How Can You Reduce Your RMDs Before They Even Start?

Key Takeaways

• You can’t change the IRS formula, but you can change the balance it gets applied to. Every dollar you move out of the traditional side before 73, to a Roth or to charity, is a dollar your future RMD isn’t calculated on.
• A smaller RMD isn’t automatically a better result. If you pay tax now at a higher rate than you’d have paid later, you spent money to make a number smaller. The rate is the decision, not the RMD.
• RMDs climb two ways at once: the share the IRS requires rises every year, and the balance it applies to often rises too.
• The years between your last paycheck and age 73 are usually the lowest-income years of your adult life. They’re also the only ones you fully control.
• The levers are Roth conversions, qualified charitable distributions (QCDs) starting at 70½, and sometimes a qualified longevity annuity contract (QLAC). Each has a real cost, and a QCD only helps if you were already giving.

You reduce future RMDs by shrinking the balance they’re calculated from, and the years before age 73 are when there’s the most room to do it. The IRS takes your prior December 31 account balance and divides it by a factor from its life expectancy table.¹ You can’t negotiate the factor. You can absolutely influence the balance.

Why do RMDs grow faster than most people expect?

Because two numbers are moving at the same time, and most people only ever watch one of them. It’s like tracking your weight and ignoring your blood pressure. The number you’re not looking at is the one that gets you.

The first is the IRS factor. Your RMD is your prior year-end balance divided by a number from an IRS table that shrinks as you age (they call it the applicable denominator).¹ At 73 that number is 26.5, which works out to 3.77% of the account. At 75 it’s 24.6, or 4.07%. At 80 it’s 20.2, or 4.95%.³ A smaller denominator means a bigger required withdrawal, every single year, forever.

The second is the balance itself. In a lot of retirement accounts the balance keeps growing during those same years. So a rising percentage gets applied to a rising number.

Two variables compounding together. That’s the part that catches people. Most folks I sit down with know RMDs exist. Fewer have run out what that does to their bracket at 80 instead of 73.

Do you really own your whole IRA?

Not all of it. Part of that balance already belongs to the IRS. You just don’t know the exact number yet, and there’s no statement that shows it.

Here’s the reframe I use at the table. Say you own a $1,000,000 house and you owe the bank $800,000 on it. Ask what you’re worth on that house and you’d say $200,000, because you owe a third party.

Now say you have a $1,000,000 traditional IRA. Ask what it’s worth and you’d say $1,000,000.

But you owe money on that one too. That balance usually gets paid, whether it’s today, in ten years, or by your kids after you’re gone. There are exceptions, but planning as though it’s coming is the safer default.

Once you see the account that way, the question changes. It stops being “how do I avoid this” and starts being “when do I want to pay it, and at what rate.” That’s the real decision. It’s the same idea as the retirement tax bomb, from the account side.

How can you reduce your RMDs before they even start?

By moving money out of the traditional IRA before the IRS starts requiring it, on your terms and in years you pick.

The window matters as much as the method. Once you stop working, your paycheck is gone. Social Security may not have started. RMDs haven’t begun. For a lot of households that’s the lowest taxable income they’ll ever see again. It’s the window where the condition is still treatable, before it becomes the thing you manage for the rest of your life.

Think of it like a diagnosis you get twenty years early. The condition is coming either way. What you do with those twenty years is the part that’s up to you.

Can a Roth conversion lower your future RMDs?

Yes, and for most households this is the lever that applies most often. Moving money from a traditional IRA to a Roth IRA means you pay the tax now, in a year you chose, instead of later in a year the IRS chose. It also permanently shrinks the balance your future RMDs are figured on, and Roth IRAs have no required distributions during your lifetime.¹

There’s an old farming line I borrow for this. Would you rather pay tax on the seed or on the crop? A conversion is choosing the seed.

The costs are real and you should weigh all of them. A conversion can’t be undone. The tax is due that year. Paying that tax out of the converted money shrinks what actually lands in the Roth. It adds to your income for the year, which can raise the taxable share of your Social Security and can push you past a Medicare surcharge threshold two years later, since 2026 premiums are generally set from your 2024 return.⁷ Five-year rules apply before earnings come out tax free. And the whole case rests on a guess about future tax rates that could turn out wrong.

Size matters too. In my book Your Fiscal Physical I walk through why bracket-aware conversions spread across several years often work out differently than one large conversion. For some households the big conversion is still the right call. We go deeper on the timing in our post on whether Roth conversions are still worth it in 2026.

