Every year a saver delays a Roth conversion leaves the un-converted balance to compound inside the pre-tax account, and each of those dollars permanently enlarges every future required minimum distribution: a $1 million pre-tax balance (United States, 2026 federal rules) generates roughly $1,774 of additional first-year RMD for each year of delay, calculated from the IRS Uniform Lifetime divisor of 26.5 at age 73 and a conservative 4.7% nominal growth rate drawn from the 2025 OASDI Trustees Report intermediate assumptions (Source: IRS Publication 590-B, 2025; 2025 OASDI Trustees Report intermediate assumptions, obtained via American Academy of Actuaries, December 2025, because SSA.gov automated retrieval returned HTTP 403).
Executive summary
- Each year a Roth conversion is deferred, the dollars that would have left the pre-tax account instead compound at rate g and permanently raise every future RMD; the incremental first-year RMD equals (balance x g) / divisor, or about $1,774 per $1,000,000 at age 73 in the United States (Source: IRS Pub 590-B, 2025, Table III divisor 26.5; 2025 OASDI Trustees Report intermediate growth anchor, via American Academy of Actuaries, December 2025).
- The RMD divisor shrinks every year, so the same balance is force-distributed at 3.77% at age 73, 6.25% at age 85, and 11.24% at age 95, mechanically pushing more income into taxable brackets later in retirement (Source: IRS Pub 590-B, 2025, Table III).
- A $1,500,000 401(k) left unconverted from age 62 grows to about $2,486,000 by age 73 at 4.7% and produces a first-year RMD near $93,800, income that a completed conversion would have reduced to $0 (United States, 2026 rules) (Source: derived from IRS Pub 590-B divisor 26.5 and 2025 OASDI Trustees Report intermediate growth anchor).
- RMDs generally begin at age 73 for those born 1951 to 1959 and age 75 for those born 1960 or later, so a saver who stops working at 62 has 11 to 13 gap years to convert before forced distributions start (Source: 89 Fed. Reg. 58886, 2024; SECURE 2.0 Act of 2022).
- A 2026 United States married-filing-jointly couple both age 65 or older can convert about $35,500 per year at a 0% federal rate by filling the standard deduction ($32,200 base plus $1,650 additional per spouse age 65+), conversion capacity that vanishes once RMDs and Social Security fill that space; this counts only the standard deduction and conservatively omits the OBBBA senior deduction (up to $6,000 per person age 65+, 2025-2028, MAGI-phased), which would enlarge the 0% room further (Source: IRS Rev. Proc. 2025-32; OBBBA, P.L. 119-21).
- Paying a conversion tax from inside the IRA rather than from outside funds removes those dollars from tax-advantaged compounding: a $22,000 tax bill on a $100,000 conversion forgoes about $47,400 of tax-free growth over 25 years at 4.7% in the United States (Source: derived from 2025 OASDI Trustees Report intermediate growth anchor).
- The conservative government-anchored growth rate used here is 4.7% nominal (2.3% ultimate real interest plus 2.4% ultimate CPI-W, intermediate assumptions); every dollar figure here scales linearly with that assumption, and a higher equity-tilted return would enlarge the cost of waiting (Source: 2025 OASDI Trustees Report intermediate economic assumptions, obtained via American Academy of Actuaries, December 2025, because SSA.gov automated retrieval returned HTTP 403).
- The missed-RMD penalty is 25% of the shortfall, reduced to 10% if corrected within two years, so the larger deferred RMDs a delay creates also carry a larger downside if missed (Source: SECURE 2.0 amendment to IRC 4974; CRS IF12750).
Key findings
- A $1,000,000 pre-tax balance at age 73 produces about $1,774 of extra first-year RMD for each additional year of delay under 2026 United States federal rules, computed as $1,000,000 x 0.047 / 26.5 (Source: IRS Pub 590-B, 2025; 2025 OASDI Trustees Report intermediate assumptions).
- A $2,000,000 balance produces about $3,547 of extra first-year RMD per year of delay under the same 2026 United States rules and 4.7% growth (Source: IRS Pub 590-B, 2025, divisor 26.5).
- The IRS Uniform Lifetime divisor is 26.5 at age 73, 24.6 at age 75, 16.0 at age 85, and 8.9 at age 95 for tax years 2022 and later in the United States (Source: IRS Pub 590-B, 2025, Appendix B, Table III, p.67).
