If you’re between ages 65 and 72, there’s a good chance you’ve spent decades focusing on saving for retirement—and far less time thinking about how and when you’ll withdraw from those accounts.
That’s completely normal. But it’s also why Required Minimum Distributions (RMDs) can feel like an unpleasant surprise: they may increase taxable income later in retirement, potentially affecting your tax bracket, Medicare premiums, and how much of your Social Security is taxable.
This guide is designed as a practical, pre-RMD checklist for people who haven’t looked closely at RMD rules or the tax ripple effects.
What are RMDs (and when do they start)?
RMDs are mandatory withdrawals from certain retirement accounts—most commonly Traditional IRAs and pre-tax employer plans like 401(k)s and 403(b)s. (Roth IRAs generally do not have RMDs during the original owner’s lifetime.)
The RMD age depends on your birth year. For many people approaching retirement today, RMDs begin in the early-to-mid 70s. The key point for planning, though, is this: RMDs are driven by account values, and the years leading up to your first RMD are often your best window to prepare.
Planning takeaway: Waiting until your “RMD year” can limit your options. Ages 65–72 are often an ideal time to look at tax strategy, withdrawal sequencing, and account structure.
Why RMDs matter: the tax domino effect
RMDs don’t just create a withdrawal requirement—they can raise your taxable income, which may:
- Push you into a higher marginal tax bracket
- Increase the portion of Social Security benefits subject to federal income taxes
- Increase Medicare IRMAA surcharges (income-related monthly adjustment amounts) for Part B and Part D premiums
- Reduce eligibility for certain tax credits or deductions
- Increase taxes on capital gains and dividends depending on your overall income picture
Even if you don’t “need” the RMD for spending, the distribution is generally still taxable (unless you have basis from nondeductible contributions). That’s why pre-planning is often less about avoiding RMDs and more about managing taxes over time.
A pre-RMD checklist (ages 65–72)
Here are the planning areas that can make a meaningful difference before RMDs begin.
1) Take inventory: which accounts will generate RMDs?
Start with a clear list:
- Traditional IRA(s)
- SEP/SIMPLE IRA(s)
- Old 401(k)/403(b) plans
- Current employer plan(s) (rules can vary, especially if still working)
Also note:
- Approximate balances
- Current investment mix (growth-heavy accounts can amplify future RMDs if they appreciate)
- Beneficiary designations (important for inherited account rules and family tax planning)
2) Estimate your “future tax picture,” not just today’s
Many retirees assume taxes go down in retirement. Sometimes they do—but often income rises later due to:
- Social Security starting (for you and/or a spouse)
- Pensions
- Portfolio income
- RMDs
- Part-time work or consulting
A simple projection can be eye-opening: what does your income look like at 68 versus 75? The “gap years” before RMDs (and sometimes before Social Security) can be a strategic window.
3) Consider Roth conversions (if appropriate)
A Roth conversion is moving money from a pre-tax retirement account to a Roth IRA, typically creating taxable income in the year of the conversion. It’s not right for everyone, but it can be worth evaluating because it may:
- Reduce future RMD amounts (since the converted dollars leave the pre-tax account)
- Create a pool of tax-free growth potential (subject to rules)
- Improve flexibility for later-life tax planning
Key cautions:
- Conversions can increase your current tax bill
- Higher income can impact Medicare premiums and Social Security taxation
- The timing and size of conversions matter; “all at once” is not always optimal
4) Plan withdrawal sequencing: which dollars get used first?
When multiple account types exist (taxable brokerage, Traditional IRA/401(k), Roth), the order you draw from them can affect taxes over decades.
A common planning approach is to coordinate:
- Taxable account withdrawals (capital gains management)
- Strategic IRA withdrawals in lower-income years
- Roth withdrawals later for flexibility
There isn’t one universal rule. The “best” sequence depends on your income needs, tax brackets, longevity considerations, and legacy goals.
5) Understand how charitable giving can interact with RMDs
If charitable giving is part of your plan, ask about strategies that may be more tax-efficient than writing a check from your bank account.
One example many retirees explore is the Qualified Charitable Distribution (QCD) (available once you meet the age requirement). A QCD allows eligible IRA owners to direct funds to a qualified charity under specific rules, which can help reduce taxable income in some situations.
This is a technical area with strict requirements—worth coordinating carefully.
6) Don’t overlook Medicare IRMAA and Social Security taxation
Two common “surprises” later in retirement:
- IRMAA is based on a prior-year income measure; even a one-time spike in income can affect premiums.
- Social Security benefits may become more taxable as other income rises.
This is why pre-RMD planning often focuses on smoothing income rather than simply minimizing taxes in a single year.
7) Check your withholding and estimated taxes
Because RMDs are taxable, they can create under-withholding issues if you’re used to wage withholding from a paycheck.
Some retirees choose to withhold taxes directly from IRA distributions, while others make quarterly estimated payments. The right approach depends on your income sources and tax situation.
A quick example (how this can play out)
Imagine a couple retires at 66 with substantial savings in Traditional IRAs and plans to delay Social Security until 70. Their taxable income may be relatively low from ages 66–69. If they wait until their first RMD year to act, they may end up with:
- Social Security income + RMDs stacking together
- Higher marginal tax brackets than expected
- Higher Medicare premiums due to increased reported income
But if they use ages 66–69 to coordinate withdrawals or explore partial Roth conversions, they may be able to spread taxable income more evenly across years—potentially improving after-tax flexibility later. (Outcomes vary based on tax law, returns, and personal circumstances.)
Next step: a “pre-RMD planning” conversation
You don’t need to memorize the rules to make progress. You simply need a clear view of:
- Which accounts will create future RMDs
- When other income sources begin
- How taxes and healthcare costs might shift as income changes
If you’re 65–72 and haven’t modeled how RMDs could affect your tax picture, consider making it a priority this year. A small amount of planning now can help you feel more in control later—especially when mandatory distributions begin.
This article is for educational purposes only and is not tax or legal advice. Discuss your situation with a qualified tax professional and financial advisor before acting on any strategy.