Once you’re retired, the IRS is not done with your retirement savings. Once you reach a certain age, Required Minimum Distributions force you to begin withdrawing money from tax-deferred accounts—and how you handle those withdrawals can affect everything from your tax bill to your Medicare premiums.
RMDs exist so the IRS can eventually collect income tax on retirement accounts that received tax‑deferred treatment, such as traditional IRAs and most employer plans, while Roth IRAs remain exempt from RMDs during the owner’s lifetime.
When Do Required Minimum Distributions Begin?
Your RMD starting age depends on when you were born. Those born from 1951 through 1959 generally must begin taking RMDs in the year they turn 73, while those born in 1960 or later begin at age 75. You may delay your first withdrawal until April 1 of the following year, but doing so means taking two RMDs in the same calendar year. That extra taxable income could push you into a higher tax bracket, increase your Medicare premiums or cause more of your Social Security benefits to be taxed.
Related: When Should I File for Social Security?
How Are RMDs Calculated, and What Are the Penalties?
Your RMD is calculated by dividing each traditional IRA’s balance as of December 31 of the previous year by the applicable life-expectancy factor from IRS tables. Because the calculation is based on that year-end snapshot, subsequent market gains or losses do not change the amount you are required to withdraw.
Although you must calculate the RMD for each traditional IRA separately, you can add those IRA amounts together and take the total from one or more of your IRAs. RMDs from employer plans, by contrast, usually must be taken separately from each plan. Failing to withdraw the full amount can trigger a penalty equal to 25% of the shortfall, though that penalty may drop to 10% if the mistake is corrected within the required timeframe.
How Should You Take and Use Your RMD?
Once you take an RMD, you have considerable flexibility in how to use the money. You can spend it, have taxes withheld before the net amount is deposited into your bank account, or reinvest it in a taxable brokerage account if you do not need it for living expenses. Reinvesting can be especially valuable when a market downturn forces you to sell investments at a loss, since it allows the money to remain invested and potentially benefit from a future recovery.
Retirees must strategically decide whether to schedule their mandatory withdrawals as a systematic monthly cash flow or as a single annual lump sum.
A financial advisor can help you prepare for RMDs long before the first withdrawal is due. By projecting how large those distributions may be, you can evaluate strategies such as completing Roth conversions during lower-income years or drawing down a traditional IRA earlier in retirement to reduce future RMDs and their potential effect on taxes and Medicare premiums.
Knowing these strategies exist is one thing; knowing when and how to use them is another. A financial advisor can apply the training, experience and careful analysis needed to determine which approach best fits your income, tax situation and long-term retirement goals.
Roth Conversions and Qualified Charitable Distributions
Accepting minor, voluntary tax friction early in retirement can successfully protect your portfolio from facing massive tax spikes later in life. Roth conversions can be an effective part of that strategy, but they cannot satisfy an RMD—the required distribution must be taken separately.
For charitably inclined retirees, a Qualified Charitable Distribution offers another tax-smart option. Beginning at age 70½, an individual can transfer up to $111,000 in 2026 directly from an IRA to an eligible charity. The distribution can count toward an RMD without being included in taxable income, potentially helping reduce the retiree’s overall tax burden.
One important distinction is that QCD eligibility still begins at age 70½, even though the starting age for RMDs has increased. Because these ages, limits and regulations do not always change together, retirees should review the current rules before making a distribution.
When charitable gifts are transferred directly from an IRA to an eligible organization through a Qualified Charitable Distribution, the amount is generally excluded from taxable income. For retirees who regularly tithe to a church or support other charities, using QCDs can satisfy part or all of an RMD while keeping adjusted gross income lower.
That distinction matters because a higher income can trigger IRMAA surcharges on Medicare Part B and Part D premiums. With today’s higher standard deduction and an additional enhanced deduction available to eligible taxpayers age 65 and older, many retirees may not itemize charitable contributions. A QCD can therefore offer a more direct tax benefit by excluding the gift from taxable income rather than relying solely on a charitable deduction.
It’s important to note that Standard RMD tables for your own traditional accounts don’t apply to inherited IRAs, which follow a different set of rules. Inherited accounts can be subject to the 10‑year rule or annual RMDs based on the beneficiary’s life expectancy, depending on factors like your relationship to the original owner, when they died, and whether they had already started RMDs.
When we meet with clients, we build a financial plan for the short, medium and long term by focusing on what can be controlled. We cannot eliminate market volatility, but we can manage a portfolio’s exposure to it. Likewise, we cannot avoid RMD rules, but we can make strategic decisions about when and how those withdrawals are taken. We can help clients optimize their retirement account transfers to minimize taxes.
Proactive RMD planning can help prevent costly IRS penalties while supporting broader tax, investment and estate-planning goals. The requirement may be unavoidable, but the way you respond to it can make a meaningful difference.
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