RMDs explained:
required minimum distributions
Starting at age 73, the IRS forces you to withdraw from tax-deferred accounts whether you need the money or not. Here's how RMDs work, what they cost, and how to minimize the damage.
What are
RMDs?
Required minimum distributions (RMDs) are mandatory annual withdrawals from tax-deferred retirement accounts — traditional IRAs, 401(k)s, 403(b)s, TSPs, and similar plans. Starting at age 73, the IRS requires you to pull money out of these accounts every year whether you need it or not. The government gave you a tax break when you contributed; now it wants its share.
Every dollar withdrawn as an RMD is taxed as ordinary income at your federal (and usually state) income tax rate. There is no capital gains treatment, no special exclusion. If your RMD is $30,000 and you're in the 22% federal bracket, you owe at least $6,600 in federal tax on that withdrawal alone — on top of whatever state taxes apply.
Roth IRAs are the notable exception: they are completely exempt from RMDs during the account owner's lifetime. Roth 401(k)s were previously subject to RMDs, but the SECURE 2.0 Act eliminated that requirement starting in 2024. This makes Roth accounts uniquely valuable in retirement — they grow tax-free, distribute tax-free, and are never subject to forced withdrawals.
Your first RMD deadline is April 1 of the year after you turn 73. But delaying your first RMD to the following year is a trap many retirees fall into: it means taking two RMDs in a single calendar year — the delayed first-year distribution plus the current-year distribution. That double hit can push you into a significantly higher tax bracket and trigger Medicare surcharges (IRMAA) that persist for the following year.
How RMDs are
calculated
The RMD formula is straightforward: take your total tax-deferred account balance as of December 31 of the prior year, and divide it by the IRS Uniform Lifetime Table factor for your current age. The result is the minimum amount you must withdraw (and pay taxes on) for that year. You can always withdraw more — but you cannot withdraw less without facing penalties.
The Uniform Lifetime Table assigns a life expectancy factor to each age. At 73, the factor is 26.5. At 80, it drops to 20.2. At 90, it's 12.2. As the factor shrinks, the percentage of your account you must withdraw grows — from roughly 3.8% at age 73 to nearly 5% at age 80 and over 8% by age 90. This means RMDs accelerate over time, creating an escalating tax burden in later years.
If you have multiple traditional IRAs, you calculate the RMD for each account separately but can take the total from any one (or combination) of them. This gives you some flexibility in choosing which IRA to draw down. However, 401(k) RMDs must be taken from each plan individually — you cannot satisfy a 401(k) RMD by withdrawing from an IRA or a different 401(k). If you have accounts in multiple plans, keep track of each requirement separately.
The tax impact
of RMDs
RMDs are taxed as ordinary income at your full federal and state tax rates. There is no preferential treatment — no long-term capital gains rate, no qualified dividend rate. Every dollar of your RMD is stacked on top of your other income (Social Security, pensions, part-time work, investment income) and taxed at whatever marginal rate that total income dictates.
For a single retiree with $20,000 in Social Security and a $55,000 RMD, the taxable portion of Social Security plus the full RMD produces roughly $72,000 in adjusted gross income. After the $16,100 standard deduction, taxable income lands around $56,000 — into the 22% federal bracket. Add a state income tax of 5% and the effective marginal rate on those RMD dollars is 27%. For higher-income retirees, RMDs can push income above IRMAA thresholds ($106,000 single / $212,000 married filing jointly in 2026), triggering $2,000+ per year in Medicare surcharges on top of the income tax. Learn more about this interaction in our guide to IRMAA Medicare surcharges.
The compounding problem is that large tax-deferred balances grow over time, producing ever-larger RMDs. A $1 million IRA at age 73 might grow to $1.2 million by age 78 even after withdrawals, if market returns exceed the RMD percentage. This means the dollar amount of your RMD can increase year after year, pushing you into progressively higher tax brackets and triggering additional surcharges. Without proactive planning, RMDs become the largest line item on many retirees' tax returns.
Strategies to
reduce RMDs
The most powerful strategy for reducing RMDs is Roth conversions between retirement and age 73. Every dollar you convert from a traditional IRA or 401(k) to a Roth IRA is a dollar that leaves the tax-deferred pool permanently. It will never generate an RMD, never create forced taxable income, and never contribute to IRMAA surcharges. If you retire at 62 and have 11 years before RMDs begin, strategic annual conversions can dramatically reduce your tax-deferred balance and the lifetime tax burden it creates.
Qualified charitable distributions (QCDs) are the second most effective tool. Starting at age 70½, you can direct up to $105,000 per year from your IRA directly to a qualified charity. The distribution counts toward your RMD requirement but is completely excluded from your taxable income. This is a double benefit: you satisfy the RMD obligation while keeping the money off your tax return entirely. If you're already giving to charity, routing those gifts through QCDs instead of writing checks saves real tax dollars.
The third strategy is deliberate withdrawal sequencing in early retirement. Instead of letting tax-deferred accounts compound untouched until 73, draw from them strategically in your 60s when your income (and tax rate) may be lower. Every dollar withdrawn before RMDs begin is a dollar withdrawn on your terms, at a rate you control, rather than a dollar forced out later at potentially higher rates. Combined with Roth conversions, early withdrawal sequencing can cut lifetime RMDs by 30% to 50% for retirees with large tax-deferred balances.
Convert traditional IRA to Roth before 73. Pay tax now at (hopefully) lower brackets. Every $100K converted is $100K that never faces RMDs. The tax you pay today can prevent decades of forced taxable withdrawals.
At 70½+, donate up to $105,000/yr directly from IRA to charity. Counts toward your RMD but excluded from taxable income. Double benefit: satisfy the requirement and reduce your tax bill simultaneously.
Draw from tax-deferred accounts in your 60s when income is lower. Reduces the balance before RMDs start, keeping future forced withdrawals smaller. Especially effective in the gap years between retirement and Social Security.
Model your
RMDs
Drawdown Arc automatically calculates RMDs starting at age 73 using the IRS Uniform Lifetime Table. The free calculator shows your exact RMD amount each year, the federal tax it generates, and how it interacts with Social Security, pensions, and other income sources across your entire retirement. You don't need to look anything up — the engine handles the table factors, the tax math, and the account balance tracking.
Try entering your own numbers: your current age, tax-deferred balance, Roth balance, expected Social Security, and annual spending. The projection recalculates instantly. You can see the exact year RMDs push you into a higher tax bracket and the cumulative tax cost of forced withdrawals over a 20+ year period.
With Pro, you can save multiple scenarios and compare them side by side — for example, your current plan versus one where you convert $50,000 per year to Roth in your 60s. Pro also adds state tax calculations and PDF reports, so you can see the full federal-plus-state impact of RMDs and share the results with your advisor.
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