Complete RMD & Retirement Distribution Planning Guide

Planning RMDs well is less about this year's withdrawal and more about the multi-year choreography: Roth conversions before RMDs kick in, QCDs to stay under IRMAA thresholds, and distribution sequencing that protects tax-advantaged growth. This guide walks the full picture.

The rules (post-SECURE Act 2.0)

• RMD age: 73 (born 1951-1959); 75 (born 1960+).
• Accounts affected: Traditional IRA, 401(k), 403(b), 457(b), SEP, SIMPLE. Roth IRA owners never have lifetime RMDs (inherited Roths do).
• Calculation: Prior-year-end balance ÷ IRS Uniform Lifetime Table divisor.
• Deadline: December 31 each year. First RMD can be delayed to April 1 of year following your 73rd birthday — but this stacks two RMDs in one year, usually disadvantageous.
• Penalty: 25% of the under-distribution (reduced from 50% by SECURE 2.0). Reducible to 10% if corrected within 2 years.

Stage 1 — Pre-RMD: the Roth conversion window

Between retirement (earned income stops) and RMD age, most retirees are in their lowest tax bracket since their 20s. This is the golden planning window. Priorities:

• Convert to fill the 12% and 22% brackets. Running the bracket boundaries precisely lets you move $100-200K/yr into Roth without crossing into 32%.
• Integrate with Social Security timing. Claiming SS at 70 instead of 62-67 increases the window where SS isn't yet adding to income.
• Watch IRMAA thresholds. Medicare surcharges kick in above ~$206K MFJ income. Plan conversions against these tiers.
• Consider 5-year rule. Converted funds have their own 5-year holding clock for penalty-free access.

Stage 2 — Active RMD years (73+)

• Qualified Charitable Distributions (QCDs). From age 70½, donate up to $105K/yr directly from IRA to a qualified charity. The distribution counts toward the RMD but is excluded from your income. Effective strategy for retirees who would donate anyway — skips ordinary income tax plus keeps your income under IRMAA thresholds.
• RMD aggregation rules. Multiple IRAs: total RMD calculated, can be taken from any one or combination. 401(k)s: must be taken from each account separately. Different rules matter.
• Spousal RMD strategy. Spouse is beneficiary of your IRA: at your death, can roll to own IRA (restart own RMDs based on their age). Spouses who are 10+ years younger: Joint Life Expectancy Table produces smaller RMDs than Uniform Lifetime Table.
• Health shocks. Long-term care expenses create medical-deduction opportunities — high-deductible years are good RMD years. Opposite for years with large itemized deductions elsewhere.

Stage 3 — Inherited IRA (for beneficiaries)

When you inherit an IRA from a non-spouse, the SECURE Act requires full drainage within 10 years. Planning dimensions:

• Annual RMDs still required if the decedent was already taking RMDs. Skipping pro-rata each year + final balance year 10 creates a stacked final-year tax bomb.
• Coordination with your own low-income years. If you're retiring within the 10-year window, timing distributions into low-bracket years saves meaningful tax.
• Eligible Designated Beneficiary (EDB) exceptions. Surviving spouse, minor child, disabled/chronically ill individual, or beneficiary ≤10 years younger — these get stretched distribution options.

Common mistakes

• Waiting until age 73 to think about RMDs. The key planning window is 60-72.
• Taking RMDs from taxable brokerage account rather than IRA (doesn't satisfy the requirement).
• Missing the April 1 extended deadline for first RMD (then stacking two RMDs in year 2).
• Not using QCDs when already giving charitably — leaving meaningful tax savings on the table.
• Converting to Roth without modeling IRMAA impact — a Roth conversion that triggers $3K of Medicare surcharges changes the math.
• Leaving inherited IRA on autopilot and hitting year-10 with the full balance to distribute at once.