I'm 58 With $1.7 Million in My 401(k). Should I Start Converting 10% per Year to a Roth IRA Now to Avoid RMDs and Taxes?

Transferring retirement savings to a Roth IRA from a 401(k) or similar tax-deferred account can help prevent mandatory taxable withdrawals in your 70s. This can reduce your tax burden after retiring, but it may not necessarily result in long-term tax savings. That’s because any funds converted to a Roth are taxed as ordinary income at your current marginal tax rate. The most effective conversion strategy may not be based on converting a set percentage of your 401(k) each year. Rather, you may be better off calculating the conversion amount based on its effect on your tax bracket.

A financial advisor can help you assess the pros and cons of a Roth conversion strategy. Use this free tool to get matched today.

Roth Conversion Rules

If you’re 58 now and leave your retirement savings in a 401(k), you must begin required minimum distributions (RMDs) of pre-determined amounts each year beginning at age 75 (RMDs start at age 75 for people born in 1960 or later). These withdrawals will be treated as taxable income, and the resulting tax bill will reduce the income you have available in retirement.

You can convert funds by transferring them from a tax-deferred account like a 401(k) or IRA to a tax-free Roth IRA. Once in the Roth account, the funds are not subject to RMD rules, so you do not have to worry about mandatory withdrawals for money you don’t need yet.

If you do need to access your retirement savings, you can withdraw from Roth accounts without incurring any taxes or penalties. The only limitation is that you must wait at least five years after the conversion to make withdrawals if the conversion is made before age 59 ½.

Use SmartAsset’s RMD Calculator to project future withdrawals from your IRA or 401(k). The results can help you prepare for taxes and manage your retirement income more efficiently.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

$--

RMD Amount for 401(k) #1

$--

RMD Amount for 401(k) #2

$--

About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

Roth conversions come at a cost, however, as converted funds are treated like ordinary income on your tax return. Therefore, converting a large 401(k) balance in a single year can result in a sizable tax bill in the short term.

Due to this, many people opt for gradual conversions. By converting a portion of the 401(k) over several years, you can break up the tax bill and prevent yourself from entering higher tax brackets where your money will be charged at higher rates.

The decision to convert a 401(k) to a Roth, as well as how much to convert, rests on several interdependent factors. This notably includes your current income and anticipated taxable income after retirement. It’s also worth keeping in mind the fact that Roth withdrawals are not considered when determining income levels that affect Social Security benefit taxation and Medicare premiums.

Remember, a financial advisor can help you determine and execute an appropriate strategy based on your circumstances.

Roth Conversion in Action

If you are a relatively high earner with $100,000 in taxable income, you will likely be in the 22% marginal income tax bracket, owing about $13,449 in federal income tax on your 2025 return.

Converting 10% of your $1.7-million 401(k) would add $170,000 to your current taxable income. As a single filer, the resulting $270,000 in income would lift you to the 35% bracket and result in a federal tax bill of approximately $58,500.

If you instead follow a strategy of converting only enough to put you in the next-highest bracket, you could convert $97,300. This would keep you in the 24% bracket, resulting in a tax bill of $36,419.

Neither of these gradual conversion strategies would likely empty your 401(k) in 17 years, which is when you’ll turn 75 and be subject to RMDs. That means you’ll still have to take the mandatory taxable withdrawals or face higher tax rates to convert the entire 401(k) in time.

Ultimately, many dynamics affect your overall income and taxes over time. Given the difficulty of forecasting future income and its resulting income tax rates, it can make sense to have funds in a 401(k), as well as a Roth, to provide you with greater flexibility.

Consider speaking with a financial advisor to further explore the trade-offs associated with a Roth conversion based on your circumstances and goals.

Bottom Line

Converting funds from a 401(k) to a Roth IRA can help you avoid RMDs and future taxes. However, the conversion will cost you today due to added income taxes. A conversion may still make sense, especially if you think you’ll be in a higher tax bracket after retirement. However, a conversion strategy converting just enough pre-tax money to fill up your current or the next-highest tax bracket may make more sense than aiming to convert a set percentage each year.

Tax Planning Tips

A financial advisor who understands tax strategy can help you coordinate investments, withdrawals, and retirement income with an eye toward your tax bill. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you have a mix of tax-deferred, tax-free and taxable accounts, the order in which you withdraw funds can have a major impact on lifetime taxes. Drawing from taxable accounts first can allow tax-deferred assets like IRAs and 401(k)s to continue compounding while keeping income low enough to minimize taxes on Social Security and Medicare premiums. Later in retirement, switching to withdrawals from tax-deferred or Roth accounts can help balance your income streams and control RMDs
Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.