Don’t Need (or Want) Your RMD? Here’s How to Keep the IRS Rule From Running Your Retirement

Required minimum distributions feel like a double-edged sword: you followed every rule to build a pre-tax nest egg, yet once you turn 73 (75 if you were born in 1960 or later), Uncle Sam tells you exactly how much you must remove each year—and taxes every dime. Skip it and the penalty can hit 25 percent.

If you truly need those dollars for living expenses, problem solved: spend them.
If you don’t, four strategies can shrink the long-term tax bite or turn the forced withdrawal into an advantage.

1. Chip away at future RMDs with partial Roth conversions

• Why it works – Money that lives in a Roth IRA is never subject to required minimum distributions during your lifetime.

• How to use it – Each year, convert just enough of your traditional IRA or 401(k) to “top off” your current tax bracket (or a bracket you’re comfortable paying).

• Key reminders –
  
  • The converted amount is taxed as ordinary income in the year you move it.
  • Each conversion must stay in the Roth for five years before earnings come out penalty-free.
  • Spreading conversions over several low-income years—often the gap between retirement and age 73—keeps the tax hit manageable.

2. Reinvest the RMD in a taxable account

You can’t roll an RMD directly into a Roth, but nothing stops you from transferring the after-tax proceeds to a low-cost, tax-efficient brokerage portfolio the very next day.

• Benefit – Your money stays invested and growing instead of languishing in a checking account.

• Tip – Favor index ETFs, municipal-bond funds, or individual stocks you’re happy to hold for more than a year to keep ongoing tax drag low.

3. Satisfy the RMD and support a cause with a qualified charitable distribution (QCD)

• How it works – Once you’re 70½, up to $100,000 a year can flow straight from your IRA to a 501(c)(3) charity.

• Tax win – The distribution never hits your adjusted gross income, so it won’t nudge you into a higher bracket, raise Medicare IRMAA surcharges, or subject more of your Social Security to tax.

• Important detail – The check (or electronic transfer) must go directly from the IRA custodian to the charity.

4. Delay the first RMD by continuing to work—and consolidating old plans

Still love your job and own less than five percent of the company? RMDs from your current employer’s 401(k) are waived until you finally clock out for good.

• Roll any lingering IRAs or prior 401(k)s into that active plan and the entire balance can keep compounding, penalty-free.

• When you do retire, you’ll take your first distribution by April 1 of the following year.

Choosing the right mix

• Goal: lower lifetime taxes – Graduated Roth conversions plus QCDs.

• Goal: preserve assets for heirs – Continue working or convert to Roth (heirs can stretch tax-free growth for ten years).

• Goal: boost current lifestyle – Combine RMDs with additional withdrawals from Roth or taxable accounts to match the years you’re most active.

No single tactic fits everyone; the best plan blends several approaches and adapts as tax law, markets and your health evolve. Run the numbers—or work with a planner who will—so the IRS schedule doesn’t become your spending plan.

Your turn: Have you already taken an RMD you didn’t need? Did you reinvest it, convert to Roth earlier, or send it to charity? Share what’s worked for you in the comments. And if you’d like a personalized withdrawal map, that’s what we do every day—reach out.

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