People with retirement savings in a traditional IRA or 401(k) often experience a moment of panic when their balances grow and they realize they'll soon be on the hook for required minimum distributions (RMDs). RMDs can not only create a tax headache but also have additional consequences, such as raising retirees' income to the point where higher Medicare costs apply.
That's what makes Roth conversions so appealing. By moving money from a traditional IRA or 401(k) into a Roth IRA, you can enjoy tax-free gains in that account, take tax-free withdrawals, and avoid RMDs completely.
