Am I Too Old for Roth Conversions? I’m 84, my wife is 77, and we’ve saved $8 million.
Short answer: You’re not too old. Age alone doesn’t disqualify you from Roth conversions, and for many affluent couples in their late 70s and 80s, conversions can still create meaningful tax and estate benefits. The key is whether the taxes you’d pay today are likely lower than the taxes you, your surviving spouse, or your heirs would otherwise pay later.
Why Roth conversions can still make sense late in life
– Reduce future required minimum distributions (RMDs): At your ages, RMDs from traditional IRAs are a substantial, rising share of pre‑tax balances. Converting some funds to Roth after taking the year’s RMD shrinks future RMDs and the associated tax drag.
– Protect the surviving spouse from the “widow(er)’s penalty”: When one spouse dies, the survivor often switches to single tax brackets, which are much less favorable, yet keeps most of the same RMDs and portfolio income. Converting while you can still use the married-filing-jointly brackets can lower the survivor’s lifetime tax bill.
– Improve what heirs keep under the SECURE Act: Most non‑spouse heirs now must empty inherited IRAs within 10 years. With large pre‑tax accounts, that often forces your children to recognize big chunks of taxable income during peak earning years. Inherited Roth IRAs also must be emptied within 10 years, but withdrawals are generally tax‑free and can compound tax‑free for up to a decade after your deaths.
– Start the Roth “five‑year clock”: Earnings in a Roth are tax‑free if any Roth IRA of the original owner has been open for at least five tax years. Starting or adding to a Roth now helps ensure beneficiaries won’t face that five‑year issue if they need to take distributions earlier in the 10‑year window.
– Estate planning flexibility: Traditional IRAs are “income in respect of a decedent” (IRD)—your heirs owe income tax on them. Roth IRAs are not. Paying tax on conversion now can be like prepaying the heirs’ income tax at your potentially lower joint brackets.
When Roth conversions may be less compelling
– Very high current tax rate relative to future: If conversions would push you well into top federal brackets and also trigger large state taxes, while your heirs are in modest brackets, full-throttle conversion could be uneconomical.
– Limited time horizon and no heir benefit: If you expect to spend down most assets during your lifetimes and don’t prioritize leaving tax‑efficient accounts to heirs, conversions may have lower value.
– Large charitable intent from IRAs: If you plan to give significant amounts to charity now or at death, using pre‑tax IRA dollars can be better than converting. Qualified charitable distributions (QCDs) from IRAs (available from age 70½) can satisfy up to $105,000 per person per year tax‑free (indexed), directly reducing RMDs and AGI. Naming charities as IRA beneficiaries also avoids income tax entirely on those dollars.
Important rules and frictions to consider
– You must take the year’s RMD first. RMDs cannot be converted. Only amounts above the RMD may be converted.
– Taxes today vs. surcharges tomorrow: Conversions increase adjusted gross income. That can:
– Push you into higher tax brackets.
– Raise Medicare Part B and D premiums via IRMAA surcharges (based on your MAGI from two years prior).
– Trigger or increase the 3.8% net investment income tax on your other investment income (the conversion itself isn’t NIIT, but it can push other income into NIIT territory).
– State taxes and mobility: Some states don’t tax Roth conversions, some do. If you might change residency, the optimal timing could change.
– Pay the tax from taxable assets: Using cash or selling taxable investments to pay the conversion tax generally improves the math versus withholding tax from the IRA itself.
– Asset location after converting: Place higher‑growth assets in Roth to maximize the benefit, and lower‑growth/income assets in pre‑tax accounts.
How your profile influences the decision
– Portfolio size and composition: With $8 million, if a significant share sits in traditional IRAs/401(k)s, your lifetime RMDs plus investment income may outstrip your spending needs. Conversions can be about smoothing taxes and making inheritances more tax‑efficient.
– Longevity: At 84 and 77, your joint life expectancy can extend well over a decade, and then heirs get another 10 years to let a Roth compound. That’s plenty of runway for conversions to matter.
– Heirs’ tax brackets: If your children are (or will be) high earners, conversions are generally more attractive. If they’re in low brackets, converting less may be reasonable.
– Charitable goals: If you already give or plan to leave bequests, prioritize using pre‑tax IRA dollars for charity and Roth/taxable for heirs.
A practical game plan to evaluate conversions now
1) Map your accounts and RMDs:
– List pre‑tax IRA/401(k), Roth, and taxable balances.
– Estimate current and future RMDs (a ballpark at your age is roughly 6–7% of pre‑tax balances annually, rising over time).
2) Project taxes under three scenarios:
– No conversions; both spouses alive.
– No conversions; survivor files single after first death.
– A measured annual conversion plan while both alive (for example, “fill up” a chosen tax bracket each year).
3) Layer in Medicare impacts:
– Check how much additional IRMAA you’d face two years after a proposed conversion. Sometimes the lifetime tax and estate benefits outweigh a few years of surcharges; sometimes not.
4) Sequence each year:
– Do QCDs first if you give to charity.
– Take the remaining RMD.
– Convert an additional amount up to your chosen tax bracket ceiling.
– Pay taxes from taxable assets, not from the IRA.
5) Place assets intentionally:
– After converting, hold higher‑expected‑return assets in Roth, income‑heavy assets in tax‑deferred, and step‑up‑friendly assets in taxable.
6) Review estate designations:
– If leaving IRAs to a trust, ensure it’s drafted properly for SECURE Act rules. Consider leaving pre‑tax IRAs to charity and Roth/taxable to heirs.
7) Revisit annually:
– Tax brackets, markets, health, residency, and family circumstances change. Adjust the conversion amount each year.
What about estate taxes?
– Federally, today’s combined exemption for a couple is well above $8 million, and even after the scheduled 2026 reduction it is still projected to be around the level of your estate or higher for many families. That said, some states have estate or inheritance taxes with much lower thresholds. Coordinate income‑tax planning (Roth/QCD) with estate‑tax planning specific to your state.
A simple way to think about it
– If paying, say, a mid‑20s marginal rate to convert now prevents your survivor or your high‑earning children from paying rates in the 30s later—and it reduces RMDs and surcharges along the way—the conversion often wins.
– If the only way to convert is by pushing into very high brackets and triggering large state taxes and IRMAA for several years, while your heirs are low‑bracket, the conversion often loses.
Key takeaways
– You’re not too old for Roth conversions; at 84 and 77, the combination of widow(er)’s penalty risk and the SECURE Act’s 10‑year inheritance rule can make measured conversions very valuable.
– Start with charitable planning (QCDs), then take your RMD, then consider a targeted conversion that fills a sensible tax bracket each year.
– Pay conversion taxes from taxable assets, be mindful of Medicare IRMAA, and locate higher‑growth assets in Roth afterward.
– Coordinate with beneficiary tax brackets and your state’s tax and estate rules.
This is educational, not individualized tax advice. Given your asset level and the number of moving parts (RMDs, IRMAA, state taxes, heirs, trusts), it’s worth running side‑by‑side projections with a fiduciary advisor or CPA. Ask them to show you a multi‑year comparison for “no conversion,” “measured conversions while married,” and “survivor scenario,” including Medicare premiums and inheritance outcomes. That will make the answer clear for your family.
