Before Your 401(k) RMDs Start at 73, Make Sure You Execute This Tax-Saving Move in Your 60s

"That gap, the years between retirement and age 73, is where the bracket-filling Roth conversion does its work. For a couple who can live on outside money during the conversion window, the lifetime tax savings on a $2 million traditional balance run into the $400,000-plus range. Here is how the math pencils out for 2026."

"Picture a couple aged 61 and 62 who retired this year. Both plan to delay Social Security to age 70, and they live on $90,000 a year drawn from the brokerage account and cash reserves. Because they are not pulling from the 401(k) and not yet collecting Social Security, their taxable income for the next several years is close to zero. That empty bracket space is the asset most retirees never use."

"The 2026 numbers define the runway. The MFJ standard deduction is roughly $30,000 while both spouses are under 65, rising to about $32,300 once both turn 65. The 12% MFJ bracket extends to about $96,950, which leaves roughly $66,950 of conversion capacity taxed at 12%. The next $109,750 sits at 22%, taking the couple to the $206,700 top of the 22% bracket."

"The plan is to convert $77,000 per year from age 61 to age 73, filling the 12% bracket and dipping a small slice into 22%. Over twelve years, that moves $924,000 from traditional to Roth at a blended federal rate of about 13.5%, roughly $124,700 in total conversion tax. Compare that to the no-conversion path. Left untouched and compounding at 6%, the $2 million grows to roughly $4.0 million by age 73."

A married couple with $2.0 million in traditional 401(k) assets and no Roth balances faces significant IRS taxation when required minimum distributions begin. The tax impact depends on what happens between retirement and the first RMD at age 73. The strategy uses years with little or no taxable income to convert traditional funds into Roth accounts while bracket space is available. With Social Security delayed to age 70 and spending covered by brokerage and cash, taxable income stays near zero for several years. Using 2026 figures, the couple can convert about $77,000 per year from age 61 to 73, largely within the 12% bracket and slightly into 22%, paying about $124,700 in conversion taxes. Leaving the traditional balance unconverted and compounding at 6% would grow it to about $4.0 million by age 73, increasing future RMD-driven taxation.

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