Roth Conversion + Fixed Index Annuity: The Two-Move Strategy Smart Retirees Are Using Before 73

By Rodney Cummings, RSSA® | Legacy Wealth Services

There’s a window between retirement and age 73 that most people waste.

It’s called the “gap years” — the period after you stop working (and stop receiving earned income) but before Required Minimum Distributions begin forcing taxable withdrawals from your IRA. For many retirees, this window spans 5 to 13 years.

During this window, your taxable income is at its lowest point in decades. Your tax brackets are relatively empty. And you have maximum flexibility over what income you take, when you take it, and how much you pay in taxes.

The retirees who use this window strategically don’t just save a few thousand dollars. They restructure their entire tax situation for the next 20–30 years. They arrive at 73 with a significantly smaller IRA (and thus smaller RMDs), a Roth account that generates tax-free income forever, and a Fixed Index Annuity providing a guaranteed paycheck that doesn’t trigger provisional income the same way IRA distributions do.

This is the two-move strategy. It’s not complicated. But it requires doing things in a deliberate order — and doing them before 73.

The Problem This Strategy Solves

Before explaining the moves, it helps to understand what problem they’re solving.

If you have a traditional IRA or 401(k), you face a mathematically certain future tax obligation. The money grew tax-deferred. Eventually — at 73, whether you need the income or not — the IRS requires you to start withdrawing it, and taxing it, every year for the rest of your life.

The amount of that future tax bill depends almost entirely on one variable: the size of your IRA at age 73.

The larger the IRA at 73, the larger the RMDs. The larger the RMDs:

The more ordinary income you have each year
The higher percentage of your Social Security benefit becomes taxable
The more likely you are to trigger IRMAA Medicare premium surcharges
The higher your effective marginal tax rate becomes

The two-move strategy attacks this problem at its root — by reducing the size of the IRA before RMDs begin, while replacing the income with a more tax-efficient source.

Move #1: Systematic Roth Conversions

A Roth conversion is the process of moving money from a traditional IRA (pre-tax) into a Roth IRA (after-tax) and paying the income tax now, at your current rate. Once in the Roth, the money grows tax-free forever — and it has no RMD requirement during the owner’s lifetime.

Why the Gap Years Are the Best Window

During the gap years, most retirees have lower taxable income than at any point in their working life. Earned income has stopped. Social Security may not have started yet (or is just beginning). RMDs haven’t started.

This means your lower tax brackets — the 10%, 12%, and 22% brackets — are largely empty. You can convert IRA money into those brackets at the lowest tax rates you’ll see for the rest of your life.

The math: Suppose you’re 65, married filing jointly, with $20,000 in Social Security income and no other income. The 22% bracket goes up to $94,050 in taxable income (2025 standard deduction already subtracted). You could convert up to ~$74,000 of IRA money into the Roth and pay only 12–22% on the conversion — rates you may not see again once RMDs begin pushing you into higher brackets.

Do this for 5–8 years, and you’ve potentially converted $300,000–$600,000 out of the IRA before the RMD clock starts. That’s $300,000–$600,000 that generates zero future RMDs, zero future provisional income, zero future IRMAA exposure.

The Key Discipline: Don’t Convert Too Much

Roth conversions aren’t a “more is better” situation. Converting too aggressively can:

Push you over IRMAA thresholds (remember the 2-year lookback)
Make Social Security benefits taxable prematurely
Accelerate tax payments beyond what the future savings justify

The goal is to fill your brackets strategically — converting exactly enough each year to reach the top of a lower bracket without crossing into a higher one. This requires knowing your MAGI, your provisional income, and your IRMAA exposure before each conversion.

This is exactly the kind of analysis a Retirement Income Analysis delivers.

Move #2: The Fixed Index Annuity as the Income Engine

Here’s the challenge with Roth conversions: during the years you’re converting, you’re moving money from the IRA into the Roth — but you still need income to live on.

If you solve that problem by drawing more from the IRA, you’re defeating the purpose of the conversion — the draws add to your taxable income and limit how much room you have to convert.

This is where the Fixed Index Annuity enters the strategy.

What a FIA Does in This Context

A Fixed Index Annuity — specifically one with an income rider — provides a guaranteed income stream that is funded from a separate pool of assets (savings, a lump-sum rollover from a portion of the IRA, brokerage assets, etc.). The income rider guarantees a specific annual payment that you cannot outlive, regardless of market performance.

By funding your living expenses from the FIA income rider during the gap years, you:

1. Reduce IRA draws — meaning more of your income comes from a source that doesn’t generate provisional income the same way traditional IRA distributions do, and your IRA stays intact for strategic conversion.

2. Create conversion room — with living expenses covered by the FIA, you have maximum bracket space available for Roth conversions each year without going over threshold.

