The Retirement Tax Window Most People Miss
The gap between retiring and RMDs is easy to overlook — and easy to waste.
When people picture retirement planning, they usually picture the years of retirement. But some of the most valuable planning happens in a specific, temporary window: the stretch between when your paycheck stops and when Required Minimum Distributions (RMDs) begin.
Here’s why that window matters.
What the window is
Once you stop working, your income often drops before Social Security and RMDs fully ramp up. For a few years, you may find yourself in a lower tax bracket than you were during your career — and lower than you’ll be later, once RMDs force taxable income out of your pre-tax accounts whether you need the money or not.
That temporary dip is an opportunity. It’s a stretch of years when intentionally recognizing some income — for example, through a Roth conversion — can be far cheaper than it will be later.
Why it’s worth planning, not guessing
A Roth conversion moves money from a pre-tax account (like a traditional IRA) into a Roth, where it can grow and later be withdrawn tax-free. You pay tax on the amount you convert now, in exchange for not paying tax on it — or its growth — later.
Done thoughtfully, filling up a lower tax bracket during that window can reduce your lifetime tax bill and shrink the future RMDs that would otherwise push you higher. Done carelessly, a conversion that’s too large in one year can:
spill into a higher bracket than you intended,
increase the portion of your Social Security that’s taxable, and
trigger IRMAA — the income-based surcharge on Medicare premiums.
None of that means conversions are bad. It means they’re a numbers exercise, not a rule of thumb. The right amount depends on your brackets, your other income, your Medicare timeline, and even your heirs’ likely tax rates.
The questions worth asking
If you’re in or near this window, a few questions from the Retirement Red Zone Checklist are worth sitting with:
Are you in a temporary low-tax window before RMDs and Social Security begin?
How large are your pre-tax balances, and what will future RMDs look like?
Do you have taxable cash available to pay conversion taxes without raiding the conversion itself?
Could a smart tax move accidentally raise your Medicare premiums?
A coordinated approach
The reason this belongs in a plan rather than a spreadsheet is that every lever touches the others. Income, taxes, Social Security timing, and Medicare are connected — pull one and the rest move. Coordinating them, ideally alongside your CPA, is where the real value shows up.
If you’d like a clearer picture of your own window, the Retirement Red Zone Checklist is a good place to start — it walks you through this and 19 other areas worth reviewing before you retire. And if you’d like a second set of eyes, we’re happy to help you turn the boxes you couldn’t check into a written plan.
Nicholas St. George is a Registered Representative with, and securities and advisory services offered through, LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. This material is for general educational purposes only and is not individualized tax, legal, or investment advice; please consult a qualified professional regarding your individual situation. Investing involves risk including possible loss of principal.
