face at 73 if you convert nothing. Divide your projected balance by 26.5 and add expected Social Security. If the total lands above $105,700 single or $211,400 joint, you are looking at a 24% marginal rate the Roth Window can eliminate.
3. Execute conversions late in the year, after dividends and gains are known, so you can hit the bracket cap precisely rather than guessing in January.

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