"Do Roth conversions in the gap years" is one of the most repeated pieces of retirement-tax advice — the window between retiring and when Required Minimum Distributions (RMDs) start at 73, when your taxable income is unusually low. The pitch is that filling those low brackets now avoids a brutal RMD-driven tax bill later. But the advice is almost always given without a number attached. So we attached one. We computed the entire lifetime federal income tax bill for a representative Married-Filing-Jointly retiree under two strategies on the identical portfolio: do nothing, versus convert just enough each gap year to fill the 12% bracket. Here is exactly what inaction costs — and where the advice quietly breaks down.
Headline finding: A Married-Filing-Jointly retiree with a $1,000,000 Traditional IRA who does nothing pays a median $31,741 more in lifetime federal income tax than one who fills the 12% bracket with Roth conversions during the gap years (retire 65, RMDs at 73, plan to 90). The penalty climbs to about $74,800 at a $1.5M balance and $112,800 at $2M. But the same strategy applied to a $500,000 IRA lost a median $12,939 — because that balance's RMDs would have stayed in low brackets anyway. The advice is right, but only above a threshold, and the data shows where.
Why doing nothing gets expensive: the RMD bracket trap
Leave a large Traditional IRA untouched and two things compound against you. First, the balance keeps growing — a $1,000,000 IRA earning 5% real grows to roughly $1.48M by age 73. Second, RMDs are forced: the IRS Uniform Lifetime Table requires you to withdraw a rising fraction every year whether you need the money or not, starting at about 1/26.5 of the balance at 73 and accelerating. On a $1.48M balance that first RMD is ~$55,750 — and stacked on top of taxable Social Security, it lands squarely in the 22% bracket. Every year after, the required fraction grows.
The gap years are the escape hatch. Before RMDs and often before Social Security, a retiree living off taxable savings can have near-zero ordinary income — leaving the entire 10% and 12% brackets empty. Converting Traditional dollars to Roth to fill that space moves money out of the IRA at a 12% rate that would otherwise come out later at 22% or higher, and the converted dollars then grow tax-free and are permanently exempt from RMDs, shrinking every future forced withdrawal.
The trap is that inaction feels free. Doing nothing has no upfront tax bill, so it looks costless. But the bill is only deferred — and deferral lets the balance grow into larger RMDs taxed at higher rates. The gap-year window to convert cheaply is open for only about eight years and then closes permanently when RMDs begin.
Headline chart: lifetime tax penalty of inaction, by IRA size
Median extra lifetime federal tax from doing nothing vs filling the 12% bracket
Positive bars = converting saved money (doing nothing was costlier). Negative bar = converting cost money. 20,000 Monte Carlo return paths per IRA size; same retiree, same returns, only the strategy differs.
The relationship is steep and roughly linear above the threshold: each additional $500,000 of Traditional balance adds roughly $40,000 to the lifetime cost of inaction. The crossover sits below $1M — for the $500,000 IRA, the future RMDs were never large enough to escape the low brackets, so paying conversion tax early simply gave money to the IRS sooner for little benefit.
Full results: four IRA sizes
Each row is 20,000 Monte Carlo paths on the real return. "Median saving" is the typical lifetime federal tax saved by converting versus doing nothing (positive = converting wins). "Conversion wins %" is the share of return paths where converting produced the lower lifetime bill.
| Traditional IRA | Lifetime tax: do nothing | Lifetime tax: convert | Median saving | 25th–75th pct saving | Conversion wins |
|---|---|---|---|---|---|
| $500,000 | $47,896 | $58,945 | −$12,939 | −$39,551 to $20,207 | 39.3% |
| $1,000,000 | $160,507 | $129,648 | +$31,741 | −$9,064 to $91,958 | 69.5% |
| $1,500,000 | $282,846 | $208,372 | +$74,832 | $27,049 to $148,727 | 91.2% |
| $2,000,000 | $430,096 | $314,183 | +$112,795 | $41,294 to $191,396 | 88.8% |
Three things stand out:
- The penalty for inaction scales with balance. A $2M IRA owner who does nothing pays a median $430,096 in lifetime federal tax versus $314,183 if they convert — a $112,795 gap, larger than most people's entire retirement tax bill.
- Roth conversions are not universally good advice. At $500,000, converting lost money in 61% of paths. The blanket recommendation to "always do Roth conversions in the gap years" is wrong below a balance threshold — a nuance most articles skip.
