My RMD starts next year. Should I convert my whole IRA to a Roth?

Core Insights - The article discusses the considerations for converting an IRA to a Roth IRA, particularly focusing on the timing and amount of conversion to optimize tax implications [2][4]. Group 1: Conversion Considerations - A careful year-to-year analysis is recommended over a one-time full conversion to avoid required minimum distributions (RMD) [1]. - The size of the IRA significantly impacts the tax implications of conversion; a larger IRA can lead to a higher tax rate upon conversion [3]. - Even small conversions can trigger additional costs, such as surcharges on Medicare, known as Income-Related Monthly Adjustment Amounts (IRMAA) [3]. Group 2: Tax Rate Assessment - Current tax rates can be assessed with high accuracy, allowing for informed decisions on the conversion amount [4]. - Future tax rates are more challenging to predict, but RMDs typically increase over time, prompting many to consider Roth conversions to avoid RMDs [5]. - At age 73, the typical RMD is 3.77% of the account balance, increasing to 11.2% by age 95, indicating a significant rise in required distributions as one ages [6]. Group 3: Investment Strategy Impact - The investment strategy of the IRA affects RMD calculations; conservative investments lead to smaller RMD increases, while aggressive investments can result in more unpredictable RMDs [7].