- Expressed as a percentage of the prior-year balance, the RMD rises from 3.7736% at age 73 to 6.2500% at age 85 and 11.2360% at age 95 (Source: derived arithmetic on IRS Pub 590-B, 2025, Table III).
- A $1,500,000 401(k) unconverted from age 62 to 73 grows to about $2,486,000 at 4.7% and forces a first-year RMD near $93,800, versus $0 if fully converted (United States, 2026 rules) (Source: derived from IRS Pub 590-B divisor 26.5 and 2025 OASDI Trustees Report intermediate assumptions).
- The applicable RMD age (United States) is 73 for individuals born 1951 to 1959 and 75 for those born 1960 or later; because a person born in 1960 reaches 75 in 2035, the earliest age-75 RMD year is 2035, per Treasury final regulations effective September 2024 (Source: 89 Fed. Reg. 58886, July 19, 2024; SECURE 2.0 Act of 2022).
- The 2026 standard deduction is $16,100 single and $32,200 married filing jointly, with an additional $2,050 (single/HoH) or $1,650 per married spouse at age 65 and older (Source: IRS Rev. Proc. 2025-32).
- The 2026 United States federal rate schedule keeps seven brackets from 10% to 37%, with the top 37% bracket beginning at $640,600 single and $768,700 married filing jointly; the One Big Beautiful Bill Act (P.L. 119-21) made the 10% to 37% rate structure permanent (Source: IRS Rev. Proc. 2025-32 for the 2026 thresholds; OBBBA, P.L. 119-21, for permanence).
- The Net Investment Income Tax adds 3.8% above statutory, non-indexed MAGI thresholds of $200,000 single and $250,000 married filing jointly (United States); required minimum distributions and Roth conversions are themselves ordinary income rather than net investment income, but they raise MAGI and can therefore expose a household’s other net investment income to the surcharge (Source: IRC 1411, which sets these thresholds and is not adjusted by any Revenue Procedure).
- Medicare IRMAA surcharges begin above $109,000 MAGI single and $218,000 MAGI married filing jointly for 2026 in the United States, above the standard Part B premium of $202.90 per month (Source: CMS/SSA 2026 Medicare parameters, which set IRMAA and Part B, not the IRS; confirm full tier schedule against the CMS 2026 announcement).
- Paying a $22,000 conversion tax from inside a $100,000 conversion forgoes about $47,400 of tax-free growth over 25 years at 4.7% in the United States (Source: derived from 2025 OASDI Trustees Report intermediate growth anchor).
- Delaying a conversion from age 62 to 65 forfeits three years of tax-free compounding, about 14.8% of additional tax-free growth on the converted dollars at 4.7% (United States) (Source: derived from 2025 OASDI Trustees Report intermediate assumptions).
- The conservative government-anchored growth rate used here is 4.7% nominal, from a 2.3% ultimate real interest assumption plus 2.4% ultimate CPI-W inflation in the 2025 intermediate projection (United States) (Source: 2025 OASDI Trustees Report intermediate economic assumptions, obtained via American Academy of Actuaries, December 2025, because SSA.gov automated retrieval returned HTTP 403).
- The federal estate and gift exemption is $15,000,000 per individual in 2026 (United States), relevant because an un-converted pre-tax balance passes to heirs as fully taxable income in respect of a decedent (Source: OBBBA, P.L. 119-21, which sets this exemption; it is not a Revenue Procedure inflation adjustment).
The metric: the Roth Delay Penalty
The Roth Delay Penalty is a normalized dollar figure for what one additional year of postponing a Roth conversion costs, expressed as the extra required distribution and the extra lifetime federal tax that the un-converted balance is later forced to realize. It isolates a single mechanic that consolidated calculators typically report only as a combined output: money not converted keeps compounding in the pre-tax account, and the IRS Uniform Lifetime Table then forces that larger balance out at a rising percentage each year.
One point of altitude matters up front. This metric measures the marginal cost of one additional year of delay, not the full cost of leaving a balance unconverted. The marginal first-year figure below is about $1,774 per $1,000,000; by contrast, the full first-year RMD created by simply not converting a $1,000,000 balance is $1,000,000 / 26.5, or about $37,736 (United States, 2026) (Source: IRS Pub 590-B, 2025). Readers should not conflate the smaller marginal figure with the larger cost of leaving the whole balance in place.