Do qualified charitable distributions actually save you money?

Only if you were already giving. This one gets oversold, so let’s be plain about it.

Starting at age 70½ you can send money straight from an IRA to a qualifying charity. It’s excluded from your income, and once you’re 73 it can count toward satisfying your RMD.⁴ For 2026 the cap is $111,000 per person.⁵ Because the money isn’t included in your taxable income, it doesn’t lift the income figure Medicare looks at.

Now the honest part. If you’re already giving, this is one of the more tax-efficient ways to do it. If you’re not charitably inclined, a QCD does not save you money. You gave away a dollar to avoid paying 24 cents of tax on it, if you’re in the 24% bracket. You come out with less spendable net worth, not more. I’ve had people ask about QCDs purely as a tax play, and my answer is the same every time: this is a strategy for money you were giving anyway.

A few specifics that trip people up. QCDs come only from IRAs, never from a 401(k) or other employer plan, and ongoing SEP and SIMPLE IRAs don’t qualify either.⁴⁸ The recipient has to be a qualifying public charity, so donor-advised funds and supporting organizations are excluded by statute.⁸ You can’t also deduct the same gift. And deductible IRA contributions you made after 70½ reduce how much of your distribution gets QCD treatment.⁴

What is a QLAC, and does it lower your RMD?

It can. It’s a special annuity you buy inside your IRA (a qualified longevity annuity contract, or QLAC). The money you put in gets pulled out of your RMD math until the payments start.⁶ For 2026 you can put in up to $210,000, and payments have to begin no later than the first day of the month after you turn 85.⁵⁶

So it does shrink the RMD base, and that’s the appeal.

Understand what you’re trading for it. You’ve turned liquid, investable dollars into a contract, and getting out is limited. You’re taking on the insurance company’s ability to pay decades from now. The money still gets taxed when the payments start, so this defers the bill rather than erasing it. An annuity inside an IRA doesn’t add a tax benefit either, since the account was already tax-deferred. Add to that the contract’s built-in costs, payments usually fixed in nominal dollars that inflation eats over twenty-plus years, and a death benefit that varies by contract if you die before payments start.

One thing to be clear about. Alchemy Wealth Management is fee-only. We don’t sell insurance or annuity products and we receive no commissions, so nothing here is a recommendation to buy a QLAC or any other annuity. Which means I have no reason to talk you into one, and no reason to talk you out of one either. I just have to read the contract, which, having read a few, is nobody’s idea of a fun evening.

Can you delay RMDs by still working?

Sometimes, and only for the employer plan at the job you still have.

If you’re a participant in a workplace plan such as a 401(k), you can generally delay RMDs from that plan until the year you actually retire, unless you own more than 5% of the business sponsoring it.² Your plan document has to allow it, and some don’t. This does nothing for your IRAs. Traditional, SEP, and SIMPLE IRA owners start at 73 whether they’re working or not.¹

Delaying isn’t the same as avoiding. Every year you postpone, the balance keeps growing and the denominator keeps shrinking, so the RMDs waiting at the other end are larger. For some people the delay is worth it. For others it just moves a bigger problem a few years down the road.

What does shrinking the base actually save?

On a $2,000,000 IRA, converting $400,000 out beforehand cuts the first RMD by $15,094.34. Here’s how that math works.

Picture that $2,000,000 traditional IRA at age 73. Before you read the next line, take a guess at the first RMD.

At an applicable denominator of 26.5, it’s $75,471.70.³

Now picture the same person, except that across their late 60s and early 70s they converted $400,000 to a Roth. The balance at 73 is $1,600,000. The first RMD is $60,377.36.

The difference in forced taxable income, in year one, is $15,094.34. Under the same flat-balance assumption the gap would repeat and widen as the denominator shrinks.

Now the other side of the ledger, because that’s the half most articles skip. Getting $400,000 out of a traditional IRA isn’t free. Every converted dollar is taxable in the year you convert it, so this person paid a real tax bill up front, years earlier than they had to, in exchange for the smaller number later. Whether that trade was worth making comes down to the rate they paid then versus the rate they’d have paid at 80. Nobody knows the second number for certain. That’s the honest tension in every one of these decisions, and it’s why this gets modeled rather than assumed.

