7 Ways to Reduce your Required Minimum Distributions (RMDs)

The IRS mandates distributions from retirement accounts as individuals reach a certain age, which can result in higher tax payments.

💡However, there are strategies to minimize the impact of these required minimum distributions (RMDs) and save on taxes. Here are seven strategies to reduce your RMDs and optimize your tax situation:

👉 Roth Conversions
👉 Delay Social Security Benefits
👉 Qualified Charitable Distributions (QCD)
👉 Continue Working
👉 Utilize Joint Life Expectancy Tables
👉 Optimize Asset Location
👉 Plan for Tax Implications on Heirs

Reducing RMDs and optimizing taxes requires careful planning aligned with your life plan and financial objectives. Work with a financial planner and implement these strategies to minimize the impact of RMDs and maximize the value of your retirement savings.

Learn the tips & strategies to get the most out of life with your money.

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For more resources and content, check us out below!

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⏱ Timestamps ⏱
0:00 Intro
1:12 Understand this first
4:09 Roth conversions
6:51 Delay social security
8:23 Qualified Charitable Distributions (QCD)
11:19 Continue Working
12:14 Utilize Joint Life Expectancy Tables
13:28 Optimize Asset Location
15:20 Plan for Tax Implications on Heirs
17:39 Outro

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[timma]

Based on your advice, I promptly notified my wife that it would be more beneficial to have a spouse 10 years younger. It did not go as planned. However it has indeed reduced my RMDs since the divorce awarded half of my IRA to her. Mission accomplished!??? 🤔 On a serious note, great content as always.

[rangelet]

I’ve spend the last few days watching retirement strategy videos and everyone speaks way too fast and doesn’t take the time to slow down and use illustration to help explain what they are teaching. You do an amazing job communicating and slowing it down for easy note taking and understanding. Thank you!!

[shawnbrennan]

Just remember: if you are complaining about having to take RMDs, you are in a great situation.

[DaveS]

James, you do a tremendous job of explaining very complex issues in a clear and concise manner. I really appreciate and enjoy your videos. Thank you for creating such excellent content!

[July..]

Retire early and start taking distributions….This will lower your total amount in your account at age 73 to 75 when you have to take RMD’s plus you will get more healthy years to enjoy it. That’s a win win….

[suzanneemerson]

This is a great explanation. Wish I had heard it way before I turned 70 1/2 and had to start taking RMD’s. That was over a decade ago, and no one was talking about it much back then, so now my RMD is added on to my government pension income, and I am in a higher bracket and paying higher taxes on my pension as well as the RMD on both State and Federal returns. 😢

I wish I had done Roth conversions, but I didn’t know about them. I do use QCD’s, though. No more mailing personal checks to charities.

[PH-mdxp]

Great video. I’ve decided to go find my self a woman that is 10 or more years younger than I am, mainly for the RMD benefits, and nothing else :)

[daveschmarder-]

I'm all set with my planning. I wished YT was around 50 years ago when I first started. I did recommend this video to a couple that are in this time of their life.
My IRA is modest, but along with my RMD, I'm planning a Roth conversion too. I'm waiting until the end of the year when I will know my income, then do the Roth conversion. I switched to making Roth contributions in 1998. Somehow I got that one right.

[haroldcoleman]

Wow! James, you made my day with the younger spouse revised RMD schedule. She's 19 years younger, this is REALLY helpful.

[frankdombrowski]

By far the best and most comprehensive explanation of RMDs available out there. Very easy to understand and very well laid out. Great job James!

[Laborkei]

Don't forget, you can raise the cost of your Medicare if you do too much of a Roth Conversion. Me personally I watch the Tax Tables for IRMA and take the difference to know how much to Roll to Roth.

[PostJM]

I advised my husband to take 401K Roth because he was at a lower tax bracket. I’m glad he listened to me as now we have a combined 500K in Roth. But he still has a lot of conversions to do before RMD hits in 10 years.

[janetkenny]

I love that you lead with living a quality of life in retirement and money is to have a fulfilling life. I only want to not outlive my money, have great experiences, and leave a little to my one child. My projections look very good, and I appreciate the giving to charity with RMD’s. That would be a blessing all around. As always, thank you for some more ideas and strategies.

[hogroamer]

That was a very well thought out video. I'm a 1%er! No, I don't have $11.1M. I'm the 1% that intends to convert my entire IRA to a Roth IRA. I don't intend for my beneficiaries to pay taxes on their inheritance. They most likely will still be working at the time of my death, and any taxable inheritance would be taxed at their top bracket and possibly push them into an even higher tax bracket. They already make very good money, so I'm converting up to the top of the 24% tax bracket. Also, there is no state income tax where I live, but they live in greedy New York State.

Growing up, I couldn't see how I could possibly be in a higher tax bracket in retirement, so I opted almost exclusively, to contributed to a traditional IRA. After three years of Roth Conversions, I still have three times as much in my traditional IRA than the Roth. Due to growth, dividends and intrest, it's hard to bring down the balance even after a conversion. I'm trying to make a point to those that are foregoing the Roth to gain a small tax advantage now.

[jimlow]

Great content. Alas, I didn't use the window for Roth conversions between retirement and RMD age.
Also, RMD and Roth conversions hit your income line and could increase your IRMAA medicare payment.

[ericliu]

Thank you, James. I have never thought about your points 6 & 7 and this changes my planning.

[MrLopez]

Is it smarter to do a Roth conversion than to withdraw the same amount as the standard deduction from your IRA/401K in retirement years before RMDs kick in?

[rudester]

I think a discussion of what happens to the inheritors of a regular IRA vs a Roth IRA.

[rodneynapier]

What about an 8th option. Begin taking out higher amounts from IRA when you can to preserve brokerage account that can be passed to heirs without 10;year withdrawal rule. Lower IRA balance early in retirement will lessen amount of RMD then switch over to brokerage withdrawals when you need to.

[cliffluxion]

Thank you very much for this helpful and interesting content! 😀