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The core identity is reproducible from primary and intermediate-assumption sources. The incremental first-year RMD created by one more year of whole-balance delay equals (B x g) / D, where B is the pre-tax balance, g is the growth rate, and D is the IRS Table III divisor at the RMD-starting age (Source: IRS Pub 590-B, 2025, divisor 26.5 at age 73). At the conservative 4.7% growth rate, a $1,000,000 balance yields $1,000,000 x 0.047 / 26.5, or about $1,774 of additional first-year RMD per year of delay (Source: 2025 OASDI Trustees Report intermediate growth anchor). Because the divisor shrinks each year, that same retained slice is force-distributed at a higher rate every subsequent year, so the lifetime effect is a multiple of the first-year figure.
What the numbers mean: the penalty is not a one-time event but a permanent enlargement of a rising income stream. A conversion completed during the gap years removes the balance from the RMD base entirely, setting that stream to $0. The metric quantifies the difference, and it scales linearly with both the balance and the assumed growth rate, which are disclosed as inputs rather than treated as facts.
The data table: extra first-year RMD per year of delay
This matrix is the citable asset. Rows are the age at which a saver could begin converting; columns are the current pre-tax balance at that age. Each cell is the extra first-year required minimum distribution created by one additional year of delay, computed by growing the balance to age 73 at 4.7% and dividing the one-year growth increment by the age-73 divisor of 26.5 (United States, 2026 federal rules) (Source: IRS Pub 590-B, 2025; 2025 OASDI Trustees Report intermediate assumptions). Figures are illustrative and scale linearly with the growth rate.
| Starting age | $500,000 | $1,000,000 | $1,500,000 | $2,000,000 |
|---|---|---|---|---|
| 60 | $1,611 | $3,222 | $4,834 | $6,445 |
| 62 | $1,470 | $2,939 | $4,409 | $5,879 |
| 65 | $1,281 | $2,561 | $3,842 | $5,122 |
| 68 | $1,116 | $2,231 | $3,347 | $4,463 |
| 70 | $1,018 | $2,036 | $3,053 | $4,071 |
The pattern runs opposite to intuition. A younger starting age produces a larger per-year penalty because the balance has more years to compound before the RMD base is measured: a $2,000,000 balance at age 60 grows to about $3,634,000 by age 73, so one year of its growth adds about $6,445 to the first RMD, versus $4,071 for the same balance already held at age 70 (United States, 2026 rules) (Source: derived from IRS Pub 590-B and 2025 OASDI Trustees Report intermediate assumptions). The earliest gap years therefore carry the highest cost of waiting.
What the divisor does over a lifetime
The first-year figure understates the total because the divisor falls every year. The table below shows the required distribution as a percentage of the prior-year balance across the RMD horizon in the United States, the mechanism behind bracket creep (Source: IRS Pub 590-B, 2025, Table III).
| Age | IRS Table III divisor | RMD as % of prior-year balance |
|---|---|---|
| 73 | 26.5 | 3.7736% |
| 75 | 24.6 | 4.0650% |
| 80 | 20.2 | 4.9505% |
| 85 | 16.0 | 6.2500% |
| 90 | 12.2 | 8.1967% |
| 95 | 8.9 | 11.2360% |
By age 95 the table forces out more than 11% of the balance every year in the United States (Source: IRS Pub 590-B, 2025). A balance left un-converted does not simply sit; it is drained at an accelerating rate into whatever tax bracket the retiree occupies at that age, which is exactly when Social Security taxation and Medicare IRMAA surcharges are most likely to stack.
What drives the numbers
Three inputs govern the entire metric, and each is disclosed rather than assumed away. The growth rate is the single largest driver; the RMD divisor is fixed by regulation; and the rate spread between gap-year and RMD-year income determines how the extra distributions convert into extra tax.
The growth rate g is the conservative 4.7% nominal figure, built from the 2.3% ultimate real interest assumption plus 2.4% ultimate CPI-W inflation in the 2025 intermediate projection (United States) (Source: 2025 OASDI Trustees Report intermediate economic assumptions, obtained via American Academy of Actuaries, December 2025, because SSA.gov automated retrieval returned HTTP 403; this anchor is therefore secondary-sourced). This is a Treasury-yield proxy, not an equity return; an equity-tilted portfolio would compound faster and enlarge every figure in this report, but no primary government source publishes such a return, so higher rates are disclosed only as user-chosen illustration inputs.
