Roth conversions at 84: $8M IRA couple weighs estate-planning trade-off

An 84-year-old couple holding roughly $8 million across four traditional IRAs is weighing whether Roth conversions still make financial sense at their age, even as the most tax-efficient window for such moves has largely closed. The couple, who sought guidance from MarketWatch's Moneyist column, initially believed conversions meant paying taxes twice — once on withdrawal and again on contribution — before learning the tax cost applies only at the point of conversion.

"One of the most significant advantages of a Roth conversion, regardless of age, is the ability to leave a tax-free inheritance to your loved ones," said Danny Gudorf, a financial planner at Gudorf Financial Group in Dayton, Ohio. "This benefit becomes even more valuable as you enter your 70s and start thinking more seriously about your legacy."

The couple's net worth sits mostly in four separate traditional IRAs — two in the husband's name and two in the wife's. Their income comes from Social Security, required minimum distributions and monthly pensions totaling about $2,200. After taxes, they reinvest roughly half of their RMDs in a taxable brokerage account. Their largest annual expenses are RMD-related taxes and real-estate taxes, which together run about $7,000 per year.

The central question is not whether conversions save the couple money during their lifetimes — the bracket-arbitrage window between retirement and the onset of Social Security and RMDs has passed — but whether converting now shields heirs from the SECURE Act's 10-year rule. That rule requires most non-spouse beneficiaries to fully distribute inherited traditional IRAs within a decade, potentially at top marginal rates stacked on top of their own income.

The husband, who has already outlived his male predecessors by about six years, said he suspects he may not have many years left. His wife's female relatives, however, have often lived into their 90s. That longevity gap raises a separate concern: planning for the surviving spouse, who could face narrower tax brackets, fewer standard deductions and higher Medicare premiums when filing status shifts from married filing jointly to single.

The 10-Year Rule Outweighs Current Tax Brackets

The couple's RMDs alone may already place them near the top of federal tax brackets, meaning any conversion would incur taxes at their current marginal rate. But the analysis shifts when heirs are high earners. An $8 million traditional IRA left to beneficiaries under the SECURE Act means a decade of large, mandatory taxable distributions layered on top of their own salaries and investment income.

"By converting a portion of your traditional IRA to a Roth IRA, you're essentially giving your beneficiaries a gift that keeps on giving," Gudorf said. "They'll be able to withdraw funds tax-free without worrying about the impact on their own tax situation. This is especially important when your beneficiaries are already in medium to high tax brackets."

The couple also needs to account for Medicare's Income-Related Monthly Adjustment Amount, which raises Part B and Part D premiums based on modified adjusted gross income. Traditional IRA withdrawals count toward MAGI, while qualified Roth distributions do not. Capital gains, dividends and interest from their taxable brokerage account are also included in the MAGI calculation. Tax brackets, IRMAA thresholds and SECURE Act rules can change, so readers should verify current figures against the latest IRS and Medicare announcements.

Fee-Averse Couple Seeks One-Time Planning Advice

The couple said they are reluctant to pay a financial adviser 2 percent of assets — roughly $160,000 per year — after losing $10,000 within four months when a major bank managed a $20,000 account for them. They now use a CPA primarily for tax preparation and are seeking objective, one-time or periodic advice on tax-efficient strategies and estate planning rather than ongoing asset management.

A certified financial planner who specializes in tax planning could stress-test two scenarios — conversions versus no conversions — and model the tax impact of each path for both the couple and their heirs. Timing matters: conversions made later in the year, when the couple knows their full income picture, or during market downturns when converting the same number of shares at a lower valuation, can reduce the tax bite.

The broader lesson for retirees approaching their 80s is that Roth conversion decisions should be driven by the full picture — the 10-year inherited-IRA rule, beneficiary tax brackets, IRMAA surcharges and surviving-spouse planning — rather than by any single factor in isolation. For this couple, the answer hinges less on their own tax bracket today and more on who inherits the accounts and what those heirs' tax situations look like.

This article is for informational purposes only and does not constitute investment advice.