She Retired at 64 With $380,000 in a 401(k) and No Income for Nine Years. She Never Converted a Dollar. Her First RMD Was Taxed at 22%.

A retiree who left her job at 64 and accumulated a $380,000 401(k) balance without converting any funds to a Roth IRA encountered nine years of tax implications when required minimum distributions (RMDs) began at 73. During those years, she had no other income, resulting in minimal taxable income each year. In the 2026 tax year, the IRS standard deduction was $16,100, and the 22% tax bracket began above $50,400 for single filers.

By not converting any money, she missed the opportunity to use a 12% tax bracket each year, which would have reduced her future RMD obligations. If she had converted $38,000 annually, her first RMD would have remained below the 12% bracket, avoiding the higher 22% tax rate. Her untouched balance grew to approximately $642,000 at age 73, and the IRS required her to take a first RMD of around $24,200, pushing her taxable income above the threshold for the 12% bracket.

The guide emphasizes the importance of making strategic decisions during the gap years to minimize tax burdens in retirement.