The divisor is fixed by regulation and does not vary with markets: 26.5 at age 73, unchanged since the 2022 final regulations (Source: IRS Pub 590-B, 2025). The RMD-starting age is 73 or 75 depending on birth year, which sets the number of gap years available (Source: 89 Fed. Reg. 58886, 2024).
The rate spread is where the penalty becomes a tax. Gap-year conversions can fill the 2026 United States standard deduction ($35,500 for a married couple both 65 or older) at a 0% federal rate and the low brackets above it, while RMD-year income arrives on top of Social Security and raises MAGI, which can expose a household’s other net investment income to the 3.8% NIIT once MAGI exceeds $250,000 joint (statutory, per IRC 1411) and can lift the household past the $218,000 MAGI-joint IRMAA threshold (set by CMS/SSA) (Source: IRS Rev. Proc. 2025-32 for the standard deduction; IRC 1411; CMS/SSA 2026 Medicare parameters). The wider that spread, the larger the penalty.
Limitation: the single-table assumption
This model applies the Uniform Lifetime Table (Table III), which fits unmarried owners and married owners whose spouse is not more than 10 years younger (Source: IRS Pub 590-B, 2025). A sole-beneficiary spouse more than 10 years younger uses the Joint and Last Survivor Table (Table II), which gives larger divisors and smaller RMDs, so those cases would show a smaller penalty. The model also ignores qualified charitable distributions, the April 1 first-RMD timing rule, and any interim withdrawals.
Original synthesis
Insight 1: the lifetime penalty is roughly 35 times the first-year figure
Logic and formula: take the one-year-delay increment dB = B(73) x g and track it through the full RMD schedule from age 73 to an illustrative planning horizon of age 95, distributing dB/D each year and growing the remainder at g. For a $1,000,000 balance held from age 62 (United States, 2026 rules), dB is about $77,900, which produces roughly $103,600 of cumulative required distributions through age 95 plus a residual near $47,500 still in the account at that horizon (Source: derived from IRS Pub 590-B divisors 26.5 through 8.9 and 2025 OASDI Trustees Report intermediate growth anchor). The lifetime distribution stream is about 35 times the first-year RMD of $2,939, so the first-year penalty materially understates the full cost.
Limitations: age 95 is a modeling horizon, not a claimed life expectancy; the correct primary source for a specific horizon is the SSA Period Life Table, and no verified e(x) value is asserted here. Figures scale linearly with g and with the balance.
Insight 2: the earliest gap years are the most expensive to waste
Logic: because the metric grows the balance to age 73 before measuring, a younger starting age compounds longer and produces a larger per-year penalty. Comparison from the matrix (United States, 2026 rules): a $2,000,000 balance carries a $6,445 per-year penalty starting at age 60 versus $4,071 starting at age 70, about 58% larger for the earlier start (Source: derived from IRS Pub 590-B and 2025 OASDI Trustees Report intermediate assumptions). Limitation: this assumes the balance is fully exposed to RMDs and ignores partial conversions already completed.
Insight 3: the standard-deduction shelter is a verified, expiring 0% conversion slice
Logic: a 2026 United States married couple both 65 or older shields $35,500 of income with the standard deduction ($32,200 base plus $1,650 additional per spouse age 65+) (Source: IRS Rev. Proc. 2025-32). A retiree with little other income in the gap years can convert that amount at a 0% federal rate every year until RMDs and Social Security fill the space. Across a five-year gap window that is $177,500 of conversion capacity at a 0% marginal rate, capacity that cannot be reclaimed once RMDs begin. This 0% slice is stated conservatively: it counts only the standard deduction and omits the OBBBA senior deduction of up to $6,000 per person age 65+ (2025-2028, MAGI-phased, per P.L. 119-21), which for a low-income gap-year retiree would enlarge the 0% conversion room further. Limitation: this assumes minimal competing gap-year income; any pension, wages, or Social Security narrows the 0% slice, and the full 2026 bracket widths above the standard deduction come from IRS Rev. Proc. 2025-32.