- The win rate rises with balance. Conversions beat doing nothing in 70% of return paths at $1M and ~90% at $1.5M. The bigger your future RMD problem, the more reliably the gap years pay off.
CC-BY-4.0 — free for any use including republication and journalism, with attribution to QuantCalc Research.
Why our numbers are conservative
Several real-world factors that we deliberately left out would all increase the cost of doing nothing, not decrease it:
- No state income tax in the model. In a taxing state, the do-nothing penalty grows because RMDs are also taxed at the state level.
- No IRMAA. Large RMDs can push Medicare Part B and D premiums into surcharge tiers (IRMAA), an extra cost of inaction we excluded entirely.
- No heir analysis. Under SECURE Act rules, most non-spouse heirs must empty an inherited Traditional IRA within 10 years — often in their peak earning years at high brackets. A Roth inherited instead is tax-free. This single factor can dwarf the lifetime difference and we ignore it.
- Current-law brackets. We hold 2025 brackets constant. If the 2017 tax cuts sunset and rates rise, converting now at locked-in lower rates becomes more valuable, again widening the gap.
So the figures here are best read as a floor on the cost of inaction for a high-balance retiree. The honest counterweight is the $500,000 result: conversions are a balance-dependent strategy, not a universal one, and below the threshold the upfront tax simply isn't recovered.
Methodology
Engine: roth-gap-mc-1.0.0 · fixed seed 20260602 · 20,000 Monte Carlo return paths per IRA size · plus a deterministic flat-5% hand-checkable case. Generator is re-runnable and reproduces these figures exactly.
Retiree: Married Filing Jointly, retires at 65, claims $36,000/yr real Social Security at 67, RMDs begin at 73 (SECURE 2.0), plan-to age 90. All dollars are real (constant 2025 dollars).
Tax law: 2025 federal MFJ ordinary brackets and $30,000 standard deduction (IRS Rev. Proc. 2024-40), held constant in real terms — the standard simplification for a multi-decade comparison, disclosed. Social Security taxation uses the simplified up-to-85%-includable provisional-income rule; because it applies near-identically to both strategies, it is a second-order effect on the difference.
RMDs: IRS Uniform Lifetime Table divisors (Pub 590-B), age 73 onward, applied to the prior year-end Traditional balance.
Strategies: Do nothing — no conversions; the Traditional IRA grows untouched until RMDs force taxable withdrawals. Convert — each gap year (65–72), convert just enough Traditional → Roth to fill taxable income to the top of the 12% bracket; converted dollars grow tax-free and are exempt from future RMDs. Both strategies face the identical realized return path each year, so the tax difference is attributable purely to strategy.
Returns: Annual real return drawn Normal(5%, 10%) for the Monte Carlo overlay; the deterministic check uses a flat 5% real and yields a $41,883 lifetime saving at the $1M balance — consistent with the Monte Carlo median.
What this is not: Not a full plan. It is the federal income tax difference between two strategies. State tax, IRMAA, and heir/estate effects are excluded and, as noted above, would all increase the cost of doing nothing.
The conversion target — the top of the 12% bracket — is deliberately moderate; more aggressive conversions (filling the 22% or 24% bracket) would widen the gap further for the largest balances but introduce more case-specific judgment. We chose the conservative, widely-recommended target so the result is easy to reproduce and defend. The generator and full dataset are published above for anyone who wants to vary the bracket target, balance, return, or horizon.
What would conversions save you?
The answer depends on your balance, your bracket, your state, and your spending. Model your own gap-year conversions against your real RMD schedule instead of trusting a one-size-fits-all rule of thumb.
Plan Your Retirement Taxes →Related research
- → 510,000-path 51-State Retirement Monte Carlo — the state-tax companion; California costs $167,580 more in 30-year state tax than Wyoming, on top of the federal picture here.
- → The 2026 ACA Cliff Costs Early Retirees a Median $212,668 — the pre-Medicare bridge study, where conversion income can collide with ACA subsidy thresholds.
- → Social Security at 70 Beats 62 Only 42% of the Time — If You Invest — the claiming-age decision that interacts with conversion timing.
Frequently asked questions
Last updated 2026-06-02. Dataset license: CC-BY-4.0. Tax parameters: IRS Rev. Proc. 2024-40 (2025 MFJ brackets), IRS Pub 590-B Uniform Lifetime Table (public domain). QuantCalc is an independent retirement-planning research project. Not affiliated with the IRS or any government agency. Not financial, tax, or legal advice.