How to Approach a Roth Conversion With a $1 Million IRA
- Jul 15
- 8 min read
By Kenneth M. Ford, AWMA®, AIF®
Last Updated: July 2026
Estimated Reading Time: 9–10 minutes
Quick Answer
A Roth conversion with a $1 million IRA requires a very different planning approach than a Roth conversion for a smaller retirement account. Once a pre-tax balance reaches seven figures, Required Minimum Distributions (RMDs), Medicare IRMAA, and long-term tax planning become much more significant considerations. At smaller balances, required minimum distributions are a manageable annoyance. At seven figures, the account itself becomes the tax problem: left untouched at a 6% return, a $1 million IRA roughly doubles by the time RMDs begin at 73, producing a first-year required withdrawal near $72,000 and climbing past $160,000 a year by the late eighties.
More importantly, at this balance the tax bracket stops being the true cost of a conversion. Large conversion income can trigger four costs the bracket does not show: Medicare IRMAA surcharges, increased taxation of Social Security, the 3.8% net investment income tax, and capital-gains stacking. Your bracket plus those costs is your true marginal rate — and that is the only number that should determine how much to convert.
For most seven-figure households, the practical implication is to convert less in any single year than the bracket suggests, and to extend the strategy across more years.
Hypothetical illustration. Assumes a $1,000,000 traditional IRA, 6% annual growth, and RMDs beginning at 73 under the IRS Uniform Lifetime Table. Not a prediction, recommendation, or guarantee. Individual results vary.
Why This Matters
A Roth conversion for someone with $80,000 in an IRA and a conversion for someone with $1.6 million are barely the same category of decision.
Below a few hundred thousand dollars, the balance will never throw off enough required income to distort a tax picture. Past a million, it distorts everything:
• It sets your future tax brackets, whether you want the income or not
• It sets your Medicare premiums
• It determines how much of your Social Security becomes taxable
• It shapes the size and efficiency of what you leave your heirs
• It removes your flexibility precisely when you have the fewest levers left
Most Roth conversion content on the internet is written for a general audience. This is written for the seven-figure balance, where the answers are frequently different.
Why a Roth Conversion With a $1 Million IRA Is Different
Required minimum distributions begin at age 73. The IRS divides your year-end balance by a life-expectancy factor from the Uniform Lifetime Table, and that quotient is what you must withdraw.
Two things compound against you:
The balance grows. A $1 million IRA at a 6% return is worth roughly $1.9 million by 73.
The divisor shrinks. Each year, the life-expectancy factor gets smaller — so you’re dividing a larger balance by a smaller number.
The result is an income stream that starts near $72,000 and rises past $160,000 a year in your late eighties. It arrives whether you need it or not, stacked on top of Social Security and any pension.
Hypothetical illustration. Assumes a $1,000,000 traditional IRA, 6% annual growth, RMDs beginning at 73 under the IRS Uniform Lifetime Table. Not a prediction or guarantee.
The Bracket Is No Longer the Cost
Standard advice says: fill up your bracket. Convert enough income to reach the top of the 22% or 24% band, then stop.
At $200,000 in an IRA, that instruction is roughly fine. At $1.5 million, it can be actively expensive — because conversion income at that scale collides with four costs the tax table cannot see.
1. Medicare IRMAA. A cliff, not a ramp. Cross the threshold by a single dollar and the surcharge applies to the entire year. In 2026, IRMAA begins at $109,000 of income for an individual and $218,000 for a couple. The standard Part B premium of $202.90 per month rises to $689.90 at the top tier. And IRMAA looks back two years — so a conversion at 63 sets your premium at 65.
2. The Social Security tax torpedo. As income rises, up to 85% of your benefit becomes taxable. Within a certain band, one dollar of conversion income can make more than a dollar of benefits taxable — spiking your effective rate well above your stated bracket.
3. The 3.8% net investment income tax. Conversion income is not itself investment income, but it raises your total income and can pull dividends, interest, and capital gains into range for the surtax. It begins at $200,000 (individual) / $250,000 (joint).
4. Capital-gains stacking. Ordinary conversion income sits beneath your long-term gains in the tax stack and can push them out of the 0% rate entirely. Before 65, it can also claw back ACA health-insurance subsidies.
Add your bracket to whichever of these you’re approaching, and you have your true marginal rate.
There Aren’t Two Choices. There Are Three.
Most people frame this as convert or don’t convert. But conventional bracket-filling is a third path — and it is not the same as sizing a conversion to the true marginal rate.
The Window Is Shorter Than You Think
For most pre-retirees there is a window close to ideal: after employment income stops, but before Social Security and RMDs begin. Retire at 62, delay Social Security toward 70, and with RMDs not starting until 73, you may have close to a decade of artificially low income.
But note where the real deadline sits. Because IRMAA looks back two years, the Medicare clock effectively closes at 63, not 65. The cleanest conversion years are the early sixties. Most people discover this at 64.
Advisor Insight
The most common mistake we see at seven figures isn’t converting too little. It’s converting the wrong amount in the wrong year — usually because someone filled a bracket without checking what sat just above it.
