From 24/7 Wall St. · AJ Tiarsmith · · 1m 40s
Warren Buffett's Roth Conversion Math
63-year-old with $800,000 can avoid RMDs using Buffett's Roth trick.
In brief
63-year-old with $800,000 can avoid RMDs using Buffett's Roth trick. A 63-year-old with $800,000 can convert to Roth IRA to avoid required minimum distributions by 2026, costing $203,586-$257,016 depending on strategy. Originally reported by 24/7 Wall St..
Warren Buffett's Roth Move
Warren Buffett paid a one-time tax to move $11.6 million from traditional retirement account into Roth IRA.
“After paying the one-time tax, both men saw their Roth accounts soar”
Roth vs Traditional IRA
Buffett held $20.2 million in Roth IRA with no required withdrawals until age 88.
RMDs for Traditional IRA
Traditional IRA would require $1,474,453 withdrawal in 2019 and higher annual withdrawals.
Conversion Threshold
Conversion limit lifted in 2010 for those earning under $100,000 annually.
The Math
63-year-old with $800,00:00 in traditional IRA can avoid RMDs through Roth conversion.
Plan 1: All at Once
Convert entire $800,000 in 2026 costs $257,016 with $153,300 in 37% tax bracket.
Plan 2: Four Years
Four conversions before Social Security cost $203,586 with Medicare surcharges.
Plan 3: Twelve Years
Twelve conversions of $90,000 each cost $216,746 with no 37% tax bracket.
Roth Balance at 75
All plans end with $1,609,757 in Roth IRA with zero RMDs.
Where Plans Fail
Higher returns favor early conversion; tax rates can change; ladder needs discipline.
Bottom Line
Three strategies to avoid RMDs by 2026 with costs ranging from $203,586 to $257,016.
Tax Impact
All conversions cost $203,586-$257,016 with Medicare surcharges and tax brackets.
Roth at 75
All plans end with $1,609,757 in Roth IRA with zero RMDs.
What it means
A 63-year-old with $800,000 can convert to Roth IRA to avoid required minimum distributions by 2026, costing $203,586-$257,016 depending on strategy.
