How to Reduce RMD Taxes: 7 Strategies That Actually Work

Start with the rules as they stand in October 2026. Under SECURE 2.0, RMDs begin at 73 if you were born from 1951 through 1959, and at 75 if you were born in 1960 or later. The first RMD can be delayed to April 1 of the following year, every later one is due December 31, and the penalty for a missed RMD is 25%, cut to 10% if corrected within two years. The One Big Beautiful Bill Act, signed July 4, 2025, made the current brackets permanent and added a $6,000 per person deduction for taxpayers 65 and older for 2025 through 2028, phased out by 6% of modified AGI above $75,000 single or $150,000 joint. It did not change the RMD rules. Every RMD dollar is ordinary income, raises the MAGI that sets Medicare IRMAA two years later, can make more of your Social Security taxable, and can phase out the senior deduction.

Strategy 1: Roth conversions before RMDs begin. The years between retirement and 73 or 75 are usually the lowest-income years you will ever have. Converting enough each year to fill the 12%, 22% or 24% bracket shrinks the balance that RMDs are calculated on and moves growth into a Roth that has no lifetime RMDs. In 2026 the 22% bracket for married couples ends at $211,400 of taxable income and the 24% bracket at $403,550. For anyone 63 or older, watch the IRMAA line too, because 2026 income sets 2028 premiums and the first surcharge tier for 2026 starts at $218,000 of MAGI for joint filers. Conversions count toward that MAGI.

Strategy 2: Qualified charitable distributions. From age 70½, you can send up to $111,000 per person in 2026 directly from an IRA to a qualifying charity. The QCD counts toward your RMD and is excluded from AGI, which is better than taking the RMD and deducting the gift. That gap widened in 2026: OBBBA added a 0.5% of AGI floor on itemized charitable deductions and capped the value of itemized deductions at 35% for top-bracket taxpayers, and neither applies to a QCD. The money must go from the IRA custodian to the charity, not through you, and it cannot go to a donor-advised fund or private foundation. The one-time QCD to a charitable remainder trust or gift annuity is $55,000 for 2026.

Strategy 3: A qualifying longevity annuity contract (QLAC). You can move up to $210,000 per person (2026 limit) of IRA or 401(k) money into a QLAC, and that amount is excluded from the RMD calculation until income starts, no later than age 85. On a $2M IRA at 73, removing $210,000 lowers the first RMD by about $7,900. That is real but modest, so a QLAC makes sense mainly for people who also want guaranteed income late in life.

Strategy 4: The still-working exception. If you are still employed past your RMD age and do not own more than 5% of the company, you can delay RMDs from your current employer's 401(k) until April 1 after the year you retire. IRAs do not get this exception, but if the plan accepts roll-ins, you can move pre-tax IRA money into the current employer plan and delay RMDs on it as well. Strategy 5: Asset location. Holding bonds and lower-growth assets in the pre-tax IRA and growth assets in Roth and taxable accounts slows the IRA's growth, which slows the growth of future RMDs. It is a risk-management decision as much as a tax one, so it should fit your overall allocation.

Strategy 6: Timing within the year. Delaying the first RMD to April 1 stacks two RMDs into one tax year, which can push you into a higher bracket or IRMAA tier, so it only makes sense when the first year has unusually high income. Taking the RMD late in the year and having taxes withheld from it lets the withholding count as if it had been paid evenly through the year, which can replace quarterly estimates. Strategy 7: Plan for the surviving spouse. When one spouse dies, the survivor files single with roughly half the bracket room while the RMD often stays the same. Conversions and QCDs done while both spouses are alive are the main defense against that jump.

If you are between retirement and 73, your main tool is Roth conversions, and the right amount each year is a bracket and IRMAA decision, not a fixed number. A couple with $2.5M in pre-tax accounts at 62 could face first RMDs near $190,000 at 75 if the money grows at 5%, stacked on top of Social Security and any pension. Converting a measured amount each year shifts that income into brackets you choose rather than ones the RMD table chooses for you.

If you are already taking RMDs and give to charity, run every gift through a QCD first. A couple giving $20,000 a year who take the standard deduction gets no itemized deduction for it, and under the 2026 rules would get at most a $2,000 non-itemizer deduction for cash gifts. The same $20,000 sent as a QCD removes $20,000 from AGI entirely, which can lower IRMAA, reduce the taxable share of Social Security, and help preserve the senior deduction.

Arizona adds a modest layer. RMDs are taxed at the 2.5% flat state rate, while Arizona does not tax Social Security. Because Arizona starts from federal AGI, a QCD lowers your Arizona tax too. None of these strategies erase the tax on pre-tax money. They let you pick when and at what rate you pay it, which is the whole game.

• Waiting until RMD age to look at the problem, when the cheapest years to shrink the balance are the ones right after retirement.
• Taking the RMD and then writing a check to charity, instead of sending a QCD directly from the IRA.
• Converting to the top of the 24% bracket without checking the IRMAA tier, which for anyone 63 or older raises Medicare premiums two years later.
• Delaying the first RMD to April 1 without realizing it doubles that year's RMD income.
• Assuming QCDs work from a 401(k), when they must come from an IRA, so the money has to be rolled over first.
• Making deductible IRA contributions after 70½ and then doing QCDs, which reduces the excludable QCD amount under the anti-abuse rule.