Roth Conversion Case Study for IRA Millionaires

Aug 13, 2025

When Sally retired at 62 with a $1 million IRA, she was proud of what she’d built — until she realized how much of it the IRS could eventually claim.

In this case study, we’ll walk through Sally’s Roth conversion strategy using specialized software to show how she can turn a potential “tax time bomb” into long-term, tax-free income. Along the way, we’ll cover how today’s tax brackets, rising national debt, and future Medicare costs all play into the decision.

Why Now Is a Smart Time to Consider a Roth Conversion

The One Big Beautiful Bill Act (OBBBA), passed in 2025, made the 2017 TCJA tax brackets permanent — including the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets — and adjusted some for inflation. While “permanent” in tax law only lasts until Congress changes it, this creates a window where we know exactly where the brackets are.

If you’re in your 60s and facing RMDs at 73 or 75, now is a prime time to convert part of your IRA to Roth while tax rates are predictable and relatively low.

The National Debt and Why It Matters for IRA Millionaires

The U.S. national debt now exceeds $37 trillion and grows by about $50 billion every 100 days. The largest federal budget expense? Medicare and Medicaid.

Given these realities, it’s hard to imagine a future where taxes don’t increase. For IRA millionaires, that means bigger RMDs could push you into higher brackets, trigger IRMAA surcharges on Medicare premiums, and erode your nest egg faster than planned.

Short-Term IRMAA Pain for Long-Term Tax Freedom

Roth conversions can temporarily raise your IRMAA surcharges, but eliminating RMDs in the future often outweighs the short-term cost. Paying taxes now — while rates are lower and predictable — can mean decades of tax-free growth and greater control over your retirement income.

Sally’s Case Study: From IRA Millionaire to Roth Millionaire

Age: 62
Married Filing Jointly
AGI: $150,000
IRA Balance: $1,000,000 (pre-tax)
Pension Income: $5,000/month (covers income floor)
Goals: Reduce future RMDs, minimize IRMAA, pass tax-free legacy to heirs

How the Roth Blueprint Software Helped Sally

We entered Sally’s details into Roth-friendly annuity software with three key goals:

No out-of-pocket tax payments — Taxes are paid using the strategy’s internal growth and bonuses.
No premium reduction — Her $1M principal never drops during conversion.
Optimize tax bracket usage — Evaluate 22% vs. 24% bracket scenarios.

In the 22% bracket, Sally could only convert ~$56,700/year, stretching the process over many years. Bumping up to the 24% bracket allowed her to convert $176,268 in the first year, completing the process in just six years.

The Results

Total Taxes Paid: ~$372,000 (vs. $889,000 without strategy)
Post-Conversion Roth Balance: $1.2M after six years
At Age 100: Projected ~$5.8M tax-free
RMDs: Eliminated
Legacy: 100% tax-free to heirs

Why Pair a Roth Conversion with a Fixed Indexed Annuity

Roth IRAs grow tax-free, but they can still lose value in market downturns. By pairing the Roth with an A-rated fixed indexed annuity, Sally gains:

Bonus & gains to cover the taxes on the conversion
Internal Roth conversion
Principal protection (0% floor)
Market-linked growth potential
Tax-free withdrawals in retirement
Optional lifetime income guarantees

Today’s annuities aren’t the same as those from decades ago — many now offer bonuses, competitive growth, and innovative features that make them powerful Roth conversion tools.