We’ve seen a conversion sized perfectly to the top of the 24% bracket push a household one dollar over an IRMAA threshold. The bracket math was flawless. The outcome cost them thousands in Medicare premiums two years later, for no additional benefit whatsoever.
The bracket sets the strategy. The true marginal rate sets the amount. At a million dollars and up, that distinction is worth real money.
Example
Robert and Anne are both 62 and recently retired. They have $1.2 million in traditional IRAs, a $300,000 taxable brokerage account to live on, and plan to delay Social Security to 70. This year, their only taxable income is roughly $20,000 from a small pension.
They are years from Medicare and years from RMDs. They are squarely in the window.
Because their income is otherwise so low, they have room to convert a great deal at a measured rate. Filling the gap to the top of the 24% bracket, they could move approximately $416,000 into a Roth this year at a blended federal rate near 20% — and repeat it for about three years.
But their advisor models the true marginal rate, not just the bracket. Filling the 24% bracket lifts their income near $436,000 — high enough, given IRMAA’s two-year lookback, to place them in one of the highest Medicare tiers when they enroll, and to invite the 3.8% surtax.
The disciplined course is to convert somewhat less each year, stay beneath a chosen IRMAA threshold as they approach 63, and extend the plan across a few additional years.
Hypothetical illustration. Not a prediction, recommendation, or guarantee. Individual circumstances vary.
Common Mistakes
Treating a seven-figure IRA like a small one. The advice that works at $200,000 can be actively wrong at $1.5 million.
Filling the bracket without checking what’s above it. IRMAA, the Social Security torpedo, and the surtax all sit outside the tax table.
Waiting for a “perfect” year. A dollar left unconverted is compounding — and so is the tax embedded in it.
Assuming the Medicare deadline is 65. Because of the two-year lookback, it is effectively 63.
Paying the conversion tax from the IRA. This shrinks the amount that lands in the Roth, dollar for dollar.
Frequently Asked Questions
Is $1 million really the threshold where the math changes? It’s an approximation, not a bright line. What actually changes is whether required distributions will be large enough to push you into higher brackets and across IRMAA thresholds. For most households, that begins to happen somewhere in the seven figures.
How much should I convert each year? There is no universal answer. The right amount is the amount that fills the space beneath your next meaningful threshold — bracket, IRMAA tier, or surtax — without crossing it, unless crossing it is worth the cost.
What if I’m already taking RMDs? It’s narrower, but not closed. You must take the RMD first (an RMD cannot be converted), and you can convert above it. Conversions still reduce future RMDs and can spare your heirs a significant tax bill.
Does the $15 million estate exemption mean I don’t need to worry about my estate? It means you likely don’t owe estate tax. It does not address the income tax your heirs will owe on an inherited traditional IRA — which is usually the bigger number.
Can a conversion ever be undone? No. Recharacterization was eliminated in 2018. This is why the sizing deserves genuine analysis rather than a year-end decision.
Key Takeaways
A seven-figure IRA creates future taxable income: Left alone, it can generate large Required Minimum Distributions that may push you into higher tax brackets.
Growth compounds the future tax bill: At a 6% annual return, a $1 million IRA roughly doubles by age 73, with RMDs starting around $72,000 and increasing over time.
Your true marginal rate—not your tax bracket—should guide conversions: Consider IRMAA, the Social Security tax torpedo, the 3.8% Net Investment Income Tax, and capital gains stacking alongside your federal tax bracket.
The Medicare planning window closes earlier than many realize: For IRMAA purposes, meaningful Roth conversion planning often ends around age 63, before Medicare begins at 65.
Large IRAs often favor a gradual conversion strategy: Converting smaller amounts over more years may produce better long-term tax outcomes than one large conversion.
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Final Thoughts
A large pre-tax account is not wealth you own outright. It is wealth you share with a silent partner whose share has compounded right alongside yours — and you simply haven’t been sent the invoice.
The purpose of planning is to settle that bill on your terms rather than the government’s. That means knowing what a conversion dollar actually costs you, in the specific year you convert it. Not what the bracket says. What it actually costs.
See What a Seven-Figure IRA Could Mean for Your Retirement
Once your retirement savings reach seven figures, Roth conversion planning becomes more than a tax bracket decision. Factors like future Required Minimum Distributions, Medicare IRMAA, Social Security taxation, and long-term legacy planning all become part of the equation.
A Roth Conversion Analysis can help you evaluate how these factors may affect your retirement and whether a multi-year conversion strategy makes sense for your situation.
Disclaimer
This article is for educational purposes only and should not be considered tax, legal, or investment advice. Roth conversions, Medicare premiums, IRMAA surcharges, required minimum distributions, and retirement income strategies should be evaluated based on your individual circumstances, including your income sources, tax situation, retirement goals, and broader financial plan. All examples are hypothetical, are provided for illustration only, and are not a guarantee or prediction of any particular result; individual results will vary. Figures reflect 2026 federal parameters and are subject to change. Tax laws, Medicare rules, premium amounts, and IRMAA thresholds change over time. Consult qualified tax and financial professionals before making financial decisions.
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