Quick Answer
At age 73, the IRS forces minimum withdrawals from traditional 401(k) and IRA accounts (RMDs) — every dollar is taxed as ordinary income. The fix is Roth conversions before age 73:
- Each year, convert a portion of your traditional IRA to a Roth IRA — pay taxes now at your current rate.
- Invest converted funds in your Roth IRA where growth and withdrawals are tax-free and not subject to RMDs.
- Repeat annually until your pre-tax balance is small enough that future RMDs won't push you into a higher bracket.
What Is an RMD?
A required minimum distribution is the minimum amount the IRS requires you to withdraw from traditional IRAs, 401(k)s, and other pre-tax retirement accounts every year starting at age 73 (or 75 if you were born in 1960 or later). Every dollar you withdraw is taxable as ordinary income — not capital gains, but full income tax.
For most ITIN holders, the point of this rule is good: the IRS wants retirees to eventually pull out and pay taxes on the money they deferred during their careers. But the problem is timing — you're forced to take the RMD on the IRS's schedule, not yours, and if you've saved aggressively, the amount can be enormous.
How Much Do You Have to Withdraw?
Your RMD equals your Dec 31 prior-year balance divided by an IRS life expectancy factor. At age 73 the factor is 26.5, so a $500,000 balance requires an $18,868 withdrawal; at age 90 the factor drops to 11.4, raising the same balance's RMD to $43,860. The factor shrinks with age, so RMDs grow over time.
The IRS publishes life expectancy factors in the Uniform Lifetime Table. Here's an example:
- Age 73: Factor of 26.5. If you have $500,000, RMD = $500,000 ÷ 26.5 = $18,868/year.
- Age 80: Factor of 18.7. Same $500,000 balance, RMD = $500,000 ÷ 18.7 = $26,738/year.
- Age 90: Factor of 11.4. RMD = $500,000 ÷ 11.4 = $43,860/year.
As you age, the factor shrinks, meaning your RMD grows larger — even if your balance stays the same. This is by design: the IRS assumes you're drawing down your account faster as your life expectancy shortens.
What Are the RMD Deadlines for ITIN Holders?
Your first RMD is due by April 1 of the year after you turn 73, and every RMD after that is due by December 31. Missing a deadline triggers a 25% penalty on the amount you should have withdrawn, though correcting the error within 2 years reduces it to 10%. The rules are identical for ITIN and SSN holders.
- First RMD: Must be taken by April 1 of the year AFTER you turn 73. (You can also take it by Dec 31 of the year you turn 73 instead.)
- All subsequent RMDs: Must be taken by December 31 each year.
- Penalty for missing the deadline: 25% of the amount you should have withdrawn but didn't. If your RMD is $20,000 and you take $0, the penalty is $5,000. This is one of the highest penalties the IRS imposes.
There's a small grace period: if you catch the mistake and correct it within two years, the penalty can be reduced to 10%.
Why Do RMDs Create a Retirement Tax Bomb?
Here's where the bomb comes in. Imagine you are age 72, earning $80,000/year and in the 22% federal tax bracket. You have $800,000 saved in a traditional 401(k) and IRA from decades of pre-tax contributions.
Next year, at 73, your RMD is: $800,000 ÷ 26.5 = $30,188. Suddenly your taxable income is $80,000 + $30,188 = $110,188. That $30,000 RMD pushed you up to the 24% bracket, costing you roughly $7,000 in extra federal taxes that you didn't owe the year before. Plus state taxes. Plus, it may trigger higher Medicare premiums (IRMAA — Income-Related Monthly Adjustment Amount).
This is the tax bomb. You didn't do anything wrong — you just saved money — but the IRS's forced withdrawal schedule creates a big unexpected tax bill.
How Do Roth Conversions Help Avoid the RMD Tax Bomb?
Roth conversions move pre-tax retirement funds into a Roth in your 50s and 60s, before RMDs start, so that money never triggers a required withdrawal. By converting about $20,000 a year to fill the 22% bracket for 10 years, you shift $200,000 to Roth and cut a future RMD from $30,188 down to $22,642.
- Fill unused bracket space: If you're earning $80,000 and the 22% bracket goes up to $105,700 (2026 rates), you have $25,700 of unused space. Convert $20,000 from your traditional IRA to Roth — you pay 22% in taxes ($4,400), but that $20,000 is now in a Roth account and will never trigger RMDs.
- Do this consistently: If you repeat this every year for 10 years, you've moved $200,000 to Roth at favorable rates. At 73, your RMD is now $600,000 ÷ 26.5 = $22,642 instead of $30,188 — saving thousands in taxes.
