Managing RMD Impact at 73

I've  been thinking about doing Roth Conversions to minimize the RMD tax bomb.   Tax rates are pretty low now.   I would definitely do conversions in the 12% tax bracket.   However, I'm rethinking as to whether to do RMD conversions, pay the tax now, to avoid paying taxes in the future at higher tax brackets.  It seems the RMD tax bomb might not be as big a deal as the media implies.

According to the 2026 Uniform Lifetime Table, a $10,000 IRA would require a $3774 RMD at 73.   For a $1M IRA, multiply that by 10 to get a $37,735 RMD. 

With a median IRA balance of $200,000 at 73, that means a median of $7,500 annual RMD. With an average IRA balance of $600,000 that means an average of $22,600 annual RMD.   Neither of these seem outrageous from a federal tax point of view.  This is causing me to lean towards just paying taxes when I have to take an RMD.

Another factor is the Inherited IRA RMD requirement to be distributed in 10 years.   At a median of $200,000 that would be $20,000 per year for 1 heir, which probably is a nice bonus for 10 years.  At $600,000 that would be $60,000 per year for 1 heir, which my create a minor tax bomb but still they  would still receive at least 2/3s even after higher tax rates.

If I had $100 Million in an traditional IRA (I wish),  I might think about Roth Conversions and RMDs differently.  Even then, I might just take my annual $3.7 million RMD and pay the taxes.

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This is not financial, retirement, nor RMD advice. Please consult a professional advisor.

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