No. of Recommendations: 5
It's been quite a while since I looked throughly at Roth conversions and tax rates, but I realized that conversions just change the timing of when you pay the income tax.
Here's the 2026 tax table
Single Rate MFJ
$0 10% $0
$12,401 12% $24,802
$50,401 22% $100,802
$105,701 24% $211,402
$201,776 32% $403,552
$256,226 35% $512,452
We are talking about people who "have a lot of money in retirement funds". A reasonable corollary is that they also have a significant other income or income-ish assets. Pension, stocks & bonds in taxable non-retirement accounts, etc.
Oh, by definition they do. Because they live quite well without Social Security, being as they are delaying taking SS.
Now doing back-of-envelope math ...
And assuming we are not talking about ultra-wealthy, but merely well above average.
Their SS is going to be 85% taxed because they are well above that threshold ($34K single, $44K MFJ). Take it at 62 or at 70, it's going to be 85% taxed. So that isn't a consideration.
Therefore they are probably already in the 22% bracket. The next bracket is 24%, only 2% more, so that's only a minor jump. Squint hard and just ballpark as 23% for the entire range $100,800 to $403,500.
That's a pretty big income range where they are solidly paying ~23% marginal tax. They pay the same rate whether their income is $100,000 or $400,000. So there is basically no tax reason/advantage to take steps to reduce their taxable income as long as it is in this range.
24% to 32% is a big jump though, so they'd might want to try to stay under $403K. But a couple getting $400,000 taxable income doesn't need to sweat anything.
Yeah, they are going to get hit with IRMMA, too. That just goes along with having a large income. (It's still a bargain. Non-Medicare insurance is over $1000/mo.)
Anyway, people with a very large regular IRA are going to have a difficult time doing enough Roth conversions to reduce a very large IRA fast enough before getting to the RMD carousel. I have read a few case studies on this, and basically they threw up their hands.
Once you get to a certain age the primary benefit of Roth conversions is for Mom & Dad to pay the tax now so that the kids don't get hit with the tax on the inherited IRA.