Quick Read
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VUG's 440% 10-year return and IDEV's 54% five-year gain reward investors who use two extra tax-deferred years before RMDs kick in at 75.
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Roth conversions during the pre-RMD window let retirees control taxable income, shrinking the balance that drives future required distributions.
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GOVT's 5.21% Treasury yield funds living expenses or conversion-year taxes without forcing stock sales during a market downturn.
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If you are in your mid-to-late sixties, you may have spent years planning around an earlier forced-distribution age for your traditional IRA or 401(k). For many readers in that group, that date still remains years away. Under United States Code, Title 26, required minimum distributions (RMDs) start at 75 for anyone born in 1960 or later. That gives you a longer runway to plan around. Three ETFs show different roles during that runway: the Vanguard Morningstar Growth ETF( NYSEARCA:VUG ) for growth, iShares Core MSCI International Developed Markets ETF( NYSEARCA:IDEV ) for diversification, and the iShares U.S. Treasury Bond ETF( CBOE:GOVT ) for stability.
How the Law Sets Your Start Date
The rule sits in 26 U.S.C. § 401(a)(9)(C)(v). It turns on the dates when you reach certain ages. United States Code, Title 26 sets the earlier tier this way: "In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the applicable age is 73." The next clause of United States Code, Title 26 provides that "In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75."
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The birth-year framing in the headline is accurate shorthand for readers at or past the cutoff. If you sit right at the boundary, confirm which applicable age applies to you, since the rule depends on attainment dates. According to the IRS, distributions generally must begin by April 1 of the year following the year you reach your applicable age.
Waiting Longer Can Build a Bigger Tax Bill
A later start date has a cost. Each extra year of deferral lets the balance keep growing, and a larger balance produces larger required distributions once they begin. For some readers, the added years quietly build a bigger tax problem. The value of the window comes from what you do during it.
Roth Conversions Are the Window's Biggest Opportunity
The years between retiring and your first RMD offer unusual flexibility for tax planning. Your paycheck has stopped, the government has not yet set a withdrawal schedule, and you decide how much income you recognize and when. Once distributions begin, that control shrinks.
The window serves three purposes. First, money you leave alone keeps compounding inside the account. Second, and most valuable, you get more years to convert traditional balances to a Roth. A conversion moves money out of the tax-deferred account on your terms, during years when your income may run lower, instead of on a schedule written for you later. More years means more opportunities to pace conversions by design rather than cramming them in. Each converted dollar also cuts the balance that will drive future required distributions, which goes straight at the problem described above.
Third, you have room to choose when to claim other income sources, such as Social Security or a pension, without RMDs crowding into the same years. Whether converting fits depends on your full tax picture. The longer runway gives you more time to decide (we sized up those low-tax years between the last paycheck and the first RMD in a free Roth guide here: The Roth Window).
VUG Gets the Most Out of Untouched Compounding
Growth stocks gain the most from years left alone in a sheltered account, which makes VUG the growth component of this lineup. Its largest holdings are NVIDIA at 13.3%, Apple at 12.3%, Alphabet at 9.9%, and Microsoft at 9.1% of assets, per Vanguard's June fact sheet. Adjusted returns were 440.49% over 10 years and 15.27% over the past year. With a 0.03% expense ratio, fees take almost nothing out of that growth. Its most recent quarterly dividend was $0.091 per share, so price appreciation drives nearly all of the return.
IDEV Adds Global Exposure Beyond U.S. Stocks
Most retirement accounts at this stage lean heavily on U.S. stocks. IDEV spreads money across developed markets outside the U.S., including Canada, Europe, and Japan. The fund held about $31.6 billion in net assets as of July 31, with positions such as Royal Bank of Canada, Shopify, Toronto-Dominion Bank, Volvo, and Kirin. Royal Bank of Canada, one of the larger positions in its latest filing, makes up about 1% of assets, a much wider spread than VUG's top-heavy lineup. IDEV returned 15.85% over the past year and 53.49% over five years.
GOVT Funds Spending Without Forcing Stock Sales
GOVT holds U.S. Treasuries across the yield curve, with about $43.55 billion in net assets as of July 31. It pays monthly. The latest distribution was $0.070593 per share, and the trailing 12-month total reached $0.832823. Yields remain high, with the 10-year Treasury at 5.21% and the 30-year at 5.56% as of October 13. A Treasury allocation can cover living costs or the tax due in a conversion year, so you avoid selling stocks during a downturn.
Trade-Offs to Weigh Before You Build Around the Window
Each fund carries real risk. VUG concentrates heavily in a handful of tech giants, so a sell-off in those names hits the whole fund. IDEV adds currency swings to stock market risk. GOVT's price fell 2.1% over the past year and 4.86% over five years as rising rates drove bond prices lower.
The bigger risk is doing nothing with the extra time. If you fall under the latter rule, these three funds show three roles: growth that compounds, diversification beyond U.S. borders, and a stable source of cash. Each can be explored as part of a careful plan for the runway.
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