What Are Required Minimum Distributions — and How to Delay or Reduce Them

RMDs are mandatory withdrawals from your traditional IRA that start at age 73. Required minimum distributions do not ask whether you need the cash. They do not care whether the market is down. They do not wait for a better tax year. Once they start, the IRS decides the minimum amount that has to come out of your account every year, and the withdrawal is usually taxed as ordinary income.

At 73, the IRS forces you to withdraw roughly 1/26.5 of your traditional IRA balance. On a $500,000 account, that is $18,868 in year one, taxed whether you need the money or not. On a $1 million balance, the first withdrawal is about $37,736. If you are 62 and sitting on a large pre-tax IRA, this is the part to pay attention to now, not at 72. The years before 73 are when you still have room to act. That is exactly what the Roth Conversion Ladder Calculator is for: running the math before required withdrawals start locking in your future tax bill.

What required minimum distributions (RMDs) actually are

Required minimum distributions apply to most pre-tax retirement accounts: traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer plans such as 401(k)s. The same logic usually applies to 403(b) and 457(b) plans. Roth IRAs are exempt during the original owner’s lifetime. Designated Roth accounts in employer plans are also exempt from lifetime RMDs under current law.

The current starting age for RMD for most people is 73. That change came from SECURE 2.0. Your first RMD is generally due by April 1 of the year after the year you turn 73. Every later RMD is due by December 31. Delaying the first one sounds harmless, but it usually means taking two taxable withdrawals in the same calendar year: the delayed first RMD by April 1 and the second RMD by December 31.

The calculation itself is simple. The IRS takes your December 31 account balance from the prior year and divides it by a life-expectancy factor from the Uniform Lifetime Table. At age 73, that factor is 26.5. At 74, it is 25.5. The divisor gets smaller as you age, so the percentage you must withdraw keeps rising.

Here is a plain example. Say your traditional IRA was worth $500,000 on December 31 of the year before you turned 73. Divide $500,000 by 26.5 and your first RMD is $18,867.92. If the account grows to $520,000 by the next December 31, your age-74 RMD is $520,000 divided by 25.5, or $20,392.16. The forced withdrawal rises because the balance is still large and the divisor is shrinking.

If you have several traditional IRAs, the IRS lets you total the RMDs and pull the full amount from one IRA if you want. Employer plans are less flexible. A 401(k) RMD generally has to come from that specific 401(k). That matters if you still have old plans scattered across former employers.

Why RMDs hurt

The first problem is tax drag. A retiree can spend years carefully managing taxable income, then hit 73 and lose part of that control. A couple with $65,000 of Social Security and pension income may feel comfortably inside a moderate bracket. Add a $38,000 RMD from a $1 million IRA and the picture changes fast. More of each extra dollar starts landing in higher brackets.

The second problem is bracket creep plus Medicare costs. RMD income counts in modified adjusted gross income (MAGI) for IRMAA. MAGI is your adjusted gross income (AGI) — total income minus specific deductions like traditional IRA contributions and student loan interest — plus a few items added back, such as tax-exempt bond interest. It is the income figure Medicare uses to set your premium surcharge.

In 2026, the first IRMAA surcharge tier starts above $109,000 for single filers and above $218,000 for married couples filing jointly. That means an RMD does not just create an income tax bill. It can also raise your Medicare Part B and Part D premiums two years later.

Here is a realistic example. A married couple has $180,000 of MAGI from Social Security, a small pension, and portfolio income. They look safe. Then a $50,000 combined RMD hits. MAGI jumps to $230,000. They have now crossed the 2026 married-filing-jointly IRMAA threshold. The RMD did not just add taxable income. It changed what they pay for Medicare.

The third problem is the compounding hit. Money that leaves a traditional IRA under an RMD is money that stops compounding inside the tax-deferred account. Some of it may stay invested in a brokerage account, but now the future growth is exposed to dividend taxes, capital gains tax, or both. A forced $20,000 withdrawal at 73 is not just a one-year tax event. It reduces the balance that could have produced future tax-deferred growth at 74, 75, and 80.

This is why large traditional balances become their own tax problem. The account did what it was supposed to do for decades. Then the deferred tax bill arrives all at once, at the same stage of life when Social Security, pensions, and Medicare pricing all start to matter more.

How to delay or reduce RMDs

The cleanest strategy is to shrink the traditional balance before age 73. That usually means Roth conversions in the years after work slows down and before RMDs begin. If your taxable income drops at 60, 61, or 62, those years can be far better for conversions than 73 and beyond. You choose how much to convert. The IRS does not choose it for you.

