The Golden Window: How to Legally Cut the IRS Out of Your Retirement

You know that feeling when you're watching an NBA game and a team has a wide-open fast break? The defense is scrambling, the lane is clear, and you've got maybe 3 seconds to make the play before the window closes. Miss it, and the opportunity is gone forever.

That's exactly what happens with Roth conversions in retirement.

Most people think their million-dollar IRA means they're set for life. Here's what they don't realize: in most cases, 25% or more of that money isn't theirs. It belongs to the IRS.

Every dollar in a traditional IRA or 401(k) is shared money. You're basically renting your retirement from the government. But there's a way to take back control—and a specific window of time when it works best.

At its core, a Roth conversion is simple.

You move money from a pre-tax account (like a traditional IRA or 401(k)) into a Roth IRA. When you do this, you create taxable income today.

But here's what you get in return:

Think of it like buying an apartment instead of renting. You pay a big chunk upfront, but after that? No more rent. Ever.

The IRS is no longer your landlord.

The absolute best time to do Roth conversions? That narrow window after you retire but before Social Security and required minimum distributions kick in.

Let me tell you about Ken and Maria.

Ken is 63, Maria is 61. They're retiring next summer with $2.4 million in traditional IRAs and 401(k)s.

Ken told me: "I feel like I've been saving my whole life just to hand a massive check to the IRS when I'm 75."

He was right to worry. If they did nothing, their required minimum distributions would start at age 75. That first RMD would be over $100,000. Add Social Security? They'd be pushed into the 24% federal bracket. Plus thousands more per year in Medicare surcharges.

Then Maria asked the question that changed everything: "What happens if one of us dies early?"

When one spouse passes, the survivor files as single. Same income, but now filling up single tax brackets—which are about half the width of married brackets. That's the widow's penalty.

But here's where the golden window comes in.

For the first time in decades, Ken and Maria will have low-income years:

We ran the numbers. Over the next four years, they can convert roughly $100,000 per year and stay in the 22% bracket.

That's $400,000 moved from pre-tax to Roth. They'll pay about $88,000 in federal taxes over those four years.

But if they wait? They'll pay 24% to 32% on that same money, plus Medicare surcharges. We're talking $140,000 or more over their lifetime.

By acting now, they're saving over $50,000 in taxes.

Here's something most people don't know: Medicare premiums aren't flat.

If your income is too high, you pay surcharges called IRMAA. For 2025, if your modified adjusted gross income as a married couple exceeds $212,000, your premiums jump. It's a cliff. One dollar over, and you're paying thousands in extra dollars per year.

Now here's the tricky part: IRMAA looks at your income from two years ago.

So if you do a big Roth conversion in 2025, you won't feel the IRMAA pain until 2027. Most people don't connect the dots. They convert too much and get blindsided.

When we map out conversions, we model income every single year. Some years we convert $110,000. Other years, $95,000.

It's not always about maximizing the conversion. It's about maximizing the after-tax, after-IRMAA value.

Mistake #1: Converting too much in one year

Cramming $300,000 into one year pushes you into top brackets and triggers IRMAA. Slow and steady wins.

Mistake #2: Ignoring IRMAA

One dollar over a threshold can cost you thousands. Always model your income two years out.

Mistake #3: Waiting too long

I meet clients who say, "I'll start next year." Then next year comes, and they say the same thing. Before they know it, they're 73, RMDs are starting, and the window is gone.

Let's talk about what most people miss.

Your IRA balance isn't entirely yours. $1 million in a traditional IRA at the 24% bracket? That's really $760,000 of your money and $240,000 of the IRS's money.

A Roth conversion means paying taxes upfront. Your portfolio looks smaller on paper. But that money is ALL yours. The IRS doesn't get another dime.

Stop measuring by pre-tax balance. Start measuring by what's actually yours.

Ken understood this immediately. He said, "So we're not shrinking our wealth. We're just deciding when to pay the IRS, and we'd rather do it now when we have control."

Exactly.

Here's how to figure out your conversion opportunity:

This isn't one and done. It's a multi-year plan. But when done well, it saves tens of thousands in lifetime taxes and gives you control.

Control over your tax bracket. Control over Medicare premiums. Control over what happens to your surviving spouse.

Right now, we have some of the lowest tax brackets in decades. Tax laws can change. The smartest retirees aren't waiting. They're acting now.

If you're in that golden window—retired, pre-RMD, pre-Social Security—this is your moment.

Your retirement accounts don't have to be shared with the IRS forever. You can take back what's yours. You just have to act while the window is still open.

Want to see the full breakdown with real numbers and examples? Head to our website and watch the complete video where I walk through Ken and Maria's exact conversion strategy step by step.

Education only, not advice. Consult your professional(s).