Roth Conversions in Your 50s and 60s: Using “aRothmetic” to Minimize Lifetime Taxes

Taxes in retirement are not a one-year problem. They stack across decades, interact with Medicare premiums, and ripple into what your heirs will owe. That is why many families in their 50s and 60s explore partial Roth conversions: paying some tax now to reduce bigger bills later.

At Formula Wealth, we model this tradeoff with aRothmetic, our numbers-first Roth conversion framework. It helps you right-size conversions, fill the “good” parts of your tax brackets, avoid avoidable Medicare Income-Related Monthly Adjustment Amount (IRMAA) surcharges, and reduce future Required Minimum Distributions (RMDs). The goal is simple: minimize lifetime taxes at the family level, not just this year’s bill.

Whether you are still working or newly retired, the window for smart conversions can open and close quickly. Here is how to think about it:

The core idea: bracket management, not guesswork

Roth conversions turn pre-tax IRA money into Roth IRA money. You pay ordinary income tax on the amount converted in the year of conversion, then future Roth growth and qualified withdrawals are tax-free under current law.

The key is bracket management. With aRothmetic, we:

- Project multi-year income, deductions, and tax brackets for both spouses.

- Identify “valleys” when taxable income is temporarily lower, often early retirement or gap years between work and Social Security.

- Fill a target bracket to a defined dollar, while steering clear of the next bracket and IRMAA cliffs when possible.

Today’s brackets are relatively attractive. Converting too little leaves large IRAs that drive heavy RMDs later. Converting too much pushes you into punitive brackets or IRMAA tiers. Precision matters.

Before vs. after retirement: two different playbooks

If you are still working, conversions compete with salary, bonuses, and equity income. We often stack small conversions in lower-earning years or after a large charitable deduction. If you hold appreciated stock, you may pair smaller conversions with capital gain harvesting to stay within target ranges.

In early retirement, the playbook changes. You may have several low-income years before RMDs and full Social Security benefits begin. Those years can be prime time to fill the 12 or 22 percent brackets carefully. aRothmetic coordinates:

• Social Security timing

• IRA withdrawals and conversions

• Capital gains realization

• Qualified Charitable Distributions (QCDs) once age 70½

• Required Minimum Distributions once age 73

The aim is to get enough into Roth while keeping IRMAA and stealth taxes in check.

Medicare IRMAA and Social Security taxation

Roth conversions increase Modified Adjusted Gross Income (MAGI). Higher MAGI two years prior can trigger IRMAA, increasing Medicare Part B and Part D premiums. We track:

• The two-year lookback. A 2026 conversion can affect 2028 premiums.

• Thresholds and surcharges by filing status. Small jumps can have meaningful dollar impacts.

• Appeals via SSA-44. If your income falls due to a qualifying life event (retirement, work stoppage), you can request a reconsideration.

Conversions also interact with Social Security taxation. Higher provisional income can push more benefits into taxable territory. aRothmetic quantifies both effects so you can decide whether an extra dollar of conversion is worth it this year.

RMD coordination and the 70s problem

Large pre-tax IRAs create large RMDs starting in your early 70s (age depends on birth year under current rules). Those RMDs can:

• Force income you do not need

• Push you into higher tax brackets

• Trigger IRMAA surcharges

• Increase taxes on Social Security

• Limit flexibility for charitable planning

Right-sized conversions in your 50s and 60s can shrink future RMDs, smoothing your tax profile. If you are charitably inclined after 70½, QCDs can further manage RMD-driven income by giving directly from your IRA and excluding those dollars from your adjusted gross income.

For more on mechanics and timing, see our primer on an IRA Roth conversion to understand the building blocks.

Dual-generation planning: case studies

Case Study 1, parents in early retirement:

• Profile: Married, age 62 and 61, $2.6M total investments, $1.8M in pre-tax IRAs and 401(k)s, retiring now. No Social Security yet.

• aRothmetic result: Convert $180k per year for four years, filling the 24 percent bracket without crossing an IRMAA tier. Delay Social Security to 67 and 70 for resilience. Begin modest QCDs at 70½.

