Is Converting $100k a Year to a Roth at 60 a Good Way to Avoid RMDs?

Core Insights - Required Minimum Distributions (RMDs) pose challenges for retirees, and converting to a Roth IRA can alleviate these concerns [1][3] - A Roth conversion allows individuals to avoid RMDs since taxes are paid upfront, but this may lead to higher costs depending on the tax situation [2][8] RMD Overview - RMDs apply to pre-tax retirement portfolios starting at age 73, requiring minimum annual withdrawals to ensure tax payments on retirement funds [3][4] - The withdrawal amount is determined by the portfolio's value and the account holder's age, with the rule applying to each portfolio separately [4] Financial Implications - For example, a 60-year-old with a $1.1 million IRA could see the account grow to approximately $2.99 million by age 73, necessitating a withdrawal of $112,890 and a tax payment of at least $17,000 [5] - Converting to a Roth IRA eliminates RMD requirements, allowing funds to remain invested until needed [6][7] Roth Conversion Details - A Roth conversion involves transferring funds from a traditional IRA to a Roth IRA, providing tax-free withdrawals in retirement and exemption from RMD rules [7] - The primary drawback of a Roth conversion is the upfront tax liability on the converted amount, which must be paid in the year of conversion [8]