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RMDs are like colon cancer screenings: You thought they were only for older folks, and ignoring them now could lead to bigger problems down the road.
When you get to the current RMD age of 73 (updated in the SECURE 2.0 Act) and you’re forced to take money from your traditional accounts, you’re not just paying taxes on that specific RMD dollar amount.
Here are the five biggest mistakes I see retirees make with their RMDs. Learn from these mistakes so that you can plan your RMDs ahead of time and hopefully lower their tax bite.
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Mistake No. 1: Waiting until age 73 to create a plan
One of the most consistent concerns I hear from retirees is, “How bad am I going to get killed on taxes when my RMDs start?”
They have projected out their future RMD amount of $10,000, $25,000, even $100,000 in future taxable income, and they’re concerned about the tax cost.
But then they stop there. They see the problem, but they figure they can’t do anything about it.
Thankfully, you can. Go beyond just projecting your RMD amount, but also project your future tax brackets. Then find the tax years between now and 73 when your taxes are likely to be lowest; this is often before you start Social Security.
Then, during those lower projected tax years, do a Roth conversion at that lower tax rate, so that your future RMD is lower and the Roth money can grow tax-free.
Mistake No. 2: Failing to make use of qualified charitable distributions (QCDs)
A retired pastor came to my office for a new client meeting. He brought in his investment statements, and tax return, and he explained that he had roughly a $12,000 RMD each year and that he gave it all away.
I reviewed his tax return and saw the RMD listed as taxable income, and I saw that he wasn’t itemizing his deductions — he was paying more taxes than he should have!
I asked the pastor how he took out his RMD each year to give to charity, and he said, “I want to follow the rules, so I take out my RMD as soon as I can each year and put it in the bank. Then at the end of the year, I write out checks to my church and favorite charities.”
I showed him that he could do a qualified charitable distribution (QCD) instead, sending the money from the IRA directly to the charities.
I calculated that using the QCD rules on the $12,000 QCD amount to be $2,263 in income tax savings.
And here’s a next-level QCD move: You can start doing QCDs at age 70½, even though RMDs don’t start until 73 currently. It just might lower this year’s taxes, and it will definitely lower your future RMD amounts.
Mistake No. 3: Doing the wrong tax withholding
I just met a retiree who had his first RMD distribution last year. He and his wife make $36,000 from Social Security and $36,000 from his pension.
They don’t need their IRA money, which is why they hadn’t taken anything out until their first RMD, which came to $40,000.
His investment company sent him the $40,000 at the end of last year, doing the 10% mandatory federal withholding and no state tax withholding because it wasn’t required.
It turned out the taxes on his RMD were $6,400 for federal, not the $4,000 that was withheld, and $2,000 for state — and there was nothing withheld for that.
He had to write out two big checks, and he owed even more because of underpayment penalties.
Before you take out your RMD, do a tax projection to get the withholding right — the standard 10% is almost never the right amount.
Mistake No. 4: Not realizing how your RMD income affects the rest of your tax return
You would think that paying taxes on your RMDs is simple. If you’re in the 12% tax bracket, and you take out $10,000, then you just pay $1,200 in extra taxes, right? If only it were that simple.
When you take money from your traditional IRA, especially for the first time with your RMD, you’re often surprised at how much it affects the rest of your tax return.
The amount of your Social Security that is taxable is based on how much other income you have. When you have more other income from your IRA, your taxable Social Security amount goes up.
That RMD amount could push you into the next tax bracket. The IRS doesn’t hand you a card saying, “You’re in the 12% tax bracket forever.” When your RMDs start, your income goes up, and often your tax bracket goes higher.
Or perhaps that extra income means that you get less medical deductions or less of the enhanced deduction for older people.
I often see RMDs push retirees over the edge so that they are paying extra for Medicare because of the IRMAA. You can read about those IRMAA tax brackets in the Kiplinger article Medicare Premiums 2025: IRMAA Brackets and Surcharges for Parts B and D. And you can see the 2026 brackets in this Kiplinger article.
When it comes to the U.S. tax code, more RMD income often means more other income and fewer deductions, and then you pay more in taxes than you expected.
Before you take your first RMD, make sure you understand how the new taxable income affects the rest of your income and deductions.
Mistake No. 5: Forgetting that the M in RMD means ‘minimum,’ not ‘maximum’
All these tax mistakes add up to a lot of big surprises when you hit RMD age. Perhaps you’ve resolved to reduce the tax pain by sticking to just the minimum amount for your RMD. But you don’t have to restrict your distribution to the minimum.
Often, the solution to your future RMD tax problems is to bite the bullet this year and do a Roth conversion at a tax rate that you’re comfortable with so that your future RMDs are lower.
Also, remember that just because you’re required to do RMDs at age 73 doesn’t mean you can’t take out money earlier. The minimum age to withdraw from your IRA without a penalty is 59½, which means you could have 13-plus years to plan for the likely RMD tax pain.
Lower your retirement taxes by creating your RMD strategy today
RMDs might seem like an annoying part of the tax code, but when it comes to retirement taxes, RMDs affect the rest of your retirement:
- Your tax bracket
- Your Social Security taxation
- Your Medicare premiums
- Your investment strategy
- Your charitable giving
The time to start planning for your RMDs is not the year you turn 73, but even before you retire. In your retirement planning, focus not just on your investment growth, but on how that growth will affect your future tax situation.
That’s why I put tax planning as step three in my book, Retire Today: Create Your Retirement Master Plan in 5 Simple Steps, even before your investment planning (step four).
A tax-smart retirement gets you ready for your RMDs well ahead of time and works to minimize their tax impact even when you get to RMD age.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
