The most expensive thing about being a successful saver isn’t the cost of saving — it’s the tax bill waiting at the other end. For Pantex retirees with $1M+ in retirement assets, Required Minimum Distributions (RMDs) starting at age 73 can drive enough taxable income to push you into higher brackets, increase your Medicare premiums, and tax up to 85% of your Social Security benefits. The same balances, left untouched, become a meaningful tax burden on the children who inherit them.
The good news: there’s typically a 5–15 year window between retirement and age 73 where you can do something about it. The bad news: most people don’t realize the window exists until it’s already closing.
This is the planning topic where the math gets six-figure interesting fastest for high-net-worth Pantex retirees — both for your own retirement and for what you leave behind. Here’s how we approach it with our clients in the Amarillo area.
A Roth conversion moves money from a traditional retirement account (where it will be taxed when withdrawn) to a Roth IRA (where it grows and comes out tax-free, forever). You pay tax on the converted amount in the year you convert, in exchange for permanent tax-free growth and withdrawals — for you, your surviving spouse, and ultimately your heirs.
If you’re going to be in the same tax bracket your whole life and your heirs will be in a low bracket, conversions are roughly a wash. If you’re going to be in a higher bracket later — because Social Security kicks in, RMDs start, your spouse passes away and you become a single filer, or your children inherit during their peak earning years — conversions can be one of the highest-leverage things you ever do with your money.
Three factors make Pantex retirees particularly good candidates for this strategy:
1. Predictable pension income. Most retirees can’t model their future taxable income with much precision. You can. Your Pantex pension is fixed once you elect it. That predictability is the foundation of a smart conversion strategy.
2. Substantial Voya Savings Plan balances. A Pantex employee with 25–35 years of service often retires with $1M+ in the Voya plan. Without conversion planning, that balance grows tax-deferred until age 73 — and then drives RMDs that may exceed your spending needs and inflate your tax bill for the rest of your life.
3. Lower-income gap years. If you retire at 60 and delay Social Security until 70, you have ten years where your taxable income is largely whatever you choose to recognize. That’s a planning window most working-age earners would dream of.
Most retirees think of RMDs as "a set percentage of my IRA every year starting at 73." That’s technically true, but it understates the problem.
The required percentage of your account that must be withdrawn each year increases with age. At 73, the IRS requires you to withdraw roughly 3.65% of your prior-year balance. By age 80, that’s about 4.95%. By 85, roughly 6.25%. By 90, around 8.2%. By 95, closer to 10%.
For a Pantex retiree with a $2 million traditional IRA at 73, that’s an opening RMD of around $73,000 — on top of pension and Social Security. By age 85, even with steady withdrawals and modest growth, the same retiree might face RMDs of $130,000+ from a balance still in the seven figures. The problem doesn’t shrink as you spend down the account; for most of retirement, the withdrawal percentage grows faster than the balance.
Three things compound the issue:
Social Security taxation. When your other income exceeds the threshold, up to 85% of your Social Security becomes taxable. A growing RMD pulls more Social Security into the taxable column every year.
IRMAA surcharges. Medicare premiums increase in tiers based on your modified adjusted gross income from two years prior. Rising RMDs can push you across IRMAA thresholds annually — and once you’re on Medicare, those surcharges follow your income for the rest of your life.
The widow tax bracket. When one spouse passes, the survivor moves from married-filing-jointly to single. Single brackets are roughly half as wide. The RMD doesn’t shrink — but the bracket it lands in often jumps two tiers, sometimes overnight.
A multi-year Roth conversion strategy is the most reliable lever to manage all three of these problems before they manifest.
Consider a married Pantex retiree, age 62, with $1.4 million in a traditional IRA (rolled from the Voya plan), a $50,000/year pension, and plans to delay Social Security to age 70.
Without conversions: The IRA grows at roughly 6% annually for 11 years until RMDs begin at 73. The balance reaches approximately $2.65 million. RMDs in the first year would be roughly $100,000 — on top of $50,000 in pension and (by then) significant Social Security. Marginal bracket: 24% federal, plus IRMAA surcharges on Medicare premiums. RMDs continue to grow each subsequent year as the withdrawal percentage increases with age.
With conversions: The same retiree converts approximately $80,000 per year for 11 years, paying tax in the 22% bracket each year (rather than 24%+ later). At 73, the traditional IRA balance is around $1 million instead of $2.65 million; the Roth IRA holds roughly $1.5 million in tax-free growth. RMDs are dramatically lower. The surviving spouse inherits a much smaller widow-bracket problem. Children eventually inherit Roth dollars instead of a tax bomb.
Same retirement, same spending, same lifestyle. The only difference is when the tax bill is paid — and how big it is when it arrives. Lifetime tax savings, including the legacy benefit to heirs, often run from $300,000 to $700,000.
(Numbers are illustrative and depend heavily on individual circumstances, future investment returns, and tax law. Your situation will produce different results.)
Project your taxable income from now through age 90+. Pension, Social Security, RMDs (modeled with and without conversions), and other taxable income. This is the single most important step. Without it, conversion planning is guesswork.
The years between retirement and Social Security claiming, and between retirement and age 73, are typically when conversions are most valuable. For an early Pantex retiree, this can be a 10+ year window.
Many of our clients aim to "fill" a specific bracket each year — converting just enough to reach the top of the 22% or 24% bracket, but not into the next one. Some clients target IRMAA thresholds instead, since the cost of crossing one is meaningful.
This is critical. If you pay the conversion tax from the IRA itself, you reduce the principal that’s growing tax-free and largely defeat the purpose of the conversion. Conversions work best when you have taxable savings — a brokerage account, cash savings, or sale proceeds — to cover the tax bill.