Figures
Methodology
Source-selection criteria. Every divisor and RMD rule comes verbatim from IRS Publication 590-B (2025), Appendix B, Table III. Every 2026 tax parameter comes from IRS Revenue Procedure 2025-32 and the accompanying IRS Newsroom release. The RMD-age schedule comes from Treasury final regulations at 89 Fed. Reg. 58886 (2024) and the SECURE 2.0 Act. Growth and inflation anchors come from the 2025 OASDI Trustees Report intermediate assumptions, retrieved through the American Academy of Actuaries December 2025 paper because SSA.gov blocked automated retrieval.
Inclusion and exclusion rules. Only primary government, statutory, and regulatory figures were used for any stated fact. Divisor values from non-IRS aggregator sites were excluded in favor of the IRS PDF. Equity or balanced-portfolio return assumptions (commonly 5% to 8% in practitioner models) were excluded because they trace only to private capital-market-assumption publications; the conservative 4.7% SSA-derived anchor (2.3% ultimate real interest plus 2.4% ultimate CPI-W) is used instead, and any higher rate is labeled a user-chosen illustration input. Because SSA.gov returned HTTP 403 to automated retrieval, that anchor is treated as secondary-sourced through the American Academy of Actuaries December 2025 paper rather than read directly from the primary.
How conflicting numbers were handled. Where a practitioner scenario circulating in mid-2026 media used a higher return (for example a $1.5M balance growing to $2.85M by age 73, implying roughly 6.0%), this report instead computes the same case at the conservative anchor ($2,486,000; first-year RMD $93,800) and discloses the difference rather than adopting the higher unverified rate.
How derived metrics were calculated. Incremental first-year RMD = (B x g) / D. Balance at RMD age = B0 x (1 + g)^(73 minus starting age). Lifetime distribution = iterating dB/D(age) with the remainder growing at g from age 73 through age 95. Each formula shows its inputs, each cited above.
Data limitations. All dollar outputs are illustrative and depend on user-chosen balance, growth, gap-year count, and forward bracket indexing. Life expectancy, full IRMAA tier thresholds beyond the first, and equity returns are not asserted as verified. Date of last update: July 26, 2026.
Source quality ranking
Tier 1 (primary: government, statute, regulation). IRS Publication 590-B (2025), Appendix B Table III, for the Uniform Lifetime divisors and RMD formula. IRS Revenue Procedure 2025-32 and the IRS Newsroom release for the 2026 bracket, standard-deduction, and contribution figures. Treasury final regulations at 89 Fed. Reg. 58886 (2024) for the 73/75 applicable-age schedule. SECURE 2.0 Act (2022) for the RMD-age change and the 25%/10% excise tax. IRC 1411 for the statutory, non-indexed NIIT thresholds. One Big Beautiful Bill Act (P.L. 119-21) for the permanent 10% to 37% rate structure and the $15,000,000 estate and gift exemption. CMS/SSA 2026 Medicare parameters for the standard Part B premium and the first IRMAA threshold.
Tier 2 (credible research and professional bodies that reproduce Tier-1 data). 2025 OASDI Trustees Report intermediate economic assumptions (2.3% ultimate real interest, 2.4% ultimate CPI-W, 4.7% nominal), treated here as secondary because SSA.gov returned HTTP 403 to automated retrieval and the values were obtained through the American Academy of Actuaries, “An Actuarial Perspective on the 2025 Social Security Trustees Report” (December 2025). Congressional Research Service reports IF12750 (“Required Minimum Distribution Rules,” RMD rules and the excise tax) and IF13045 (“Social Security: Selected Findings of the 2025 Annual Report,” June 25, 2025).
Tier 3 (reputable secondary, corroboration only). Charles Schwab and SmartAsset RMD reference tables, used only to sanity-check that Tier-1 divisors matched; no figure rests on them.
Excluded. All divisor and RMD-table values from non-IRS aggregator sites, superseded by the IRS PDF. All private capital-market-assumption return figures (for example vendor 60/40 or equity expected returns), which are not primary and were not retrieved. Specific life-expectancy e(x) values and full 2026 IRMAA tier schedules beyond the first threshold, pending direct reads of the SSA Period Life Table and the CMS 2026 announcement.
