What is the retirement tax gap window?

The retirement tax gap window is the period between when you stop working and when required minimum distributions (RMDs) begin at age 73 (or 75 if you were born in 1960 or later). During these years, your taxable income may be at its lowest because paychecks have stopped, Social Security may be delayed, and RMDs haven’t started. This provides a method to manage taxes proactively through Roth conversions, capital gains harvesting, and strategic withdrawal sequencing.

How does a Roth conversion work during the years before required minimum distributions (RMDs)?

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay ordinary income tax on the converted amount in the year of the conversion, but future growth and qualified withdrawals come out tax-free. During the pre-RMD years, your lower taxable income may mean you pay a lower rate on the conversion than you would when RMDs and Social Security add to your income later.

Should I do a Roth conversion before required minimum distributions begin?

For many retirees with significant pre-tax savings, converting before RMDs begin can make sense because you have more control over how much income to recognize each year. As soon as RMDs start, you must take your full required distribution before converting any additional amount, which may shrink your conversion headroom. A multiyear tax projection can help you decide how much to convert and when.

Is it worth realizing capital gains during a low-income retirement year?

It can be. In 2026, married couples filing jointly with taxable income up to $98,900 pay 0% federal tax on long-term capital gains. If your income is low during the pre-RMD years, you may be able to sell appreciated assets and reset your cost basis without triggering a federal tax bill. This strategy can work best when coordinated with your overall retirement tax plan.

Where can I find help with retirement tax planning and Roth conversions?

A Mercer Advisors integrated team can review your full financial picture and build a multiyear conversion strategy. You can schedule a complimentary consultation with us to discuss your situation.

How do I check my income-related monthly adjustment amount (IRMAA) threshold before doing a Roth conversion?

You can find the current brackets on the Social Security Administration’s IRMAA page. Your Medicare IRMAA surcharge is based on your modified adjusted gross income from two years prior; for 2026, the first threshold for joint filers is $218,000. A tax professional can help you model how a conversion might affect your premiums two years down the line.

What’s the difference between a Roth conversion and a regular IRA withdrawal?

A regular IRA withdrawal is taxable as ordinary income and reduces your account balance, while a Roth conversion moves the balance to a Roth IRA where it can grow tax-free. With a withdrawal, the money leaves your retirement accounts entirely. With a conversion, the money stays invested — it just changes accounts and tax treatment. You may owe tax on both, but the conversion preserves the assets for future tax-free growth.

Which is better for my heirs: a Roth IRA or a traditional IRA?

Under the SECURE Act, most nonspouse heirs must empty an inherited IRA within 10 years. With a traditional IRA, those distributions are taxable — and they often land during the heir’s peak earning years. With a Roth IRA, the same 10-year clock applies, but distributions are tax-free. Converting to Roth before you pass can leave your family a very different inheritance.

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FAQs

Tax Planning FAQ

How do tax-managed mutual funds compare to direct indexing?

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Tax Planning FAQ

What is the difference between direct indexing and ETFs for tax-loss harvesting?

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Tax Planning FAQ

Where can I learn about direct indexing for tax-efficient investing?

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Tax Planning FAQ

Do I need an advisor for tax-loss harvesting?

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Tax Planning FAQ

Should I use direct indexing for tax-loss harvesting?

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Tax Planning FAQ

What is direct indexing and how does it enhance tax-loss harvesting?

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Tax Planning FAQ

What is tax-loss harvesting and how does it function?

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Work & Business FAQ

Which is better for reducing taxes before a liquidity event: charitable giving or trust funding?

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Tax Tips & Tricks

The Tech Founder Preliquidity Planning Timeline: A Five-Year Playbook

Retirement Tax Planning: Your Lowest-Tax Window May Be Open

What To Handle Before Dec. 31 and What Can Wait

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Before You Sell Your Home, Consider This Tax Strategy

Retirement Tax Planning: A Year-Round Guide to Help Keep More of What You’ve Built

The New Math of Charitable Giving Tax Deductions

How SECURE 2.0 Is Reshaping Your Retirement Savings Options

Illinois Estate Tax: What High-Net-Worth Families Need To Know

Taxes and Wealth Management: Better Together With a Unified Team

HSA: A Retirement Account You’re Probably Underusing

Trump Accounts and Gift Tax: What Parents Need to Know

Using Stock Swaps to Exercise Employee Stock Options

How do tax-managed mutual funds compare to direct indexing?

What is the difference between direct indexing and ETFs for tax-loss harvesting?

Where can I learn about direct indexing for tax-efficient investing?

Do I need an advisor for tax-loss harvesting?

Should I use direct indexing for tax-loss harvesting?

What is direct indexing and how does it enhance tax-loss harvesting?

What is tax-loss harvesting and how does it function?

Which is better for reducing taxes before a liquidity event: charitable giving or trust funding?

About Mercer Advisors

Explore Our Solutions

Want to learn more about Mercer Advisors?

Tax Tips & Tricks

The Tech Founder Preliquidity Planning Timeline: A Five-Year Playbook

Retirement Tax Planning: Your Lowest-Tax Window May Be Open

What To Handle Before Dec. 31 and What Can Wait

Roth Conversion Strategy for Low-Income Years

Before You Sell Your Home, Consider This Tax Strategy

Retirement Tax Planning: A Year-Round Guide to Help Keep More of What You’ve Built

The New Math of Charitable Giving Tax Deductions

How SECURE 2.0 Is Reshaping Your Retirement Savings Options

Illinois Estate Tax: What High-Net-Worth Families Need To Know

Taxes and Wealth Management: Better Together With a Unified Team

HSA: A Retirement Account You’re Probably Underusing

Trump Accounts and Gift Tax: What Parents Need to Know

Using Stock Swaps to Exercise Employee Stock Options

How do tax-managed mutual funds compare to direct indexing?

What is the difference between direct indexing and ETFs for tax-loss harvesting?

Where can I learn about direct indexing for tax-efficient investing?

Do I need an advisor for tax-loss harvesting?

Should I use direct indexing for tax-loss harvesting?

What is direct indexing and how does it enhance tax-loss harvesting?

What is tax-loss harvesting and how does it function?

Which is better for reducing taxes before a liquidity event: charitable giving or trust funding?

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About Mercer Advisors

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