Roth Conversions for IRA Millionaires: Avoid These 6 RMD Tax Traps

If you’ve saved over $1 million in a traditional IRA, congratulations — that’s no small feat.

But there’s a problem most people don’t see coming: the IRS already has a plan for your money. And it starts the moment you turn 73 or 75, when Required Minimum Distributions (RMDs) kick in.

These RMDs are mandatory — and fully taxable. And once they begin, they grow every year. The real danger? RMDs trigger a chain reaction that can quietly erode your income, spike your taxes, and even burden your heirs.

Let’s unpack the 6 biggest risks — and the Roth conversion strategy that could save your retirement plan.

What Are RMDs and Why Are They a Problem?

RMDs are forced withdrawals the IRS makes you take from your IRA, 401(k), or similar tax-deferred accounts. If you were born in 1960 or later, they start at age 75. If born earlier, they start at 73.

Here’s the kicker:

• They’re fully taxable

• They increase every year

• And if you miss one? You face a 25% penalty

But the real issue isn’t just the withdrawals — it’s what they set off. I call it the RMD Chain Reaction.

The 6 Chain Reactions RMDs Trigger

1. Higher Taxes Every Year

RMDs increase your income whether you need the money or not. That means you’re paying more in taxes, possibly bumping into higher brackets year after year.

2. Your Social Security Gets Taxed

RMDs raise your AGI (Adjusted Gross Income), which can cause up to 85% of your Social Security to become taxable. That’s money you already paid taxes on once — now taxed again.

3. Medicare IRMAA Surcharges

Higher income from RMDs also increases your Medicare premiums. These surcharges (called IRMAA) can quietly cost you $500,000 or more over your retirement — and they’re rising every year.

4. You Lose Valuable Tax Deductions

As income increases, you may lose:

• The Qualified Business Income (QBI) deduction

• SALT deductions

• Energy and education tax credits

These losses can compound over time and reduce your financial flexibility.

5. The Widow’s (or Widower’s) Penalty

When one spouse passes, the survivor files as a single taxpayer — which means higher tax rates on the same income. The RMDs don’t stop, but the brackets shrink.

6. Your Heirs Inherit a Tax Time Bomb

The SECURE Act requires your heirs to empty your IRA within 10 years. That likely happens while they’re in their peak earning years — and it could push them into the top tax bracket.

The Solution: Roth Conversion Before RMDs Hit

By converting your traditional IRA into a Roth IRA early, you eliminate future RMDs altogether. And that stops the chain reaction before it starts.

Here’s what you get:

• Tax-free growth for life

• No RMDs at all

• A tax-free legacy for your heirs

The sooner you convert, the more flexibility you have to manage your tax brackets over time.

What About the Taxes on the Conversion?

Great question — and that’s where our strategy shines.

Using our Roth Conversion Blueprint™, we help you:

• Convert gradually over multiple years

• Avoid jumping into a higher tax bracket

• Use Roth-friendly annuities that generate internal growth and bonuses to help offset your conversion taxes

There’s no out-of-pocket tax cost, no principal reduction, and your account stays protected from market losses. We customize the timeline based on your income, age, and goals.

You Have Options — But Time Matters

There are 737 annuity companies out there — only five are truly Roth-friendly. We work exclusively with A-rated carriers that offer protected growth, lifetime income, and tax-free legacy options.

Let’s see if this strategy makes sense for you. The earlier we start, the more tax-efficient your conversion can be.

➠ Schedule a Q&A Call to Find Out More About a Roth Conversion: Schedule a Retirement Income Q&A Call 

Ready to Retire Financially Relaxed?

My goal is to help you eliminate the fear of running out of money, avoid costly mistakes, and retire with confidence and security. When you have safe, predictable income in place, you’re free to actually enjoy retirement — not just worry your way through it.

• Learn more at the Retirement Income School™

• Want to talk? Schedule a Retirement Income Q&A Call — I’d love to support you.

This is your chance to learn what you wish school had taught you — and discover how to keep your money safe and make it last, so you can enjoy retirement!