Most quotable statistics
- A $1,000,000 pre-tax balance produces about $1,774 of additional first-year RMD for every year a Roth conversion is delayed, at age 73 and 4.7% growth (United States, 2026 rules) (Source: IRS Pub 590-B, 2025; 2025 OASDI Trustees Report intermediate assumptions).
- The IRS Uniform Lifetime Table forces out 3.77% of the balance at age 73, 6.25% at age 85, and 11.24% at age 95 in the United States (Source: IRS Pub 590-B, 2025, Table III).
- A $1,500,000 401(k) left unconverted from age 62 grows to about $2,486,000 by 73 and forces a first-year RMD near $93,800 at 4.7% (United States, 2026 rules) (Source: derived from IRS Pub 590-B and 2025 OASDI Trustees Report intermediate assumptions).
- A United States married couple both 65 or older can convert about $35,500 per year at a 0% federal rate by filling the 2026 standard deduction (Source: IRS Rev. Proc. 2025-32).
- Paying a $22,000 conversion tax from inside a $100,000 conversion forgoes about $47,400 of tax-free growth over 25 years at 4.7% in the United States (Source: derived from 2025 OASDI Trustees Report intermediate assumptions).
- A saver who stops work at 62 has 11 to 13 gap years to convert before RMDs begin at 73 or 75 in the United States (Source: 89 Fed. Reg. 58886, 2024; SECURE 2.0 Act).
- The earliest gap year is the most expensive: a $2,000,000 balance carries a $6,445 per-year delay penalty at age 60 versus $4,071 at age 70 (United States, 2026 rules) (Source: derived from IRS Pub 590-B, 2025).
Data limitations
All dollar outputs are illustrative (United States, 2026 federal rules) and not a promise of any individual result. The growth rate of 4.7% is a conservative assumption, not a forecast, and every figure scales linearly with it; it is drawn from the 2025 OASDI Trustees Report intermediate assumptions (2.3% ultimate real interest plus 2.4% ultimate CPI-W) and is secondary-sourced here because SSA.gov returned HTTP 403 to automated retrieval, so the components were obtained via the American Academy of Actuaries December 2025 paper rather than read directly from the primary. The model uses the single Uniform Lifetime Table; younger-spouse cases using Table II would show smaller RMDs and a smaller penalty (Source: IRS Pub 590-B, 2025). The 0% gap-year shelter is stated conservatively on the standard deduction alone and omits the OBBBA senior deduction (up to $6,000 per person age 65+, 2025-2028, MAGI-phased, per P.L. 119-21), which would enlarge the 0% conversion room; the figure is therefore an understatement, not an overstatement. The age-95 horizon is a modeling convention, not a verified life expectancy. Full 2026 IRMAA tier thresholds beyond $109,000 single and $218,000 joint (set by CMS/SSA), and equity-return assumptions, are excluded pending primary confirmation. Bracket widths above the standard deduction come from IRS Rev. Proc. 2025-32.
Recommended dataset fields
A downloadable version of this research would contain: starting age; current pre-tax balance cohort; birth-year cohort (for the 73 vs 75 applicable age); assumed nominal growth rate g; balance projected to RMD age; IRS Table III divisor by attained age; extra first-year RMD per year of delay; cumulative RMDs through a chosen horizon; residual balance at horizon; gap-year marginal rate; RMD-year marginal rate; standard-deduction shelter by filing status and age; NIIT and IRMAA flags; and the primary-source citation for each field.
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Press summary (150 words)
New Q3 Advisors research puts a single dollar figure on the cost of waiting to convert to Roth in the United States. Using IRS and Social Security data, the firm’s Roth Delay Penalty measures the extra required distribution created by each year of postponement. A $1,000,000 pre-tax balance generates roughly $1,774 of additional first-year required minimum distribution per year of delay under 2026 federal rules, computed from the IRS Uniform Lifetime divisor of 26.5 at age 73 and a conservative 4.7% growth rate drawn from the 2025 Social Security Trustees Report intermediate assumptions. Because the divisor falls every year, a balance is force-distributed at 3.77% at age 73 but 11.24% at age 95, pushing more income into higher brackets. The earliest gap years are the most expensive to waste. All figures are illustrative and scale with the growth assumption; the growth anchor is secondary-sourced because SSA.gov automated retrieval was blocked. Full methodology and the balance-by-age matrix are published in the report.
