Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTMarc GubertiSun, June 14, 2026 at 5:24 PM GMT+2 5 min readQuick ReadRetirees with large traditional 401(k)s can face effective marginal rates near 40% when RMDs, Social Security taxation, and Medicare IRMAA surcharges stack simultaneously at age 73.Married couples can convert roughly $133,000 annually from pretax 401(k) to Roth at a 12% rate, paying about 9% effective tax before hitting the 22% bracket.Always pay Roth conversion taxes from a taxable brokerage account, because withholding from the converted balance shrinks the Roth and can trigger a 10% penalty if you are under age 59½.Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.A couple retires at 62 with $1.5 million split across two traditional 401(k) plans, no pension, and Social Security on hold until 70. They feel financially set. Eleven years later, required minimum distributions push them into the 22% federal bracket, drag 85% of their Social Security benefit into taxable income, and trigger Medicare IRMAA surcharges that follow them the rest of their lives. The strategy that prevents all of that is called bracket smoothing, and the window to use it closes the day the first RMD hits.PeopleImages / Getty ImagesThe 12% Bracket Is the Whole GameFor a married couple filing jointly in 2026, the 12% federal bracket ends at $100,800 of taxable income. The standard deduction is $32,200. Stack them, and a retired couple with no other income can pull roughly $133,000 out of a pretax 401(k) each year before a single dollar gets taxed at 22%.Single filers have a tighter window. The 12% bracket ends at $50,400, the standard deduction is $16,100, and the ceiling lands near $66,500 of gross withdrawals before the 22% layer kicks in.That ceiling is the entire thesis. Every dollar moved from pretax into Roth at 12% today is a dollar that will not be forced out at 22% or 24% later, when RMDs, Social Security taxation, and Medicare premiums stack on top of each other.What $1.5 Million Looks Like Under Each PathTake the couple above. Between 62 and 70 they have an eight-year window with no earned income and no Social Security check. If they convert $100,000 a year from traditional 401(k) to Roth, taxable income lands near $67,800 after the standard deduction. Federal tax on that conversion runs roughly about $7,600. Filling the bracket all the way to the ceiling costs $11,600, or roughly 9% effective.Now run the path where they leave the account alone. At a blended return, the balance grows to roughly $2.85 million by age 73. The first RMD using the IRS Uniform Lifetime Table lands near $107,000. Add a delayed Social Security benefit close to $80,000 for the household, and gross income clears $187,000 before any portfolio income.Terms and Privacy PolicyPrivacy & Cookie SettingsMore Info