Required Minimum Distributions (RMDs) can impact taxes, Medicare, and legacy planning. Learn strategies high-net-worth retirees can use to navigate them effectively. 

How to Navigate Required Minimum Distributions (RMDs) in Retirement

Required Minimum Distributions (RMDs) are mandatory withdrawals from certain retirement accounts, starting at a specified age. While they’re a legal requirement, they also present a planning opportunity, especially for high-net-worth retirees.

Large RMDs can push taxable income higher, potentially increasing Medicare premiums (IRMAA), reducing favorable tax treatment on capital gains, and leading to higher taxation on Social Security benefits. But with proactive retirement planning, retirees can structure their RMDs to align more closely with their broader financial, charitable, and legacy goals.

While the strategies below can be effective under the right circumstances, they may not be appropriate for every situation. It’s important to consult with an experienced financial advisor to determine what approach makes the most sense for your overall retirement plan.

Here are some ways high-income retirees can manage and plan around RMDs:

• Delay and reduce future RMDs through Roth conversions or QLACs
• Use charitable giving strategies to offset taxable income
• Coordinate RMD timing with broader tax and income strategies
• Leverage RMDs as a tool for portfolio rebalancing
• Integrate RMD planning with estate and inheritance goals

When RMDs Begin Under Current Law

The SECURE Act 2.0 updated the ages at which retirees must begin taking Required Minimum Distributions:

• If you were born between 1951 and 1959, your RMDs begin at age 73
• If you were born in 1960 or later, your RMDs begin at age 75

These age increases, compared to the previous starting age of 72, provide more time for tax-deferred growth and allow for additional years of income and tax planning before withdrawals become mandatory. This can be particularly useful when considering Roth conversions, charitable giving, or portfolio reallocation strategies.

In some cases, individuals who are still working past their RMD age may delay RMDs from their current employer’s retirement plan, as long as they do not own more than 5% of the company. Business owners who hold more than a 5% stake must begin RMDs at the applicable age, regardless of employment status.

Key RMD Planning Strategies 

Strategies for Navigating RMDs in Retirement

Roth Conversions Before RMD Age

A Roth conversion allows you to move funds from a traditional IRA or 401(k) into a Roth IRA, paying taxes on the amount converted now to reduce taxable income later. Since Roth IRAs are not subject to RMDs during the original owner’s lifetime, converting funds before your RMD start date can help lower your future RMD obligations.

For high-income individuals, this strategy may be most effective during lower-income years (e.g., between retirement and the RMD start age) or when phased retirement creates flexibility. It’s important to model the tax impact of conversions carefully to avoid unintentionally pushing yourself into a higher tax bracket.

Qualified Charitable Distributions (QCDs)

Once you reach age 70½, you can make Qualified Charitable Distributions of up to $115,000 per year (2026 limit) directly from your IRA to eligible charities. These distributions can count toward your RMD while also reducing your taxable income.

This approach is particularly useful for retirees who are already charitably inclined and do not need the RMD income for personal use. QCDs can also help reduce exposure to Medicare IRMAA surcharges and other tax consequences tied to adjusted gross income because they are an above-the-line deduction.

Use of QLACs to Delay RMDs

A Qualified Longevity Annuity Contract (QLAC) is a deferred income annuity purchased within a traditional retirement account that allows you to postpone RMDs on the amount used to buy the annuity. In 2026, the maximum allowable QLAC purchase is $210,000.

QLACs can be appealing to retirees who want to reduce RMD amounts in their 70s while securing a future income stream starting as late as age 85. This strategy may suit individuals who expect to live longer or who have other sources of income in early retirement and prefer to delay IRA withdrawals.

Monthly vs. Lump-Sum Withdrawals

While the IRS doesn’t require how or when within the year RMDs are taken, the method can have planning implications. Taking RMDs monthly can help manage market volatility and distribute tax liability more evenly throughout the year. It may also support consistent cash flow for households that rely on portfolio withdrawals for living expenses.

On the other hand, lump-sum withdrawals offer simplicity and may be preferred by those coordinating tax payments or managing distributions across multiple accounts.

Some retirees find value in using a hybrid method, taking smaller amounts throughout the year while leaving flexibility for year-end tax adjustments.

Income Smoothing Across Tax Brackets

One of the challenges with RMDs is the potential for large withdrawals to push retirees into higher income tax brackets or trigger additional Medicare costs. Income smoothing involves strategically withdrawing funds from various accounts—taxable, tax-deferred, and Roth—over time to avoid steep increases in taxable income in any single year.

This strategy may include drawing from tax-deferred retirement accounts more heavily in early retirement, drawing from taxable accounts while performing Roth conversions in early retirement, or drawing from taxable or Roth accounts for surplus cash flow needs once RMDs have started and have been taken.

Reviewing projected income annually can help identify opportunities to spread taxable income more evenly and manage exposure to phaseouts, surcharges, and capital gains thresholds.

Using RMDs for Portfolio Rebalancing

RMDs require the sale or distribution of investments, but retirees can use that to their advantage. By taking RMDs from overweighted or overperforming assets, you can help bring your portfolio back in line with your target allocation.

For example, if equities have significantly outpaced fixed income holdings, you might choose to withdraw from equity positions to reduce risk and maintain balance. Proceeds that aren’t needed for spending can be reinvested in a taxable account in a way that supports your long-term investment plan.

Coordinating RMDs with Legacy Planning

For individuals with multigenerational wealth goals, RMDs are also a key piece of legacy planning. Inherited IRAs are now subject to the 10-year distribution rule, meaning most beneficiaries must fully distribute the account within 10 years of the original owner’s death. Annual RMDs may still be required if the original owner had already begun taking them.

While Roth IRAs are not subject to RMDs during the account holder’s lifetime, inherited Roths must be fully distributed within 10 years as well. Incorporating trusts, gifting strategies, or beneficiary planning can help shape how and when wealth is passed on, particularly if heirs may face higher taxes or aren’t prepared to manage large distributions.

Common RMD Challenges and Potential Strategies

Make RMDs Work for Your Retirement Plan

RMDs are more than just a withdrawal requirement. When structured carefully, they can support tax efficiency, charitable goals, income flexibility, and legacy strategies.

Working with a financial planning advisor at EP Wealth can help you assess how RMDs fit into your overall retirement plan, model different approaches, and evaluate opportunities to reduce unintended tax consequences. Reviewing your strategy each year is key as both markets and regulations continue to evolve.

Contact an EP Wealth Advisor to learn more.

DISCLOSURES

• EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
• Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
• Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
• The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
• Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.      
• EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
• The content of this blog is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
• All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
• An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
• Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
• Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.