You cannot put your Required Minimum Distribution (RMD) directly into a Roth account. Annual required minimum distributions must be satisfied by distributions to a taxable account.

In a taxable brokerage account, dividends, interest, and capital gains are all taxed. This means after already paying the income tax upon withdrawal, your RMD may suffer under many more decades of the taxation in your brokerage account.

Taken just a year earlier, the same amount can be withdrawn for potentially the same or comparable tax and converted to a Roth account where its dividends, interest, and capital gains are never taxed again.

Once you are done working, you cannot put more money into your retirement accounts. You can only fund your IRAs with earned income. When you take your RMD as a retiree, you are losing the opportunity to ever protect that money from taxation in a Roth IRA again.

Converting to Roth without delay is valuable. Waiting just one year means that you lose a portion of the growth in your traditional IRA to income taxes later. And after age 70, waiting just one year means that you lose another year of RMDs to your taxable account.

There are strategic reasons to wait, such as waiting for your “gap years,” a known window of time when taxable income will be low, to convert, but don’t let fear or complication rob you of a higher after-tax net worth.

Roth conversions are almost always a good idea and converting something is almost always better than doing nothing. There is a “best conversion” and we can do our best to predict which plan it is, but even the “worst conversion” plan can save hundreds of thousands or even millions of after-tax value over doing nothing.