Partial Roth conversion in the low-income window
Dec 31 hard stopThe gap year between retirement and age-73 RMDs is the lowest-rate window this taxpayer will see. Converting traditional IRA dollars to Roth now — sized to the top of the 22% bracket and below the IRMAA tier-1 threshold — locks in a low rate, shrinks future RMDs, and grows tax-free. Conversion tax should be paid from outside the IRA to maximize the benefit.
Assumes converting ~$20K of traditional IRA to Roth, filling the 22% bracket while staying under the IRMAA tier-1 MAGI threshold (~$106K single). Converts pre-tax dollars at a known low rate ahead of higher-rate RMD years; value compounds tax-free thereafter.
The low-rate window closes; the same dollars are later withdrawn (and taxed) at higher RMD-era rates.
IRA dollars converted at today's 22% grow tax-free and reduce future RMDs.