All distributions from an IRA except when there is basis in the IRA are taxable at ordinary income rates, as are Roth conversions. Both add to AGI and taxable income in the usual manner. Your Roth IRA is now qualified and all distributions are tax free, regardless of the source being dividends or stock sales. If you are taking IRA distributions to pay down the mortgage, these distributions may increase your marginal rate or reduce the amount of conversions you can do without increasing your rate. Conversions are most beneficial when done at a marginal rate that is less than your expected rate after RMDs begin. They may also have a small advantage when the rates are the same, but not if the rates you pay on the conversion are expected to be higher.  However, you have a better chance for the rate to be lower before RMDs begin since they will add to the taxable income. Whether you should pay down the mortgage faster may depend on your interest rate and if you can itemize mortgage interest anymore since the STD deduction increased.  Generally for tax management, you should strive to somewhat equalize your taxable income from here out, which suggests that you might either pay down the mortgage or convert more now than when RMDs begin. In other words, you can estimate your starting RMD amount now and in the couple of years until then you can either convert or pay down the mortgage by the amount of that RMD from IRA distributions. Once the year you reach 70.5 begins you will have to complete your annual RMD before doing any conversions. While you will have to crunch the actual numbers, because of the mortgage payments you probably will not be able to convert much, if anything, once RMDs begin. Finally, all these distributions from your TIRA could increase your Medicare premiums (IRMAA), so if you are close to the first tier you should try and stay a little below it to avoid a large jump in Medicare premiums 2 years later.

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