3. Build a permanent income floor — the FIA income rider doesn’t stop when the market drops. It doesn’t stop when the IRA is depleted. It pays for life — providing the guaranteed “paycheck” that lets the rest of your portfolio be managed more strategically.

4. Lock in growth while markets fluctuate — FIAs credit interest based on market index performance but protect against loss. A $300,000 FIA in a 12-year accumulation period (before income is turned on) can grow to $450,000–$500,000 in a strong market, with zero market loss risk.

The Sequencing

Here’s how the two moves work in sequence:

Ages 60–65: Open FIA. Begin accumulation phase. Index credits build the income base over time.

Ages 65–72: Begin Roth conversions. Live on FIA income rider + Social Security (if taken) + any other non-IRA income. Convert IRA into Roth systematically, filling brackets each year.

Age 70: Activate full Social Security benefit (if delayed to 70 for maximum benefit). RSSA analysis has already determined this was the optimal date.

Age 72: Final year of full Roth conversion opportunity before RMDs begin at 73. Execute any remaining large conversions with awareness of upcoming RMD income.

Age 73+: RMDs begin — but on a significantly smaller IRA balance. The Roth account provides tax-free income. The FIA income rider continues its guaranteed payments. The SS benefit is at maximum. The tax picture looks dramatically different than it would have without the strategy.

A Tale of Two Retirees

Retiree A: No Strategy

Retires at 65 with $1.2M IRA, takes Social Security at 62 for $1,800/month
Does nothing during gap years — lives on IRA distributions
Arrives at 73 with $1.35M IRA (continued growth)
First RMD: $50,943
Provisional income: $50,943 + $28,800 SS = $79,743 → 85% of SS taxable
By 80: RMD has grown to ~$66,831; combined effective marginal rate approaching 30%+
IRMAA risk on any extraordinary income event

Retiree B: Two-Move Strategy

Retires at 65 with same $1.2M IRA, rolls $400K into FIA
Delays Social Security to 70 for $2,960/month (maximum benefit)
Converts $65,000/year from remaining $800K IRA into Roth over 7 years
Arrives at 73 with ~$350K remaining IRA (rest converted), $560K Roth, FIA paying $28,000/year guaranteed
First RMD on $350K IRA: ~$13,208
Provisional income: $13,208 + $35,520 SS = $48,868 → smaller SS taxation
IRMAA: well below threshold
Roth income: $0 in provisional income, $0 in taxes
Net result: tens of thousands less in annual taxes, guaranteed income for life, maximum SS benefit

The gap between these two retirees isn’t luck. It’s sequencing.

Is This Strategy Right for Everyone?

No. The two-move strategy is most powerful for retirees who:

Have significant IRA/401(k) balances ($500,000+) and meaningful taxable income during gap years would be disadvantageous
Have a gap between retirement and 73 (or 70 for SS timing)
Have assets available to fund a FIA outside the IRA (or can roll a portion of the IRA into an IRA-based FIA while converting the remainder)
Are in relatively good health and expect a 20+ year retirement
Want guaranteed lifetime income as part of their plan

It’s less impactful for retirees with minimal IRA balances, very high current income, or poor health that limits the planning horizon.

The best way to know if it applies to your situation is a Retirement Income Analysis — a structured look at your specific numbers, brackets, and timeline.

The Role of the RSSA in This Strategy

The Social Security timing decision is the single highest-impact financial decision most retirees make — and it interacts directly with both moves in this strategy.

Taking SS early (62–66) adds income during the gap years, reducing conversion room. Taking SS late (70) maximizes the benefit but requires income from other sources during the delay years — which is exactly what the FIA income rider provides.

A Registered Social Security Analyst (RSSA) models the break-even analysis, the cumulative benefit comparison, the provisional income interaction with RMDs, and the survivor benefit implications — producing a specific recommendation for when to file based on your complete financial picture.

Rodney Cummings holds the RSSA® designation — one of the relatively few insurance professionals credentialed in Social Security optimization — which means the annuity recommendation and the Social Security recommendation come from the same coordinated analysis, not two separate advisors with no visibility into each other’s work.

Take the Next Step

The gap years close on their own schedule. Every year you wait is a year of Roth conversion opportunity that doesn’t come back.

Rodney offers a free Retirement Income Analysis that models the Roth conversion + FIA two-move strategy for your specific situation: your IRA balance, your tax brackets, your Social Security options, and the FIA structure that fits your income goals.

Schedule your free Retirement Income Analysis →

Or call directly: 503-832-8555

This is a 30-minute conversation — no cost, no obligation — that can change the tax trajectory of your entire retirement.

Rodney Cummings, RSSA®, is the founder of Legacy Wealth Services, specializing in Medicare, annuities, life insurance, estate planning, and Social Security optimization. Licensed in 26 states. This content is for educational purposes only and does not constitute tax, legal, or investment advice. Consult a qualified tax professional for guidance specific to your situation.