• Outcome: Projected $400k less in lifetime federal tax across both spouses, with lower RMDs, fewer IRMAA years, and a larger Roth for late-life healthcare and survivor flexibility.

Case Study 2, adult children coordination:

• Profile: Parents age 74 and 72 with sizable IRAs already creating high RMDs. Adult child, age 45, high earner in 35 percent bracket and future beneficiary under the 10-year inherited IRA rule.

• aRothmetic result: Parents increase charitable giving via QCDs to offset part of RMDs. Adult child funds backdoor Roth IRA annually and maximizes Roth 401(k) where appropriate. Parents add targeted conversions only in years that avoid the next IRMAA tier.

• Outcome: Family-level tax minimized. Upon second parent’s death, heirs receive a higher share in Roth, reducing the tax crunch of the 10-year inherited IRA withdrawal window. This supports thoughtful generational wealth plans while keeping near-term Medicare costs reasonable.

If multigenerational efficiency is a priority, our Life Audit process can also surface estate, titling, and beneficiary moves that support generational wealth and reduce probate friction. For a deeper dive into broader planning, explore our wealth planning services resources.

A practical conversion checklist

Use this high-level list to frame your decision. Then let aRothmetic quantify it.

• Confirm your projected taxable income for the year, including dividends, interest, and realized gains.

• Choose a target bracket to fill, then set a dollar ceiling for conversions.

• Map IRMAA thresholds by filing status, and test whether a conversion would realistically cross a tier two years ahead.

• Coordinate Social Security timing and, if age 70½ or older, consider QCDs.

• Decide withholding method (pay estimate or withhold taxes from other income; avoid withholding from the conversion when possible to keep more in Roth).

• Document the rationale, keep custodian confirmations, and save for tax prep.

Timing calendar: when to act

• January to March: Build your multi-year tax map. Set preliminary conversion ranges. Identify charitable, gain-harvesting, or loss-harvesting opportunities.

• April to September: Execute partial conversions in tranches. Markets move and income surprises happen; spread timing to manage risk.

• October to early December: Recalculate with year-to-date data. Top up conversions to your target bracket without breaching IRMAA tiers.

• Late December: Final check against thresholds, RMD status, and withholding. Save all confirmations for next year’s tax return.

Where investment management fits

Investment management does not drive the tax plan, but it supports it. Thoughtful asset location places higher-growth or tax-inefficient assets in Roth accounts to maximize after-tax compounding. Rebalancing can create liquidity for tax payments or conversions without derailing risk targets. Professional investment management services also help you avoid emotional timing errors, especially when executing conversions in volatile markets. Learn more about our investment management services if you want portfolios aligned with a tax-forward plan.

FAQs

• Is it worth it to pay for a financial advisor? If you have multiple accounts, six- or seven-figure IRAs, or multiyear tax decisions that affect Medicare and heirs, the right advisor should add more value than they charge. A fiduciary, flat-fee advisor can coordinate taxes, investments, RMDs, and estate details to reduce lifetime taxes and mistakes. The value is typically in avoided pitfalls, smarter timing, and clear execution.

• What is the role of investment management services in conversions? Portfolio design and location support Roth strategy. We place higher-expected-return assets in Roth, manage rebalancing around conversion dates, and coordinate cash for taxes. The goal is to protect risk targets while maximizing the tax-free growth you just created.

• How do Roth conversions affect Medicare and IRMAA? Conversions increase MAGI, which is used for IRMAA two years later. Crossing a threshold raises Part B and D premiums. aRothmetic tests conversion sizes against these tiers and may suggest splitting conversions across years. If you retire and income drops, you can appeal via SSA-44.

A balanced next step

Roth conversions can be a powerful tool, but only when sized and timed with care. aRothmetic quantifies tradeoffs across brackets, IRMAA, Social Security taxation, and RMDs, and it connects those decisions to your family’s inheritance picture. If you want a tailored analysis, request an aRothmetic review and we will map your multi-year options and document clear action steps.

Helpful resources to continue:

• Read our overview on an IRA Roth conversion to get familiar with mechanics and paperwork.

• If building a family-level plan is a priority, start with our Life Audit to align estate, beneficiary, and tax moves for generational wealth.