How do you reduce taxes on RMDs? You can’t skip a required minimum distribution once you turn 73, but you can shrink the account it’s calculated from and control how the money lands. The biggest levers: Roth conversions in your 60s, qualified charitable distributions after 70½, the still-working exception, and a QLAC to carve money out of the RMD math entirely.
Updated September 2026 · By Matt Selph
Here’s the part nobody tells you at your retirement party: that 401(k) balance you’re so proud of isn’t entirely yours. You have a silent partner named the IRS, and around age 73, they start cashing out their share whether you need the money or not.
That forced withdrawal is your required minimum distribution. And the contrarian truth most retirees miss is simple: the RMD itself was never the real problem. The pre-tax bucket you built for 30 years is. Fix the bucket and the tax bill takes care of itself.
What is an RMD, and why does it wreck a tax plan?
A required minimum distribution is the amount the government forces you to pull from tax-deferred accounts — traditional IRAs, 401(k)s, 403(b)s — each year once you hit the RMD age. In 2026, that age is 73 for anyone turning 73 that year, and it climbs to 75 for people born in 1960 or later.
Every dollar comes out as ordinary income. Not the friendly long-term capital gains rate — the same rate as a paycheck.
Miss the deadline and the penalty stings: 25% of the amount you should have taken, though the IRS drops it to 10% if you fix the shortfall within two years. That’s a gentler penalty than the old 50% rule, but it’s still a rough way to lose money.
The deeper damage is the chain reaction. A big RMD inflates your income, and that ripple can push more of your Social Security into taxable territory (the Social Security tax torpedo) and shove you into a higher Medicare premium bracket (see the 2026 IRMAA brackets). We break down that domino effect in detail in how RMDs quietly raise your retirement taxes.
Can you avoid RMDs completely?
Mostly, no. If the money sits in a traditional pre-tax account, an RMD is coming. Anyone selling you a total escape hatch is selling something.
But two accounts genuinely sidestep the rule. Roth IRAs carry no RMDs for the original owner, ever. And as of 2024, Roth 401(k)s dropped lifetime RMDs too. That’s the whole reason the Roth side of the ledger matters so much — money in there grows and gets spent on your schedule, not the IRS’s.
So the honest goal isn’t ‘avoid the RMD.’ It’s ‘shrink what’s exposed to it, and reposition the rest.’ Here’s how.
How do you actually reduce taxes on RMDs?
1. Convert to Roth during your ‘gap years’
The window between retiring and starting Social Security or RMDs is prime tax real estate. Your income dips, your bracket drops, and you can move traditional IRA money to a Roth — paying tax now at a low rate to erase the RMD on that money forever.
Every dollar you convert in your 60s is a dollar that never triggers an RMD in your 70s and beyond. It’s the difference between paying tax on the seed or the harvest. Our full walkthrough on Roth conversions vs. RMDs runs the math.
2. Give straight from your IRA with a QCD
If you’re 70½ or older and charitably inclined, the qualified charitable distribution is the most underused move in the code. You send money directly from your IRA to a charity, and it counts toward your RMD without hitting your taxable income.
For 2026, you can route up to $111,000 per person this way. Because most retirees now take the standard deduction, a normal cash donation earns them zero tax benefit — but a QCD lowers your adjusted gross income dollar for dollar. Same gift, far better tax outcome.
3. Use the still-working exception
Still on the job at 73 and don’t own more than 5% of the company? You can generally delay RMDs from your current employer’s 401(k) until you actually retire. Old IRAs and former-employer plans don’t qualify, but it’s a clean way to push the start date if you’re not ready.
4. Park money in a QLAC
A qualified longevity annuity contract lets you move a chunk of IRA money — up to a couple hundred thousand dollars — out of the RMD calculation entirely. That money isn’t counted when your RMD is figured, and the income can be deferred as late as age 85. It’s a longevity hedge that happens to trim your near-term tax bill.
5. Reposition into tax-free growth before RMDs ever start
This is the play most people find out about ten years too late. Money repositioned into a properly structured Roth or a cash-value life insurance strategy (an IUL or LIRP) grows without adding to your future RMDs, and can later be accessed without inflating your taxable income. It’s one piece of the Tax-Free Wealth Secrets framework — building a bucket the RMD rules simply don’t touch.
RMD tax strategies at a glance
| Strategy | Who it fits | What it does | Timing |
|---|---|---|---|
| Roth conversion | Lower-income ‘gap years’ before 73 | Removes future RMDs on converted dollars | Best in your 60s |
| QCD (charitable) | Age 70½+, gives to charity | Satisfies RMD, skips taxable income | Up to $111k in 2026 |
| Still-working exception | Employed at 73, <5% owner | Delays RMDs on current 401(k) | Until you retire |
| QLAC | Wants later, guaranteed income | Carves money out of the RMD base | Income as late as 85 |
| Tax-free repositioning | Planning ahead of 73 | Grows outside the RMD system | The earlier the better |
Which RMD strategy is right for you?
It depends on one thing most articles skip: where you are in the timeline. If you’re in your 60s, conversions and repositioning are your heavy hitters. If you’re already 73, QCDs and smart withdrawal sequencing do the most work.
Think of it like a doctor reading an X-ray. Nobody prescribes before they look. A proper retirement analysis shows which bucket is overexposed, how big your RMDs are about to get, and which of these five moves actually moves the needle for your numbers. For the bigger picture, our guide to the best ways to reduce retirement taxes is a solid next read.
Frequently asked questions
At what age do RMDs start in 2026?
Age 73 for anyone reaching 73 in 2026. If you were born in 1960 or later, your RMD age is 75. Your first RMD can be delayed to April 1 of the year after you turn 73, but doing so stacks two RMDs into one tax year — often a costly move.
What is the penalty for missing an RMD?
25% of the amount you failed to withdraw. The IRS reduces it to 10% if you correct the shortfall within two years and file the right form. Either way, it’s avoidable with a calendar reminder.
Does a Roth IRA have RMDs?
No. Roth IRAs have no required minimum distributions during the original owner’s lifetime, which is exactly why converting before 73 is such a powerful lever. (Inherited Roths follow different rules.)
How much can I give through a QCD in 2026?
Up to $111,000 per individual in 2026. It counts toward your RMD and stays out of your taxable income, which for most standard-deduction retirees beats donating cash and trying to itemize.
Can I reinvest my RMD if I don’t need the cash?
Yes. You must take the distribution and pay the tax, but nothing stops you from reinvesting the after-tax money in a brokerage account, or funding a Roth if you still have earned income.
The bottom line
You can’t outrun an RMD. But you can decide, years in advance, how big it gets and how hard it hits — and even at 73 there are levers left to pull. The retirees who feel blindsided by RMDs almost always did their planning one decade too late.
If you’d like a straight-answer look at what your RMDs are shaping up to be — and which of these moves fits your situation — that’s exactly what a Tax-Free Wealth Secrets review is for. No pressure, just a clearer map.
Educational content only, not financial, tax, or legal advice. Every strategy here involves tradeoffs, and RMD and tax rules change — talk with a qualified advisor about your specific situation before acting. Guarantees on any insurance product depend on the claims-paying ability of the issuer.
About the author: Matt Selph helps pre-retirees build tax-efficient, protected retirement income at Straight Answer Wealth Group. Connect on LinkedIn.
Sources: IRS — RMD FAQs; Charles Schwab — Reducing RMDs With QCDs.
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