When you hit age 73 (if you were born between 1951 and 1959) or 75 (if you were born in 1960 or later), Uncle Sam wants his cut of your tax-deferred retirement savings. That’s where Required Minimum Distributions, or RMDs, come in. These mandatory withdrawals from IRAs, 401(k)s, and other retirement accounts can cause a major spike in your taxable income, even if you don’t need the money.

But here’s the good news: with smart planning, there are several ways to legally shrink your RMDs and keep more of your wealth growing tax-efficiently. Let’s break down 10 proven strategies to help reduce your RMD burden.

---

1. Start Withdrawals Early

Once you’re 59½, you can take penalty-free withdrawals from your retirement accounts. By strategically taking distributions in lower-tax years before RMDs kick in, you reduce the balance that future RMDs are calculated on — and potentially pay less tax over time.

Start Withdrawals Before Age 73:  Withdraw from your IRA/401(k) after age 59½ but before RMDs begin to reduce future balances and spread taxes over more years.

Case Study 1: Single Retiree, Former Nurse

• Name: Diane L.
• Age: 62
• Location: Asheville, NC
• Background: Retired nurse with $850K in an IRA and $100K in a brokerage account
• Strategy: Diane starts withdrawing $25K/year from her IRA to fill the 12% tax bracket while delaying Social Security.
• Result: Smaller IRA balance at 73, reducing her RMDs and tax rate.

Case Study 2: Married Engineers

• Names: Keith and Carol T.
• Ages: 64 and 65
• Location: Boulder, CO
• Background: Both recently retired engineers with $1.8M in combined IRAs
• Strategy: They begin drawing $80K per year to fund expenses and keep themselves in the 22% bracket.
• Result: This strategy trims their IRAs before RMDs hit, reducing future tax exposure.

---

2. Use Roth Conversions to Shift Future Growth

Converting pre-tax retirement dollars into a Roth IRA doesn’t eliminate taxes — you pay income tax now — but it means those dollars grow tax-free going forward and aren’t subject to RMDs. Done gradually, Roth conversions can help control your tax bracket while reducing future RMDs.

Convert to a Roth IRA:  Convert pre-tax retirement funds to Roth IRAs, where no RMDs apply and future growth is tax-free.

Case Study: Married Couple with Kids

• Names: Jasmine and Mark D.
• Ages: 58 and 59
• Location: Minneapolis, MN
• Background: Jasmine is a school principal; Mark was a marketing exec. They have $1.2M in 401(k)s and want to leave a legacy for their two children.
• Strategy: They convert $40K per year to Roth IRAs until age 65.
• Result: Tax is paid now, but their kids inherit tax-free assets, and future RMDs shrink significantly.

Case Study 2: Single Self-Employed Consultant

• Name: Gary M.
• Age: 55
• Location: Portland, OR
• Background: Independent IT consultant with fluctuating income and $500K in SEP IRA
• Strategy: In low-income years, he converts $30K to Roth while staying in the 12% bracket.
• Result: Future tax-free growth and reduced RMD liability.

---

3. Make Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older, you can donate up to $100,000 per year directly from an IRA to a qualified charity. This counts toward your RMD but isn’t included in your taxable income. It’s a smart way to support causes you care about while lowering your tax bill.

Make Qualified Charitable Distributions (QCDs): Direct IRA distributions (up to $100K per year) to a charity to satisfy RMDs tax-free.

Case Study 1: Retired Couple, No Kids

• Names: Linda and Frank H.
• Ages: 74 and 73
• Location: Sarasota, FL
• Background: Frank was a dentist, Linda managed their office.
• Strategy: They give $15K/year to their church directly from their IRA as a QCD.
• Result: Reduces taxable income and fulfills charitable goals.

Case Study 2: Widow and Volunteer

• Name: Susan W.
• Age: 75
• Location: Columbus, OH
• Background: Former librarian with $650K in IRA
• Strategy: Donates $5K/year to her local animal rescue shelter directly from her IRA.
• Result: Lowers taxable income and reduces impact on Medicare premiums.

---

4. Invest in a Qualified Longevity Annuity Contract (QLAC)

A QLAC allows you to defer RMDs on a portion of your IRA (up to $200,000 in 2025) until as late as age 85. This can significantly reduce taxable income in your 70s while providing guaranteed income later in life — a potential win-win for those concerned about longevity risk.

Invest in a Qualified Longevity Annuity Contract (QLAC):  Use up to $200K from retirement accounts to buy a QLAC and defer RMDs on that portion until age 85.

Case Study 1: Married Retirees with Long Life Expectancy

• Names: Bob and Jean P.
• Ages: 68 and 67
• Location: San Antonio, TX
• Background: Bob was a pilot, Jean a nutritionist. Strong family longevity.
• Strategy: Use $125K of Bob’s IRA to buy a QLAC that pays out at 85.
• Result: RMDs are lower from 73–84, and the annuity provides a future income stream.

Case Study 2: Single Woman Aging Solo

• Name: Carla T.
• Age: 66
• Location: Richmond, VA
• Background: Former social worker
• Strategy: Buys an $80K QLAC to ensure guaranteed income later in life.
• Result: Lowers her RMDs and gives peace of mind for advanced age.

---

5. Stay Employed and Defer RMDs from Your 401(k)

Still working past age 73? If you’re not a 5% or greater owner of the company and you’re actively participating in your employer’s plan, you can delay RMDs from that specific 401(k) until you retire. It’s one of the few ways to sidestep the RMD rule legally.

