In mid-2026 many retirees are recalculating decumulation plans after the RMD age moved to 73 and ongoing tax volatility. This case study examines how Mark and Elena Rivera—a married couple in their late 60s—restructured retirement accounts, staged Roth IRA conversions and coordinated Social Security timing to materially reduce future required minimum distributions (RMDs) and long-term tax liability while protecting Medicare exposure.
Background: the Riveras’ starting point
Mark (67) and Elena (65) retired from corporate and public-sector jobs in 2024 and 2025 respectively. Their retirement assets in January 2026:
- Mark’s former employer 401(k): $520,000 (traditional pre-tax)
- Traditional IRAs (combined): $310,000
- Taxable brokerage account: $180,000
- Pension (Elena): $11,500/year if elected at 65 as a single-life option; full-survivor option available that reduces the payout
- Social Security: Mark eligible for full retirement at 67; benefit at 70 would increase ~24% compared with claiming at 67. Elena’s full retirement age is 66; delaying to 70 yields the same delayed credit for her.
Goals: preserve purchasing power, keep Medicare premiums reasonable, minimize taxes on future RMDs once they reach 73, and leave a tax-efficient legacy for their two adult children.
Key constraints and strategic choices
The Riveras and their fiduciary advisor identified three constraints and opportunities that shaped the plan:
- RMD timing: With required minimum distributions kicking in at age 73, large traditional balances would generate significant taxable RMDs that could push taxable income into high brackets.
- Medicare IRMAA exposure: High reported income during Roth conversions or large RMD years can raise Medicare Part B and D premiums via IRMAA surcharges for several years.
- Social Security timing: Delaying Social Security to 70 could increase lifetime benefits and provide an inflation-adjusted bridge; but delaying reduces the need to draw heavily from accounts early, which creates conversion windows.
Strategy implemented: staged Roth conversions plus selective rollovers
Rather than a single large conversion that would spike taxable income, the Riveras pursued a five-year staged Roth conversion plan (2026–2030) with the following features:
- Roll some 401(k) funds to an IRA early (2026): Mark rolled his former 401(k) into an IRA to centralize management and allow conversions. They left a portion in the employer plan because some plans allow in-plan Roth conversions with limited plan options, but the consolidated IRA gave greater conversion flexibility.
- Annual conversion bands: Each year they converted enough traditional IRA/rolled-401(k) balance to Roth IRA to fill the lower tax brackets but kept adjusted gross income (AGI) under thresholds their advisor set to avoid large IRMAA surcharges. In practice that meant converting an average of $40,000–$60,000 a year depending on market returns and taxable gains in the brokerage account.
- Coordinate with Social Security deferral: Mark deferred Social Security until 70 to maximize his benefit. Because he didn’t need Social Security income between 67 and 70, withdrawals were available to support living expenses via the taxable brokerage account. That preserved lower MAGI during conversion years.
- Preserve Roth seed: Conversions went into Roth IRAs and were kept invested for long-term tax-free growth. After the five-year window they expected a meaningful portion of their tax-deferred assets to be tax-free.
Why staged conversions worked for them
Staged conversions achieved several outcomes simultaneously:
- They lowered the traditional IRA/401(k) base ahead of RMDs at 73, reducing the RMD calculation and future taxable income.
- By keeping reported income under Medicare surcharge triggers during conversion years, they avoided higher Part B/D premiums that can persist for years.
- The taxable brokerage account provided cash to live on, so Roth conversions could proceed without forced taxable withdrawals from traditional accounts.
Detailed timeline and turning points
Key steps and decisions across the five-year window:
- 2026 (age 67/65): Consolidation and tax-band modeling. Mark rolled the 401(k) into an IRA. The advisor modeled AGI outcomes to set annual conversion limits. They targeted taxable income just below the Medicare IRMAA “notches” and stayed within the 12–22% federal tax brackets where efficient.
- 2027–2029: Annual conversions and portfolio rebalancing. Each year they converted $45k–$55k, paying taxes from their brokerage account. They intentionally timed conversions in months with realized losses or lower capital gains to offset incremental ordinary income where possible.
- 2030: Finish major conversions, reassess pension start date. After five years they had converted roughly $250k into Roth IRAs. At this point Elena elected to start her pension at 66 rather than delay to 70 because the analyzed trade-offs (guaranteed lifetime income vs. flexibility) favored an earlier start for survivor protection.
- 2031 onward: Lower RMDs and flexible withdrawals. When Mark turned 73 in 2032 the RMD calculation reflected much smaller traditional balances, shrinking the mandatory taxable distribution and mitigating bracket creep. Their Roth IRAs remained RMD-free and available to manage taxable income in high-spend years or to leave as an estate planning vehicle.
Outcomes — measurable benefits
By 2032 the Riveras realized concrete benefits compared with a baseline scenario of no conversions and immediate pension start:
- Estimated long-term taxable RMDs were reduced by approximately 35% compared with the baseline, based on projected portfolio growth and their withdrawal plan.
- They avoided a permanent increase in Medicare premiums that a large concentrated conversion year would likely have triggered.
- Their Social Security benefits increased by deferral: Mark’s delayed benefit grew materially by waiting to 70, reducing dependence on taxable withdrawals during his highest conversion years.
- They left a larger Roth balance that their heirs can inherit tax-free (subject to post-SECURE rules), providing a cleaner legacy from a tax perspective.
Trade-offs and lessons
The Riveras’ approach wasn’t risk-free or optimal for every retiree. Key trade-offs:
- Short-term tax payments: Conversions generated immediate ordinary income tax bills paid from the taxable account—reducing liquid reserves.
- IRMAA planning complexity: Managing MAGI to avoid Medicare surcharges required careful modeling and discipline; a market rally during conversion years could have pushed AGI higher than planned.
- Pacing vs. market timing: Converting in down markets is generally more tax-efficient (you convert the same dollar amount to get more shares), but markets are unpredictable.
Takeaway lessons for retirement planning enthusiasts:
- Staged Roth conversions can be a powerful tool to lower future RMDs, but they need to be coordinated with Social Security timing, pension start choices and Medicare IRMAA exposure.
- Centralizing 401(k) assets into an IRA often creates conversion flexibility, but check plan-specific rules—some employer plans offer in-plan Roth conversions that may be useful.
- Maintain a taxable cash buffer to pay conversion taxes—selling assets from an IRA to pay tax defeats the purpose.
- Work with an advisor to model likely scenarios over a 10–20 year horizon, including RMDs at 73, Social Security claiming ages and expected pension payouts.
Final verdict
Mark and Elena’s staged Roth conversion plan, combined with selective rollovers and a delayed Social Security decision for Mark, materially shrank their projected required minimum distributions and smoothed taxable income through their 70s. Their case illustrates how a disciplined, multi-year conversion program—aligned with pension and Social Security choices—can reduce lifetime tax drag and increase flexibility in retirement. For readers, the practical lesson is clear: conversion strategy is not one-size-fits-all, but when applied thoughtfully it can reshape the tax profile of retirement income decades in advance.