I'm 60 With $1.2 Million in an IRA. Should I Convert to a Roth to Avoid RMDs?

Core Insights - The article discusses the implications of Required Minimum Distributions (RMDs) for individuals with traditional IRAs, particularly those approaching age 73, and suggests that converting to a Roth IRA can mitigate tax burdens associated with RMDs [2][3][4]. RMD Rules - Individuals must begin taking RMDs from traditional IRAs and similar accounts at age 73, calculated based on account balance and IRS life expectancy factors [3]. - RMDs are taxed as ordinary income, which can elevate tax brackets for individuals with substantial IRA balances [4]. Roth Conversions - Converting a traditional IRA to a Roth IRA can eliminate RMD requirements, allowing for more control over tax liabilities in retirement [7][8]. - Taxes must be paid on the converted amount at the individual's ordinary income rate, which can result in significant tax bills if large amounts are converted at once [8]. - Gradual conversions allow for better tax management, as individuals can choose when to take taxable withdrawals rather than being subject to mandatory RMDs [9]. Example Scenario - A $1.2 million IRA, growing at 5% annually for 13 years, could reach approximately $2.3 million by age 73, leading to an RMD of about $87,000, which could push the individual into a higher tax bracket [12].