Retiring at 67 with $2.6 million saved is an enviable position to be in. To put that in perspective, Federal Reserve data shows the average 67-year-old retiree has closer to $600,000 in total retirement savings, and far less sitting in IRAs alone. If most of your nest egg is in a traditional IRA, you’ve clearly done a lot right.

That said, a large traditional IRA does come with a common concern: required minimum distributions (RMDs) and the taxes that follow. The good news? There are planning strategies available—and no need to panic.

Let’s walk through how to think about this thoughtfully and strategically.

Why RMDs Matter (and Why They Exist)

Once you turn 73, the IRS requires you to begin taking withdrawals from traditional retirement accounts. These RMDs are taxed as ordinary income, which means they can increase your tax bill—even if you don’t actually need the money.

The IRS’s motivation is simple: traditional IRAs were funded with pre-tax dollars, and eventually, taxes are due. RMDs ensure those taxes are collected.

For retirees with large balances, RMDs can push income higher than expected, potentially affecting tax brackets, Medicare premiums, and overall flexibility in retirement.

The Roth Conversion Conversation

One of the most common strategies for managing future RMDs is strategic Roth conversions.

If your income drops in early retirement—often called the retirement income valley—you may have a window where your tax bracket is lower than it will be later. That window can be an opportunity to move some money from a traditional IRA to a Roth IRA, paying taxes now in exchange for:

• No future RMDs on Roth assets
• Tax-free withdrawals later in life
• Greater tax control in retirement

However, this is not a move to rush into.

Think in Years, Not One Big Move

Instead of converting a large lump sum all at once, many retirees benefit from a series of smaller conversions over several years. The goal is to “fill up” a tax bracket without spilling into the next one. This approach can steadily reduce future RMDs while keeping today’s tax bill manageable.

Watch for Medicare Premium Surcharges

One important consideration: Roth conversions count as income. Higher income can trigger IRMAA surcharges, which raise Medicare Part B and Part D premiums two years later.

While this matters, it shouldn’t automatically derail a good plan. In most cases, IRMAA represents a relatively small percentage of income and may be worth paying temporarily if it helps reduce taxes and RMD exposure for decades to come.

This is where long-term planning matters more than short-term discomfort.

Don’t Put Everything Into a Roth

It can be tempting to try to eliminate RMDs entirely—but that’s not always the best move.

Having multiple tax “buckets”—traditional, Roth, and taxable—creates flexibility. Future tax laws are unknown, and certain credits or benefits may require taxable income to access. A diversified tax strategy gives you options no matter what changes lie ahead.

Balance, not extremes, tends to win in retirement planning.

RMDs Aren’t Automatically a Bad Thing

RMDs often get a bad reputation, but they’re not inherently disastrous—even with a large IRA balance.

They can:

• Fund travel or lifestyle goals you might otherwise hesitate to spend on
• Support charitable giving through Qualified Charitable Distributions (QCDs)
• Serve as part of a broader income strategy rather than a tax surprise

The key is preparation, not fear.

The Bottom Line

If you’re retiring with $2.6 million in a traditional IRA, you’re starting from a position of strength. RMDs and taxes deserve attention—but not rushed decisions.

Thoughtful Roth conversions, tax-bracket management, Medicare planning, and diversification across account types can all play a role. The most important step is slowing down, looking at the full picture, and building a strategy that aligns with both your financial goals and your lifestyle.

Smart planning turns a “problem” into an opportunity—and that’s exactly what this situation can be.