People Born in 1960 or Later Can Delay 401(k) RMDs Until 75, Creating Two Extra Years for Roth Conversions

Many retirees think they already know when the IRS will begin requiring withdrawals from a 401(k), but a 2022 law changed that timeline for millions of savers. Missing the shift can mean losing access to some of the most favorable tax years in retirement.

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Kiplinger recently highlighted a reader who asked, “Did I Miss My Chance to Do a Roth Conversion? I’m 75 With a Sizeable IRA.” It is an important question for retirees with large traditional 401(k) balances who want to move money into a Roth before required withdrawals begin.

Take a 66-year-old with $900,000 in a traditional 401(k). He may think the IRS will start RMDs at 73, but if he was born in 1960, he does not have to begin until 75. That gives him two additional years to shift money into a Roth before required distributions start.

Your Birth Year Quietly Shifts the RMD Deadline

The law behind this difference is SECURE 2.0, enacted in 2022. It increased the age for required minimum distributions, or RMDs. People born from 1951 through 1959 generally begin at 73, while those born in 1960 or later start at 75.

In this example, the saver turns 74 in 2034, so required withdrawals begin the following year. Someone born in 1959 would have to start taking withdrawals at 73.

That timing matters because RMD dollars cannot be converted. In a year when an RMD is due, the withdrawal must come first and is taxed as ordinary income. Only after that can a conversion happen. For people born in 1960 or later, ages 73 and 74 can be used without mandatory withdrawals reducing the room for Roth conversions. Those years before RMDs begin can offer some of the lowest tax rates in retirement.

Two Extra Years Can Add $120,000 to a Roth

Here is a simple example. Assume withdrawals and conversions from age 66 through 72 roughly match investment growth, leaving the account at about $900,000 on January 1 of the year the saver turns 73. For illustration, assume a steady 6% annual return.

The saver converts $60,000 in January at ages 73 and 74, for a total of $120,000.

How Much Smaller the First RMD Becomes

At 75, the IRS divides the prior year-end balance by 24.6 under the Uniform Lifetime Table. Those two conversions reduce the first required withdrawal by about $5,300.

The benefit continues beyond that. Money in a Roth is not counted again in future RMD calculations, since Roth IRAs do not have lifetime required distributions under 26 U.S.C. § 408A(c)(4).

Why Paying Tax Now Can Reduce a Bigger Tax Bill Later

At a 22% tax rate, each $60,000 conversion costs $13,200, or $26,400 across both years. Paying that tax from a taxable account allows the full amount to land in the Roth. The smaller first RMD trims that year’s tax bill by about $1,170 at the same rate, though the full result also depends on later withdrawals, market performance and the taxes paid up front.

The larger advantage is avoiding the tax cascade. RMD income adds on top of Social Security, which can make as much as 85% of those benefits taxable. Medicare surcharges, known as IRMAA, create another layer, and they are based on income from two years earlier.

Under 2026 Medicare rules, a married couple filing jointly pays the standard Part B premium of about $203 per month if income from two years earlier was $218,000 or less. Above that level, each spouse pays an extra $81 per month for Part B, along with a Part D surcharge.

Together, those surcharges can add about $2,300 a year for a couple. Roth conversions can trigger them as well, because Medicare generally reviews income from two years earlier. The IRMAA test uses income before the standard deduction, so joint filers can hit the Medicare surcharge threshold before reaching the top of the 22% tax bracket at $211,400 of taxable income. That income level is the real ceiling.

Moves to Consider Before Age 73

1. Check your birth year against the RMD rules. If you were born in 1960 or later, treat ages 73 and 74 as conversion years and use the 24.6 divisor to estimate your first RMD at 75.
2. Keep conversions below the applicable Medicare surcharge threshold. Under 2026 rules, that is $218,000 for joint filers and $109,000 for single filers. Keep in mind the two-year lookback. The $60,000 conversion is only an example. A low-income year may allow more, while a year with a large capital gain may allow less.
3. Pay the conversion tax with cash outside the 401(k). If the tax has to come from the converted money, the conversion amount should be reduced, since withholding lowers what actually reaches the Roth.

Those two extra years can create a real opportunity, but they also come with real tax costs. The retirees who gain the most will adjust each year’s conversion amount based on that year’s income and the IRMAA threshold.