- Lock in lower rates: ITIN holders often have lower incomes in early retirement than they did while working. Use that window. A conversion that costs 22% now might have cost 24% or 32% if you waited until after age 73.
What Are the Key Roth Conversion Rules for ITIN Holders?
- You can convert at any age. There's no age limit on conversions — you can do them at 25 or 75.
- You pay income tax on the converted amount. If you convert $50,000 from traditional to Roth, that $50,000 is taxable income in the year of conversion. Plan your cash flow so you can pay the taxes without withdrawing from the conversion itself.
- ITIN holders can convert just like SSN holders. Your immigration status doesn't affect conversion rules — they apply the same way.
- You can't avoid the tax with a recharacterization. As of 2018, you can no longer "undo" a conversion. Once it's done, it's permanent.
- Backdoor Roth is an option if you exceed income limits. Even if your income is too high to contribute directly to a Roth IRA, you can do a backdoor Roth by contributing to a traditional IRA and immediately converting it. Same tax rules apply.
Should You Do a Roth Conversion?
A Roth conversion makes sense if you have at least 5–10 years until RMDs start, you are currently in a lower tax bracket than you expect in retirement, and you have cash outside the IRA to pay the conversion tax. It is less attractive if you are already in the top bracket or need the money before age 59½.
- You have at least 5–10 years until RMDs start.
- You're currently in a lower tax bracket than you expect to be in retirement.
- You have cash outside retirement accounts to pay the conversion tax (don't withdraw from the IRA itself to pay the tax — that defeats the purpose).
- You expect your RMDs to push you into a higher bracket or trigger Medicare premium increases (IRMAA).
Conversions don't make as much sense if you're already in the highest tax bracket, or if you'll need the money before age 59½ (withdrawals before that age from Roth accounts face a 10% penalty if it hasn't been 5 years).
What About Roth IRAs? Do They Have RMDs?
No. Roth IRAs have no required minimum distributions while you are alive. This is one of the biggest advantages of Roth accounts. Your money can stay invested and compound tax-free for decades, or forever if you don't need it. Designated Roth accounts inside a 401(k) or 403(b) plan also have no RMDs during your lifetime.
This is why Roth conversions are so powerful: they get money out of the RMD trap and into a vehicle that grows tax-free forever without forced withdrawals.
What's the Bottom Line on RMDs for ITIN Holders?
RMDs are inevitable if you've saved in pre-tax retirement accounts — but the size of the bomb you face is not. If you're in your 50s or early 60s and have significant pre-tax savings, talk to a tax professional about a Roth conversion strategy. Even converting a modest amount each year (filling your current tax bracket) can reduce RMDs significantly and keep you out of higher brackets in retirement. For ITIN holders, this is especially important because your ability to manage tax brackets is one of your biggest levers for building durable wealth.
What if I need my RMD money to live on?
Then take it. The RMD doesn't have to sit unused — it's often meant to be your retirement income. The point of planning for it is to manage the tax hit, not to avoid taking it. If your RMD is your monthly spending, conversions still help by reducing the total amount you're forced to withdraw each year, which may keep you in a lower tax bracket overall.
Can I split my RMD across multiple accounts?
Yes. If you own multiple IRAs (say, a rollover IRA and a SEP-IRA), you can aggregate the RMDs from both and take the total from one account. This gives you flexibility. However, 401(k) RMDs must be taken separately from each plan — you can't aggregate them.
What if I'm still working at age 73?
If you're still employed and participating in your employer's 401(k), you can delay taking RMDs from that plan (called the "still-working exemption") as long as you don't own 5% or more of the company. You must still take RMDs from IRAs and other 401(k)s from previous employers, but you get a reprieve on your current employer's plan.
Do Roth IRAs have required minimum distributions?
No. Roth IRAs are the only retirement account with no RMDs during the owner's lifetime. You are never required to withdraw from a Roth IRA — the money can keep growing tax-free indefinitely. This is one of the strongest reasons ITIN holders should prioritize Roth contributions over Traditional IRA or pre-tax 401(k) contributions.
What are the RMD rules for inherited IRAs?
If you inherit an IRA from someone who is not a spouse, the 10-year rule generally applies under SECURE Act 2.0: you must withdraw the entire balance within 10 years of the original owner's death. Spouses who inherit an IRA have more flexible options, including rolling the balance into their own IRA. Consult a tax professional to determine which rules apply to your situation.