Roth conversions interact with ACA premium subsidies (if you retire before 65), capital gains tax brackets, IRMAA thresholds for Medicare, Social Security taxation, your state tax situation, and your charitable giving plans. Optimizing one in isolation usually creates problems somewhere else.
For Pantex retirees who have built significant wealth and want to leave something meaningful to children or grandchildren, Roth conversions take on an even more important role. The conversation isn’t just about your taxes anymore — it’s about your family’s.
The SECURE Act of 2019 eliminated the "stretch IRA" for most non-spouse beneficiaries. Where children once could inherit a traditional IRA and stretch withdrawals over their own lifetimes, they now have to drain inherited traditional IRAs within 10 years of the original owner’s death.
That sounds reasonable until you consider what it actually means.
Most Pantex retirees pass these accounts to children who are themselves in their 50s and 60s — typically the highest-earning years of those children’s careers. If your $2 million traditional IRA passes to a child in her peak earning years, she has 10 years to withdraw and pay tax on every dollar, usually at her highest marginal bracket. Significant family wealth that could have stayed in the family goes to the IRS instead.
The same $2 million in a Roth IRA still has to come out within 10 years — but every dollar is tax-free. The math is dramatic.
For Pantex households thinking about legacy:
A traditional IRA passed to children is a tax bomb with a 10-year fuse. A $1.5 million inherited traditional IRA forces roughly $150,000+/year of taxable income onto the beneficiary, stacked on top of their existing salary. For a child already in the 32% or 35% bracket, that can mean $50,000+ per year going to taxes that wouldn’t have if conversions had been done in the parent’s low-bracket years.
A Roth IRA passed to children stays in the family. The same $1.5 million in a Roth IRA grows tax-free for up to 10 years after inheritance and comes out tax-free. No tax burden on heirs. No bracket-stacking with their working income. No coordination headaches with their own retirement planning.
The strategy compounds across generations. For Pantex retirees with grandchildren who may eventually benefit, Roth dollars are roughly twice as valuable as traditional dollars — because someone, somewhere, eventually pays the tax on traditional balances. Converting now means paying that tax once, at your rates, instead of forcing your heirs to pay it at theirs.
This doesn’t mean every Pantex retiree should convert everything to Roth. Some clients prioritize their own retirement security. Others have charitable giving plans where traditional IRAs are actually more valuable — qualified charitable distributions are tax-free from traditional IRAs but not from Roth IRAs. But for most $1M+ households with meaningful legacy goals, the conversion conversation is also a legacy conversation. The two cannot be separated.
Converting too aggressively. Cramming five years of conversions into one because you "want to get it done" pushes you into higher brackets and triggers IRMAA surcharges that may erase the savings.
Converting too late. Once RMDs begin at 73, conversions are still possible but their power diminishes — you have less runway, your taxable income floor is now higher, and the legacy clock is closer.
Paying tax from the IRA itself. This both reduces the principal that grows tax-free and (if you’re under 59½) may trigger a 10% early withdrawal penalty.
Forgetting the heirs in the math. Many retirees calculate conversion benefits against their own future tax savings only. For high-net-worth households with legacy goals, the heirs’ tax bracket should be part of the analysis. A child in a 32% bracket inheriting a traditional IRA is a very different math problem than a child in a 22% bracket.
Ignoring the surviving-spouse problem. When one spouse passes, the survivor moves from married-filing-jointly to single. Single brackets are roughly half as wide. A $200,000 income that was comfortable in a 22% bracket can suddenly be taxed at 32%. Roth dollars don’t show up on the tax return.
Assuming current tax rates will last forever. Tax brackets and rates are subject to legislative change. For some retirees, the next several years may be among the lowest tax rates they’ll see in retirement.
Every Pantex retiree’s conversion plan is different. A 62-year-old with no spouse and a small pension has a different optimal strategy than a 65-year-old couple with a large pension, an even larger Voya balance, and three children they want to provide for. But the core insight is the same: there’s a window, and it’s finite.
Every year you don’t convert is a year of capacity that’s gone — and a year closer to RMDs, when the IRS makes the timing decision for you. For households with legacy intentions, every year is also a year that more value compounds inside the traditional IRA, where your heirs will eventually inherit the tax bill alongside the asset.
For Pantex retirees in the Amarillo area, we build a multi-year conversion plan as part of a complete retirement income, tax, and legacy strategy. We update it annually as circumstances change — investment returns, tax law, life events, IRMAA thresholds, and family priorities. The conversion plan isn’t a one-time decision; it’s a recurring optimization that gets refined every year for a decade or more.
Done well, it’s the difference between paying tax once at a known rate — on your terms, in your low-bracket years — and paying tax forever at rates you don’t control, with your heirs paying their share of it as well.
“We can’t perfect the world, but we can show up for the people in it — and hold ourselves to a standard worthy of the trust they place in us.” — Ashby Dawson
Ashby Dawson, CFP®, AAMS™ is a Partner and Wealth Manager at Kingsview Partners in Amarillo, Texas. She works with Pantex employees and retirees on pension elections, Voya rollovers, tax planning, and retirement income and legacy strategy. She has been recognized as a Forbes Best-in-State Wealth Advisor and Best-in-State Women Wealth Advisor in 2022, 2023, and 2026.
Want to see what a multi-year Roth conversion and legacy plan would look like for your situation?
Schedule a confidential conversation: (806) 318-6820 | adawson@kingsview.com
This article is for educational purposes only and does not constitute personalized financial, tax, legal, or estate planning advice. Tax laws change. Roth conversions create immediate tax liability and should only be undertaken after a careful review of your specific circumstances. Please consult a qualified fiduciary advisor and tax professional before executing any conversion or legacy strategy.