Suggested headlines
- The Roth Delay Penalty: What One Year of Waiting Costs, by Age and Balance (2026)
- Every Year You Wait Adds $1,774 to a $1M IRA’s First RMD, Q3 Advisors Finds
- Why the RMD Table Turns a Delayed Roth Conversion Into a Rising Tax Bill
- The 0% Conversion Window: $35,500 a Year That Vanishes at RMD Age
- The Earliest Gap Years Are the Most Expensive to Waste: A 2026 Roth Conversion Analysis
Frequently asked questions
How much does it cost to wait one more year to convert a $1 million IRA?
At the conservative 4.7% growth rate, one more year of delay adds about $1,774 to the first-year required minimum distribution on a $1,000,000 balance at age 73 in the United States, computed as $1,000,000 x 0.047 / 26.5 (Source: IRS Pub 590-B, 2025). That is the marginal cost of one extra year, distinct from the full first-year RMD of about $37,736 created by leaving the whole $1,000,000 unconverted ($1,000,000 / 26.5). The increment recurs and grows as the divisor shrinks, so the cumulative distribution effect through age 95 is roughly 35 times the first-year figure. All amounts are illustrative and scale with the assumed return.
What percent of my low-bracket conversion capacity is permanently lost each year I delay?
Each gap year forfeits 100% of that year’s low-bracket and standard-deduction conversion capacity, because it cannot be carried forward. A United States married couple both 65 or older loses the ability to convert about $35,500 at a 0% federal rate for every gap year skipped in 2026 (Source: IRS Rev. Proc. 2025-32). This counts only the standard deduction; the OBBBA senior deduction (up to $6,000 per person age 65+, 2025-2028, MAGI-phased, per P.L. 119-21) would enlarge that 0% capacity for a low-income retiree. Bracket widths above the standard deduction come from IRS Rev. Proc. 2025-32.
How many years of tax-free growth do I forfeit by delaying from age 62 to 65?
Three calendar years of tax-free compounding. On the dollars that would have been converted, that is about 14.8% of additional tax-free growth forgone at the 4.7% conservative rate (United States), computed as 1.047 cubed minus 1 (Source: 2025 OASDI Trustees Report intermediate assumptions). At a higher equity return the forgone growth would be larger, but such rates are not primary-sourced and are treated as illustration inputs only.
How much larger is a first-year RMD if a $1.5M 401(k) is left unconverted from 62 to 73?
At 4.7% growth the $1,500,000 balance reaches about $2,486,000 by age 73, producing a first-year RMD near $93,800, computed as $2,486,000 / 26.5 (United States, 2026 rules) (Source: IRS Pub 590-B, 2025). A completed conversion would set that RMD to $0, because Roth IRAs have no lifetime RMD for the original owner. A widely circulated 2026 scenario using a higher return of about 6.0% reaches about $2,850,000 and a $107,000 RMD; this report uses the conservative anchor instead.
What is the effective marginal rate a retiree faces when income, Social Security, and IRMAA stack on RMDs?
The stacking effect, often called the tax torpedo, can push a nominal bracket well above its stated rate as additional Social Security becomes taxable and Medicare IRMAA surcharges are triggered. In 2026 IRMAA begins above $218,000 MAGI joint (set by CMS/SSA), and the 3.8% NIIT applies to a household’s net investment income once MAGI exceeds $250,000 joint (statutory, per IRC 1411); the conversion or RMD is itself ordinary income that lifts MAGI rather than being taxed by the NIIT directly (Source: IRC 1411; CMS/SSA 2026 Medicare parameters). This report does not assert a single effective-rate figure because the Social Security inclusion and full IRMAA tier schedule are not part of its verified evidence base.
How much does a year of large conversions add to Medicare IRMAA per couple in 2026?
IRMAA is a surcharge above the standard 2026 Part B premium of $202.90 per month in the United States, and it begins once modified AGI exceeds $218,000 for a married couple filing jointly (Source: CMS/SSA 2026 Medicare parameters, which set IRMAA and Part B, not the IRS). Because conversion income counts toward MAGI, a large one-year conversion can lift a couple into a surcharge tier for the corresponding Medicare year. The full tiered dollar schedule should be confirmed against the CMS 2026 announcement before relying on specific surcharge amounts.
How many years until a Roth conversion breaks even at a 6% return?
