How to Avoid or Reduce RMDs: 6 Strategies to Keep More of Your Retirement Income

If you’ve saved for retirement using traditional IRAs, 401(k)s, or other tax-deferred accounts, Required Minimum Distributions (RMDs) are in your future—and so are the taxes that come with them.

RMDs are mandatory withdrawals the IRS requires once you reach a certain age, and they’re taxed as ordinary income. But with smart planning, you can reduce the tax burden, manage cash flow more efficiently, and even eliminate RMDs altogether from certain accounts.

This guide walks you through what RMDs are, when they start, and six proven ways to lower their impact—while staying compliant with current tax law.

📅 When Do RMDs Start?

RMDs begin based on the type of account you have:

For IRAs (Traditional, SEP, SIMPLE):

Your Required Beginning Date (RBD) is April 1 of the year after the calendar year in which you turn age 73.

For Employer Plans (401(k), 403(b), Profit-Sharing):

Your RBD is April 1 of the year after the later of:

• The year you turn 73, or

• The year you retire (if your plan allows RMD deferral until retirement)

  
  

After your first RMD, all future withdrawals must be taken by December 31 each year.

⚠️ Warning: If you delay your first RMD until April 1, you’ll take two RMDs in one year—potentially increasing your tax bill.

💡 Why Avoiding or Reducing RMDs Matters

RMDs can:

• Push you into a higher tax bracket

• Increase your Medicare premiums (IRMAA)

• Cause more of your Social Security to be taxed

• Accelerate the drawdown of your retirement savings

  
  

By planning ahead, you can minimize these effects and retain more control over your retirement income.

✅ 6 Smart Ways to Reduce or Avoid RMDs

1. Convert to a Roth IRA

Roth IRAs are exempt from RMDs during the account holder’s lifetime. Converting traditional IRA or 401(k) assets to a Roth IRA can eliminate future RMDs on that money.

✅ Pros:

• No RMDs from Roth IRAs

• Tax-free growth and withdrawals

• May lower future taxable income

  
  

⚠️ Considerations:

• Conversions are taxable in the year made

• Can temporarily raise your income and affect other tax thresholds

  
  

Tip: Convert strategically in low-income years or across multiple years to manage the tax impact.

2. Delay RMDs by Continuing to Work

If you’re still working and don’t own more than 5% of the company, you may delay RMDs from your current employer’s 401(k) or similar plan until you retire.

✅ Pros:

• Defers taxable distributions

• Allows continued tax-deferred growth

  
  

⚠️ Considerations:

• Only applies to your current employer's plan

• IRAs and previous employer plans still require RMDs

  
  

Tip: If allowed, consolidate other accounts into your current employer’s plan to delay more of your RMD liability.

3. Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, you can donate directly from your IRA to a qualified charity through a QCD—up to $108,000 annually (2025 limit).

✅ Pros:

• Satisfies all or part of your RMD

• Reduces taxable income

• May lower Medicare premiums and Social Security taxation

  
  

⚠️ Considerations:

• Only available from IRAs

• Must be a direct transfer to the charity

  
  

Tip: Great for retirees who are already making charitable donations but want to do so more tax-efficiently.

4. Fund a Charitable Gift Annuity (CGA) Using a QCD

Thanks to a 2023 law, IRA owners aged 70½ or older can make a one-time QCD of up to $54,000 (2025 limit) to fund a Charitable Gift Annuity—an arrangement that provides you with lifetime income in exchange for your donation.

✅ Pros:

• Avoids taxes on the IRA withdrawal

• Generates guaranteed income for life

• Satisfies part of your RMD

• Supports a charitable cause

  
  

⚠️ Considerations:

• Only available once per lifetime

• Annuity payments are fully taxable

• No charitable deduction

  
  

Example: Alan, 75, donates $54,000 from his IRA to the American Red Cross through a QCD-funded CGA. He avoids taxation on the distribution, receives $3,710 annually for life, and fulfills part of his RMD—all while supporting a mission he values.

5. Buy a Qualified Longevity Annuity Contract (QLAC)

Delay RMDs Until Age 85 and Plan for Longevity

A QLAC—Qualified Longevity Annuity Contract—is a special kind of deferred annuity you can purchase using up to $210,000 (2025 limit) from a traditional IRA or 401(k). The funds used to buy a QLAC are excluded from your RMD calculations, reducing your tax burden in early retirement.

🔍 What Makes QLACs Special?

• Delays taxable income until as late as age 85

• Builds a guaranteed income stream for later life

• Helps hedge against the risk of outliving your savings

  
  

✅ Pros:

• Lowers RMDs during your 70s and early 80s

• Guarantees long-term income

• Provides peace of mind for late-life financial needs

  
  

⚠️ Considerations:

• Irrevocable—you can’t access the funds once committed

• Payments are taxable when received

• Not suitable for those with limited retirement savings or health concerns

  
  

Tip: Ideal for healthy individuals with other income sources who want a long-term retirement safety net.

6. Use a Qualified HSA Funding Distribution (QHFD)

Transfer IRA Funds to Your HSA Tax-Free (One-Time)

A QHFD allows you to make a one-time transfer from your IRA to your Health Savings Account (HSA), up to your annual contribution limit, without paying taxes on the withdrawal.

✅ 2025 HSA Limits:

• Self-only: $4,300 (+$1,000 catch-up if age 55+)

• Family: $8,550 (+$1,000 catch-up if age 55+)

  
  

✅ Pros:

• Reduces your IRA balance (and future RMDs)

• Increases tax-free savings for medical expenses

• No income tax on the transfer

  
  

⚠️ Considerations:

• You must be HSA-eligible (enrolled in a High-Deductible Health Plan)

• You must remain eligible for 12 months after the transfer or face tax and penalties

• Only available once per lifetime (with one exception for coverage change)

  
  

Tip: Best used while still working and covered by an HSA-eligible health plan.

🧾 Summary: Which RMD Strategy Is Right for You?

Strategy	Reduces RMDs	Avoids Taxes	Provides Income	Charitable Option
Roth IRA Conversion	✅	❌ (initially)	✅ (later)	❌
Delay via Work	✅	✅	❌	❌
QCD	✅	✅	❌	✅
QCD-Funded CGA	✅	✅	✅	✅
QLAC	✅	❌	✅ (later)	❌
QHFD	✅	✅	❌	❌

🔚 Final Thoughts

RMDs are unavoidable for most retirees—but the taxes they trigger don’t have to be. Whether your goal is to reduce taxes, give charitably, or create lifetime income, there’s a strategy that fits.

The earlier you plan—especially in your late 50s or early 60s—the more flexibility you have to optimize your income, reduce surprises, and protect your savings.

The information provided in this blog post is intended for general informational purposes only and should not be construed as legal or tax advice. While every effort has been made to ensure the accuracy of the information, tax laws and regulations are subject to change, and individual circumstances may vary. For personalized advice and to ensure compliance with current tax laws, it is strongly recommended that you consult with a qualified tax professional, financial advisor, or legal counsel. The author and publisher of this blog assume no responsibility for any errors or omissions, or for any actions taken based on the information contained herein.