Sheryl Rowling Urges 401(k) Millionaires to Use Roth Conversions Before Age 73
Updated
Updated · Morningstar · Aug 28
Sheryl Rowling Urges 401(k) Millionaires to Use Roth Conversions Before Age 73
2 articles · Updated · Morningstar · Aug 28
Summary
Rowling said retirees with $1 million or more should actively manage withdrawals, taxes and asset mix because a seven-figure nest egg no longer guarantees lasting security.
Age 60 to 73 is a key planning window, she said, because low taxable income before required minimum distributions begin can make annual IRA-to-Roth conversions relatively cheap and reduce future RMDs.
A new $40,000 SALT deduction cap for taxpayers under $500,000 creates another tax-planning lever, while large withdrawals or aggressive conversions can later raise Medicare premiums through IRMAA.
She also recommended keeping a cash bucket in savings or money markets to avoid selling in downturns, limiting early overspending, and shifting gradually toward more bonds to curb volatility.
For heirs, Rowling warned that inherited pretax IRAs must generally be emptied within 10 years, potentially forcing about $150,000 a year of taxable income on a $1.5 million account.