You’ve spent decades building your retirement savings—maybe through a 401(k), maybe an IRA. You lived below your means, invested consistently, and figured you’d get to call the shots when it came time to withdraw.
But then you hit your early 70s, and suddenly the IRS is involved.
Required Minimum Distributions—RMDs—can feel like a hidden clause in a contract you didn’t know you signed. You don’t get a friendly reminder in the mail. You’re just expected to know the rules, meet the deadlines, and brace for the tax bill.
And that’s where many retirees find themselves blindsided.
This guide is for you—the careful planner, the spreadsheet-savvy saver—who now faces a new challenge: withdrawing money on the IRS’s timeline, not your own.
Here’s what you need to know to stay ahead.
What Are RMDs and Why Do They Matter in Retirement?
At a certain point—age 73 or 75, depending on your birth year—the IRS starts requiring withdrawals from tax-deferred retirement accounts. These are called Required Minimum Distributions, or RMDs.
And while the name sounds sterile, the impact can be sharp.
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You might get bumped into a higher tax bracket.
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You may see your Medicare premiums quietly go up.
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Your ability to manage income and taxes? Suddenly constrained.
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And if you miss the RMD deadline, you could get hit with a 25% penalty.
Even if you don’t need the money, the IRS expects their cut. That’s what makes it feel like a trap for people who thought they were doing everything right.
How RMD Rules Could Trigger a Tax Crunch in Retirement
Imagine you’ve built up a sizable traditional IRA over your working years. You turn 73. The IRS sends no letter. But the law says you’re required to start taking out a percentage of your savings — which could be tens of thousands of dollars per year, depending on the size of the IRA.
Now those withdrawals? It’s taxed as income. It stacks on top of Social Security, pensions, and rental income. Whatever you’ve got. And that’s where the squeeze begins.
Some outcomes retirees often face:
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Taxable income spikes higher than expected
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Medicare IRMAA surcharges kick in without warning
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You lose eligibility for other tax credits or deductions
And if you waited to take your first RMD until the following April? That could mean two RMDs in one calendar year, doubling the tax impact at the worst time.
There’s no pause button. No exception if the market dips. The IRS doesn’t care if you’re drawing more than you need.
How to Plan for Required Minimum Distributions
This isn’t about clever loopholes. It’s about planning with intention.
Here’s where to start:
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Know your start age. If you were born 1951–1959, your RMDs begin at 73. If you were born in 1960 or later, it’s 75.
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Understand which accounts are impacted. RMDs apply to Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and 457(b)s. Even some inherited accounts—yes, even inherited Roths—might have rules you need to follow.
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Don’t get tripped up by math. The IRS uses life expectancy tables to determine your annual RMD. If you own multiple IRAs, you can total them up and take the distribution from one. But 401(k)s? You must withdraw from each individually.
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Be deadline aware. After your first RMD, every distribution must be made by December 31. Miss it, and you could face a hefty penalty.
Reducing Taxes on RMDs with Charitable Giving Strategies
Not everyone realizes this, but if you're at least 70½, you can send your RMD directly to a charity. It's called a Qualified Charitable Distribution (QCD).
And here's the kicker: that amount still satisfies your RMD requirement—but it doesn’t count as taxable income.
For retirees who want to give back and reduce their tax burden, this is worth considering.
Creating a Retirement Withdrawal Strategy That Accounts for RMDs
There's no single playbook. But a few small adjustments today can save you big headaches tomorrow.
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Take stock of which accounts will be affected.
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Review your income strategy—especially for tax efficiency.
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Ask whether a QCD, Roth conversion, or staged withdrawal plan makes sense.
This isn’t about being perfect. It’s about being proactive.
We’re not here to overpromise. But we are here to help you map out your next few steps—clearly, practically, and in a way that makes sense.
If RMDs are on your horizon—or already in motion—it may be a good time to review your approach. Let’s make sure the rules are working for you, not against you.
Want to talk to our team? Click HERE to schedule your complimentary consultation.
Sources:
IRS - Required Minimum Distributions FAQs
IRS. Jan. 29, 2025.
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions
IRS - Qualified Charitable Distributions (QCDs) for 2024
IRS. Nov. 14, 2024.
https://www.irs.gov/newsroom/give-more-tax-free-eligible-ira-owners-can-donate-up-to-105000-to-charity-in-2024
