RMDs vs Roth conversions: Here’s the 1 unspoken truth most US retirees miss. Don’t make a big mistake in 2026

This is a tidy but incomplete narrative.

Roth conversions may be a good fit for many Americans saving for retirement, but for a sizable minority, RMDs might make some sense.

The difference is more about psychology and behavior than tax math.

Here’s a closer look at why RMDs get such a bad rap and why, for some retirees, it could be preferable.

Why RMDs have a bad reputation

At age 73, most investors are subject to minimum withdrawals from their pre-tax retirement accounts such as 401(k) plans and traditional IRAs, per Internal Revenue Service (IRS) rules [1].

For control-oriented retirees, the notion of the government dictating when and how much you can tap into your nest egg is deeply unappealing.

That lack of flexibility is enough to push them to Roth conversions instead.

However, by 73, most retirees are halfway through their retirement. At this age, they qualify for Medicare and Social Security.

They’ve also depleted some of their nest egg and likely have a better sense of how to manage their retirement budget in the most efficient way.

For some, the prospect of RMDs isn’t a financial disaster. In fact, under specific circumstances, it could offer some psychological relief.

When RMDs can work in your favor

For some retirees, RMDs force them to unlock money they would otherwise have been reluctant to use.

This is important.

Roughly half (46%) of all retirees said spending their own money creates a sense of anxiety, according to the Alliance for Lifetime Income’s 2024 Protected Retirement Income and Planning (PRIP) Study (2).

Nearly 41% said they don’t know how to stage withdrawals from their various retirement accounts. About 49% said they don’t know how to manage RMDs.

Deeply ingrained spending and saving habits can be difficult to break in your 70s. For these retirees, RMDs can be a forcing mechanism to finally enjoy the fruits of their labor.

Charitable retirees can also minimize some of the tax burden.

Retirees over the age of 70 1/2 can make Qualified Charitable Donations (QCDs) that act as tax write-offs. Savvy planners can align their charitable donations with RMDs to minimize their tax bill in retirement [3].

RMDs can also act as a nudge for estate planning. If you have sizable account balances, these required withdrawals can be used to give your loved ones an early inheritance. For 2026, the annual exemption to the gift tax is $19,000 per donee.

If you and your partner have three children, you could give up to $114,000 total to them all.

Finally, consider the size of your retirement accounts. If your traditional IRA is worth less than $1 million, RMDs are unlikely to catapult you into a dramatically higher tax bracket.

For many retirees, the marginal tax rate on RMDs is similar to what they would pay converting to a Roth anyway, without the need to prepay decades of taxes upfront.