This example is hypothetical and illustrative. Balances are held flat as a simplifying assumption, no rate of return is assumed or implied, and the tax cost described above is not quantified here. Real balances move, withdrawals deplete the account, and the tables and the law can change. Treat this as the shape of the thing, not a forecast. The base drives everything downstream.

Frequently Asked Questions

Can you reduce your RMDs after age 73?

You can still shrink future ones. Conversions are allowed at any age, and QCDs can satisfy part or all of a current RMD once you’re eligible. What you can’t do is reduce the RMD for a year that’s already begun by converting, because your RMD has to come out first before any conversion.⁹ Earlier generally gives you more room, but later is not nothing.

Does taking more than your RMD reduce next year’s?

Indirectly, yes. Extra withdrawals lower the December 31 balance, and next year’s RMD is calculated from that balance.¹ What extra withdrawals can’t do is bank credit for a future year. A distribution above this year’s requirement can’t be applied to next year’s.²

Do Roth 401(k)s have RMDs?

No, not while you’re alive. Designated Roth accounts in a 401(k) or 403(b) are no longer subject to lifetime RMDs, the same as Roth IRAs.¹ Beneficiaries who inherit them still have rules to follow.

What happens if you miss an RMD?

You may owe a 25% excise tax on the amount you should have taken, dropping to 10% if you correct it within two years, reported on Form 5329.¹ The IRS can waive it if the shortfall was a reasonable error and you’re fixing it, but you have to file and explain.²

Can you take your whole RMD from just one IRA?

For IRAs, yes. You figure the amount separately for each IRA, then take the total from any one or any combination of them. Employer plans like a 401(k) or 457(b) work differently. Each one has to be satisfied on its own.²

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This article is for educational purposes only. It is not personalized investment, tax, or legal advice, and it is not a recommendation to buy, sell, or hold any security, insurance contract, or annuity, or to pursue any particular strategy. The person described in the example is hypothetical and illustrative. They are not a client, the figures are not drawn from any actual account, and the example is not a projection or estimate of investment performance. Account balances in the example are held constant as a simplifying assumption; no rate of return is assumed or implied, and the tax cost of the conversions described is not quantified. Nothing here is a guarantee or assurance of any tax savings, premium reduction, or other result. Tax rules, Medicare premiums, and contribution and distribution limits change, and future law may differ materially from current law. Figures cited are 2026 amounts and were current as of publication. Alchemy Wealth Management does not provide tax or legal advice. Please consult a qualified tax or legal professional about your own situation.

Ready to see what this looks like for you?

Here’s the good news. If you’re reading this before 73, you still have the window, and that’s the whole ballgame! Your version depends on your balances, your ages, when you claim Social Security, and what your income looks like between now and 73.

Grab the free eBook. The Retirement Tax Bomb walks through how tax-deferred accounts build a future tax bill and the levers that defuse it.

Run your own numbers. Try our tax bracket calculator and retirement withdrawal calculator.

Or just talk it through. Book a QuickFit call. Short, no pressure, just to see whether we’re a fit.

More on how we approach tax planning, our post on whether RMDs can raise your Medicare premiums, and episodes on The Fiscal Physical Podcast.

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Sources

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1. Internal Revenue Service, “Retirement topics – Required minimum distributions (RMDs).” https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds 

2. Internal Revenue Service, “Retirement plan and IRA required minimum distributions FAQs.” https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs 

3. 26 CFR § 1.401(a)(9)-9, Uniform Lifetime Table. https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-9 

4. Internal Revenue Service, Publication 590-B, “Distributions from Individual Retirement Arrangements (IRAs).” https://www.irs.gov/publications/p590b 

5. Internal Revenue Service, Notice 2025-67, 2026 cost-of-living adjustments for retirement plan limitations. https://www.irs.gov/pub/irs-drop/n-25-67.pdf 

6. Internal Revenue Service, “Instructions for Form 1098-Q, Qualifying Longevity Annuity Contract Information.” https://www.irs.gov/instructions/i1098q 

7. Social Security Administration, “Medicare Premiums: Rules for Higher-Income Beneficiaries.” https://www.ssa.gov/benefits/medicare/medicare-premiums.html 

8. 26 U.S.C. § 408(d)(8), qualified charitable distributions. https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title26-section408&num=0&edition=prelim 

9. 26 CFR § 1.408A-4, Q&A-6, converting amounts to a Roth IRA. https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/section-1.408A-4