I Have $7.5 Million in a Traditional IRA at 60 — How Aggressively Should I Do Roth Conversions?

A recent post on r/personalfinance laid out a dilemma that lands in the inboxes of fee-only advisors every week. The author is 60 years old, lives in California, and holds $7.5 million in a traditional IRA. The real question was how aggressively to convert.

This is the right question, and the math is unforgiving in both directions. Converting too little and required minimum distributions starting at 75 will tax the portfolio at a higher rate than any voluntary conversion would have. Convert too much, and you pay tomorrow’s tax bill today, in cash, at a rate you could have legally avoided.

The 15-Year Window That Closes at 75

From age 60 to 75, every dollar moved from a traditional IRA to a Roth is voluntary. After 75, the IRS sets the withdrawal amount through the Uniform Lifetime Table.

Compound $7.5 million at a 7% net return for 15 years, and the account grows to roughly $20 million. The first-year RMD lands in the $800,000 to $900,000 range, all of it ordinary income, stacked on top of Social Security, pensions, dividends, and capital gains. For a California resident, federal sits at 37% at the top, California adds 9.3%, and the net investment income tax plus IRMAA push the effective marginal rate above 46%. Nearly half of every forced dollar disappears.

What the Three Conversion Paths Actually Cost

The Reddit author modeled three specific annual conversion amounts.

1. Fill the 24% federal bracket. Roughly $364,000 per year, with a combined federal-plus-California rate near 33%. The cheapest tax rate per dollar converted, but the smallest dent in the future RMD base.
2. Fill the 32% bracket. Roughly $467,000 per year at about 41% combined. The middle path shrinks what the IRS can tax at the punishing 46%-plus rate later.
3. Fill the 35% bracket. Roughly $763,000 per year at about 44% combined. Aggressive, accelerates the tax bill, and only barely undercuts the projected RMD rate.

All three beat the do-nothing scenario. The arbitrage shrinks as conversions get larger, which is why the middle path usually points to the right answer when the runway is a full 15 years and growth assumptions are realistic.

The IRMAA and Estate Tax Layers Most Calculators Miss

Conversion income flows directly into modified adjusted gross income, and Medicare uses a two-year lookback. A $467,000 conversion at 63 sets the IRMAA bracket at 65. The standard 2026 Part B premium is $202.90 per month, but the top IRMAA tier for married filers, which starts above $750,000 in MAGI, pushes that to roughly $628 per person, per month.

The estate dimension is the one that community commenters flagged that pure income tax models ignore. IRC §2039 pulls retirement accounts into the gross estate. A $20 million traditional IRA at death hands heirs a 10-year drawdown clock under SECURE 2.0, usually during their peak earning years. A Roth of the same size hands them 10 years of tax-free growth and no income tax bill. That difference can swing seven figures.

The Macro Backdrop Tilts Toward Acting Now

Two data points matter. The 10-year Treasury yield sits at 4.4%, near the 84th percentile of its 12-month range, which raises the discount rate on future tax savings. Core PCE is running at the 91st percentile of its trailing year, and the Fed funds rate has settled at around 4%. Inflation lifts nominal portfolio values, which lifts future RMDs in dollar terms, compounding the case for converting at today’s known brackets.

Three Actions Worth Taking This Quarter

1. Build a 15-year model with three growth assumptions (5%, 7%, 9%) and solve for the conversion amount that equalizes today’s marginal rate with the projected RMD rate at 75. For a $7.5 million starting balance in California, the answer usually sits in the 32% bracket.
2. Pay conversion tax from a taxable brokerage account, never from the IRA itself. Paying tax with IRA dollars defeats most of the arbitrage and triggers a 10% penalty before 59 and a half.
3. Hire a CFP and CPA who specialize in high-net-worth tax optimization. A top-voted comment on the original thread made the point bluntly: avoiding 1% in professional fees while risking six figures in tax mistakes is poor judgment at this wealth level. The estate exposure alone justifies the engagement.