From 24/7 Wall St. · Gerelyn Terzo · · 1m 20s
A 64-Year-Old Couple's Tax Decision
A couple with $1.2 million in a 401(k) faces a tax decision before retirement.
In brief
A couple with $1.2 million in a 401(k) faces a tax decision before retirement. A 64-year-old couple with $1.2 million in a pretax 401(k) may face higher taxes if they wait to convert to Roth IRA. Originally reported by 24/7 Wall St..
The Couple's Savings
A 64-year-old couple has $1.2 million in a pretax 401(k) savings.
Tax Impact of Waiting
Leaving the 401(k) untouched could lead to higher taxes when required withdrawals start.
RMD Date Change
Under IRS Notice 2026-13, RMDs start at age 75 for those who turn 74 after December 31, 2032.
Tax Cascade Risk
401(k) withdrawals can increase Social Security taxes and Medicare premiums.
Plan A: No Conversion
Plan A leaves the 401(k) untouched until RMDs begin and uses cash for living costs.
Plan B: Roth Conversions
Plan B converts a limited piece to a Roth IRA each year during the gap to avoid higher taxes.
Tax Comparison Needed
A tax preparer should model both plans to see which has lower taxes over time.
Deadline for Action
Roth conversions must be completed by December 31 to use the current tax year's low-income room.
The Tax Decision
The couple must decide how much tax they will pay on their $1.2 million before touching it.
What matters most
A 64-year-old couple with $1.2 million in a pretax 401(k) may face higher taxes if they wait to convert to Roth IRA.