Continue Working Past Age 73:  If still employed and not a 5%+ owner, you can delay RMDs from that company’s 401(k).

Case Study 1: Professor Still Teaching

• Name: Dr. Harold K.
• Age: 74
• Location: Berkeley, CA
• Background: Tenured history professor
• Strategy: Continues teaching part-time and defers RMDs from his university’s 403(b).
• Result: Avoids RMDs while income stays steady.

Case Study 2: Married Couple Running a Small Business

• Names: Elena and Tom B.
• Ages: 72 and 73
• Location: Boise, ID
• Background: Own a small craft store, plan to sell in 2 years.
• Strategy: Roll outside IRAs into Tom’s 401(k); as an employee with less than 5% ownership, he delays RMDs.
• Result: More tax deferral until retirement.

---

6. Consolidate Accounts to Simplify and Strategize

Multiple IRAs mean multiple RMD calculations. Combining accounts can make life easier and improve your ability to plan distributions more efficiently. Note: this only works with IRAs. 401(k)s and other employer plans must be calculated separately.

Consolidate Retirement Accounts:  Merge multiple IRAs into one to simplify RMD management and avoid errors.

Case Study 1: Retired Divorcée with Multiple IRAs

• Name: Janice E.
• Age: 73
• Location: Seattle, WA
• Background: Former flight attendant
• Strategy: Combines 3 IRAs into one to streamline annual RMDs.
• Result: Easier calculations, reduced admin errors.

Case Study 2: Married Couple with Mixed 401(k)s and IRAs

• Names: Mike and Rachel C.
• Ages: 74 and 72
• Location: Scottsdale, AZ
• Background: He worked in sales, she was an HR manager.
• Strategy: Roll over 401(k)s into IRAs and consolidate into single IRA accounts.
• Result: Simplified RMDs and better control over withdrawal strategy.

---

7. Be Tax-Bracket Smart with Withdrawals

If you find yourself in a lower tax bracket — especially in the gap years between retirement and age 73 — consider taking extra distributions to fill up that bracket. It may feel counterintuitive to pull more money now, but doing so can reduce RMDs and taxes later on.

Withdraw to Fill Lower Tax Brackets:  Use a tax-bracket optimization strategy to avoid getting pushed into higher rates later.

Case Study 1: Early Retirees with Low Income Years

• Names: Alan and Terri F.
• Ages: 63 and 62
• Location: Missoula, MT
• Background: Alan is a retired teacher, Terri worked in real estate.
• Strategy: Withdraw $60K/year from IRA before claiming Social Security to fill the 12% bracket.
• Result: Reduces future RMDs and keeps lifetime taxes lower.

Case Study 2: Single Woman with Low Expenses

• Name: Brenda S.
• Age: 64
• Location: Providence, RI
• Background: Former graphic designer
• Strategy: Pulls $30K/year from IRA while she’s in the 12% bracket.
• Result: Smoothed tax rates and smaller RMDs down the road.

---

8. Delay Social Security to Open a Tax Window

Delaying Social Security benefits until age 70 increases your monthly check. But it also opens a strategic tax window in your 60s where you may have very little income — the perfect time to draw down tax-deferred accounts or do Roth conversions at low tax rates.

Delay Social Security to Open a Tax Window:  Postpone Social Security until 70 and use those early retirement years to withdraw IRA funds at lower rates.

Case Study 1: Married Couple with Savings

• Names: Jim and Nora W.
• Ages: 65 and 66
• Location: Cleveland, OH
• Background: Retired pharmacist and school administrator
• Strategy: Delay Social Security to 70 and draw $75K/year from IRAs.
• Result: Maximizes Social Security benefits and trims future RMDs.

Case Study 2: Single Retired Cop

• Name: Reggie T.
• Age: 63
• Location: Albuquerque, NM
• Background: Retired law enforcement officer with pension
• Strategy: Uses pension to cover expenses and pulls modestly from IRA while delaying Social Security.
• Result: Locks in higher future benefit and reduces taxable RMDs.

---

9. Use Withholding on RMDs to Cover Tax Bills

RMDs can be used to satisfy your annual tax obligation through withholding — potentially avoiding quarterly estimated payments altogether. This can simplify cash flow and ensure your taxes are covered without additional paperwork or hassle.

Withhold Taxes from RMDs Instead of Paying Estimates:  Withhold full tax amount from your RMD to satisfy IRS tax obligations for the year.

Case Study 1: Married Couple Seeking Simplicity

• Names: Kevin and Susan R.
• Ages: 75 and 74
• Location: Knoxville, TN
• Background: He was a contractor, she ran a small catering business.
• Strategy: Withhold 100% of their tax due from Kevin’s RMD.
• Result: Avoid quarterly estimated payments and keep compliance easy.

Case Study 2: Single Man with High RMDs

• Name: Edward B.
• Age: 77
• Location: Sacramento, CA
• Background: Former engineer with $1.4M in IRAs
• Strategy: Withholds $35K in taxes from his $120K RMD.
• Result: Meets annual tax liability without filing quarterly vouchers.

 

---

Final Thoughts

RMDs are unavoidable, but that doesn’t mean you have to surrender to high taxes and limited flexibility. Whether through Roth conversions, charitable giving, or clever withdrawal timing, you have tools at your disposal to take control of your retirement tax picture.

Planning early — ideally several years before RMDs begin — gives you the most options. A thoughtful, multi-year tax strategy can make a significant difference in how much of your money you keep. Work with a financial planner or tax advisor who understands how to integrate tax efficiency into your retirement income plan.

Your future self will thank you.

---