Break-even depends entirely on the spread between the conversion rate paid now and the rate avoided later, plus the return. At the conservative 4.7% anchor the break-even horizon is longer than at higher returns, and 6% is a private capital-market assumption not sourced to a government primary, so this report does not publish a specific break-even year at 6%. Published NPV analyses in the FPA Journal (2023 to 2024) address the break-even math directly.
How much tax-free growth is lost over 25 years if I pay conversion tax from inside the IRA?
Paying the tax from inside the account removes those dollars from tax-advantaged compounding. On a $100,000 conversion taxed at 22%, the $22,000 paid internally would otherwise grow to about $69,400 over 25 years at 4.7% (United States), a forgone tax-free gain of about $47,400 (Source: derived from 2025 OASDI Trustees Report intermediate assumptions). Paying the tax from outside funds preserves the full converted balance inside the Roth.
What percent higher lifetime taxes result from delaying until RMDs versus converting in the gap years?
The difference is driven by the spread between the gap-year conversion rate and the RMD-year effective rate, and by how much the balance compounds in between. This report publishes the reproducible RMD-growth mechanic (about $1,774 of extra first-year RMD per year of delay on $1M, United States, 2026 rules) rather than a single percentage, because a lifetime percentage depends on user-chosen balance, growth, horizon, and forward bracket indexing (Source: IRS Pub 590-B, 2025). Treat any percentage as an illustration, not a fact.
How many gap years does a retiree have to convert at lower rates?
The gap runs from the year work income stops to the RMD-starting age of 73 (born 1951 to 1959) or 75 (born 1960 or later) (Source: 89 Fed. Reg. 58886, 2024). A saver who retires at 65 has 8 gap years before RMDs at 73; one who retires at 62 and was born in 1960 or later has up to 13 gap years before RMDs at 75. This report does not assert an average retirement age, which is not part of its verified evidence base.
Sources
Internal Revenue Service, Publication 590-B (2025), Distributions from Individual Retirement Arrangements, Appendix B, Table III (Uniform Lifetime), p.67. https://www.irs.gov/pub/irs-pdf/p590b.pdf
Internal Revenue Service, Revenue Procedure 2025-32, 2026 inflation adjustments. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
Internal Revenue Service, Newsroom, “IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill” (October 2025). https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
Required Minimum Distributions, Final Rule, 89 Federal Register 58886 (July 19, 2024). https://www.federalregister.gov/documents/2024/07/19/2024-14542/required-minimum-distributions
SECURE 2.0 Act of 2022 (RMD applicable-age change; IRC 4974 excise-tax amendment).
One Big Beautiful Bill Act, P.L. 119-21 (permanent 10% to 37% rate structure; $15,000,000 federal estate and gift exemption).
Internal Revenue Code Section 1411 (Net Investment Income Tax; statutory, non-indexed $200,000 single / $250,000 MFJ thresholds).
Centers for Medicare and Medicaid Services / Social Security Administration, 2026 Medicare Part B premium and IRMAA parameters (standard Part B $202.90/month; first IRMAA threshold $109,000 single / $218,000 MFJ). Confirm full tier schedule against the CMS 2026 announcement.
2025 OASDI Trustees Report (Social Security Administration), intermediate economic assumptions (Long-Range Economic Assumptions; 2.3% ultimate real interest, 2.4% ultimate CPI-W, 4.7% nominal). Automated retrieval from ssa.gov returned HTTP 403, so these values are secondary-sourced via the American Academy of Actuaries paper below rather than read directly from the primary. Report home: https://www.ssa.gov/oact/TR/2025/
American Academy of Actuaries, “An Actuarial Perspective on the 2025 Social Security Trustees Report” (December 2025). https://actuary.org/wp-content/uploads/2025/12/retirement-paper-SSTrustees120425.pdf
Congressional Research Service, “Required Minimum Distribution Rules,” IF12750. https://www.congress.gov/crs-product/IF12750
Congressional Research Service, “Social Security: Selected Findings of the 2025 Annual Report,” IF13045 (June 25, 2025). https://www.congress.gov/crs-product/IF13045
Related Q3 Advisors resources: Roth conversion planning, how much to convert, 2026 RMD rules, Roth conversion break-even, 2026 Medicare IRMAA brackets, the widow’s penalty, Roth conversions and state taxes, 2026 contribution limits.