Say you retire at 62 with a $900,000 traditional IRA and modest taxable income. If you convert $40,000 a year from 62 through 72, you move $440,000 into Roth space before the first RMD arrives. That does not eliminate tax. It changes the timing and often lowers the lifetime bill. It also cuts future required minimum distributions because the pre-tax balance is smaller. If you want to test your own numbers, the Roth Conversion Ladder Planner is the right tool. The Roth Conversion Sweet Spot: How to Find Your Optimal Annual Conversion Amount post is the best companion piece because it shows how to fill a bracket without spilling into the next one.

The second strategy is a qualified charitable distribution, or QCD. Once you are age 70 1/2 or older, a QCD lets you send money straight from an IRA to a qualified charity. In 2025, the annual QCD limit is $105,000. The amount counts toward your RMD, but it is excluded from taxable income. That is a very different result from taking the RMD into your bank account and then writing a check to charity. For charitably inclined retirees, this is one of the few ways to satisfy the RMD without inflating AGI and MAGI.

The third strategy is the still-employed exception for a current employer plan. If you are still working past 73 and participating in your current employer’s 401(k), you can usually delay RMDs from that plan until retirement. The exception does not apply to old 401(k)s left behind at prior employers, and it does not apply if you own more than 5% of the business sponsoring the plan. It also does nothing for a traditional IRA. Still, for someone working part-time at 73 with a meaningful balance in a current 401(k), it can buy time.

There is also a simple administrative move that helps some people before 73: roll old 401(k)s into the current employer plan if the plan allows it and if you expect to rely on the still-employed exception. That keeps more of the balance inside the one account that may qualify for delayed RMD treatment. This is one place where the Rule of 55 Calculator is not the main tool, but it is still useful if part of your planning also involves timing retirement withdrawals before 59 1/2.

If health costs are part of the broader tax picture, the Pay Now or Invest? When to Actually Spend Your HSA post and the HSA Triple Tax Advantage Calculator are worth reviewing too. Lowering future MAGI is often a multi-account problem, not just an IRA problem.

FAQ

What accounts are subject to RMDs? Traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer plans such as 401(k)s are subject to RMDs. Roth IRAs are not subject to lifetime RMDs for the original owner. Employer Roth accounts are also exempt from lifetime RMDs under current rules, though beneficiaries still have distribution rules after the owner’s death.

Can I avoid RMDs entirely? You usually cannot avoid them entirely once money stays in a traditional IRA or other pre-tax account long enough. What you can do is reduce them. Roth conversions before 73 cut the balance that will later be forced out. QCDs can satisfy part or all of an IRA RMD without adding that amount to taxable income. If you are still working, the current-employer 401(k) exception can delay RMDs from that one plan.

What happens if I don’t take my RMD? There is an excise tax for missing an RMD. Older articles often quote a 50% penalty. Current law reduced that penalty to 25%, and it can drop to 10% if you correct the shortfall in time and follow the IRS correction rules. Either way, missing an RMD is expensive and avoidable, so it is worth setting the amount and deadline well before year-end.

How do Roth conversions affect RMDs? A Roth conversion reduces future RMDs because converted money leaves the traditional account before the IRS starts forcing withdrawals from it. The tradeoff is that the conversion itself is taxable in the year you do it. The goal is to convert in lower-income years, not to convert blindly. This is the same core tradeoff discussed in Roth IRA vs Traditional IRA: the decision that could cost (or save) you thousands.

Does IRMAA apply to RMD income? Yes. RMD income increases modified adjusted gross income, and that income is part of the Medicare IRMAA calculation. For some retirees, the real cost of a large RMD is federal tax plus higher Medicare Part B and Part D premiums. That is why reducing pre-tax balances before 73 can matter even if you think your income tax bracket alone looks manageable.

Run the numbers before 73

If you are in your early sixties and looking at a large IRA balance, this is the decision window that matters. Run a few conversion scenarios before the IRS runs one for you. The Roth Conversion Ladder Planner lets you test annual conversion amounts, tax brackets, and future RMD pressure with your own balance instead of generic examples.

Related: The Roth Conversion Sweet Spot: How to Find Your Optimal Annual Conversion Amount, Roth IRA vs Traditional IRA: the decision that could cost (or save) you thousands, and Pay Now or Invest? When to Actually Spend Your HSA

Sources

• IRS, Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
• IRS, Retirement plan and IRA required minimum distributions FAQs
• Medicare.gov, Fact sheet: How income affects your Medicare drug coverage premiums
• IRS, Notice 2024-80: 2025 Amounts Relating to Retirement Plans
• Congress.gov, H.R.2617 - Consolidated Appropriations Act, 2023

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