Tax-Optimized Withdrawals, Part 5: RMD Planning Before 73 (or 75)

By Tom, CPA · Updated October 25, 2026

TL;DR: Required minimum distributions start at 73 for people born 1951 to 1959 and 75 for those born in 1960 or later. A large IRA left alone until then can force big taxable withdrawals for life. Projecting your first RMD now tells you how much to convert or withdraw in the gap years.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Required minimum distributions are the IRS's way of saying: we've waited long enough, thank you. You got a deduction decades ago, your account grew tax-deferred for decades more, and now the government would like its share on a schedule it controls.

For early retirees the RMD is a distant problem that is best solved early. By the time it arrives, your best tools (the empty low brackets of your 50s and 60s) are gone. This part covers the current rules, how the math works, and how to project and shrink a future RMD while you still have options.

CPA Warning Label: RMD rules have changed three times since 2019. Confirm your applicable age from your birth year, not from a coworker's birthday party.

Current RMD ages under SECURE 2.0

The age at which RMDs begin, called the applicable age, depends on your birth year. Under Treasury regulations reflecting the SECURE 2.0 Act:

Your first RMD is for the year you reach the applicable age, but it can be delayed until April 1 of the following year. Delaying means taking two RMDs in that second year, which can bunch income. Every later RMD is due by December 31.

Workplace plans have a twist: if you still work for the employer sponsoring a 401(k) and do not own 5% or more of the business, that plan's RMDs can generally wait until you retire. IRAs get no such exception. Roth IRAs have no RMDs during the owner's lifetime, and the IRS RMD FAQs say designated Roth accounts in 401(k) and 403(b) plans are likewise not subject to RMDs while the owner is alive.

How RMDs are calculated

The formula is simple: prior December 31 balance ÷ life expectancy factor. Most owners use the IRS Uniform Lifetime Table in Publication 590-B. A few factors:

If your spouse is your sole beneficiary and more than 10 years younger, you use the Joint and Last Survivor table instead, which produces smaller RMDs. You calculate an RMD for each IRA separately but can take the total from any one or more IRAs. 401(k) RMDs must be taken from each plan separately.

Projecting your future RMD

Illustration. Assumptions: single person, age 60 today, born 1966 (applicable age 75), $1.1 million traditional IRA, 4% real annual growth, no withdrawals until 75. Dollar amounts in today's purchasing power.

• Balance at 75: $1.1 million × 1.04 to the 15th power ≈ $1.98 million.
• First RMD: $1.98 million ÷ 24.6 ≈ $80,500.

Add Social Security of, say, $35,000, and this retiree has about $115,000 of income she cannot turn off. As a single filer that puts the last dollars in the 22% bracket, and the RMD percentage rises every year from there. Now rerun the projection assuming she shrinks the IRA to $600,000 by age 60-equivalent through conversions in her late 50s and early 60s: the first RMD drops to about $43,900. Same person, very different tax life.

To project yours: grow today's balance at a conservative real return to your applicable age, divide by the table factor, add expected Social Security and pensions, and see which bracket that lands in. If it's higher than the bracket you could convert in today, the gap years are worth using.

Conversions and withdrawals before RMDs

The main RMD-shrinking tools:

• Roth conversions in low-income years (see Part 3 and the Roth conversion ladder).
• Spending from the IRA before Social Security starts, possibly while delaying benefits.
• Qualified charitable distributions once you are at least 70½: a direct IRA-to-charity transfer that counts toward your RMD but is excluded from income. The limit is inflation-adjusted: $108,000 for 2025 (Publication 590-B) and $111,000 for 2026, per the Congressional Research Service. See charitable giving in early retirement.
• Avoiding new pre-tax contributions late in your career if you already expect large RMDs.

A caution: RMDs cannot be converted to Roth or rolled over. Once you are in RMD years, the RMD must come out first, and only amounts above it can be converted. That is one more reason to do the heavy lifting before.

Worked example: what an RMD does to a tax bracket

Illustration. Assumptions: married couple filing jointly, both 75 in a future year, 2026 brackets and standard deduction used as a stand-in (held constant in real terms), $1.98 million IRA, $50,000 combined Social Security, no other income. Their first RMD is about $80,500. Because 85% of their benefits become taxable at that income, their taxable income lands around $87,500 after the standard deduction and the age-65 additions, near the top of the 12% bracket. Sounds tolerable. But the RMD percentage rises each year: by 85 the factor is 16.0, about 6.3% of the balance. If the account has kept growing, distributions can climb past $120,000, pushing the couple into the 22% bracket and close to IRMAA territory.

Now consider what happens if one spouse dies at 80. The survivor inherits the IRA (and its RMDs) but files as single within a couple of years, with brackets roughly half as wide. The same income that was in the 12% bracket for a couple sits largely in the 22% bracket for one person. That scenario gets its own discussion in Part 7.

The cure is the same one this series keeps returning to: move money out of the tax-deferred bucket at low rates before RMDs force it out at higher ones.

Penalty rules if you miss one

Missing an RMD triggers an excise tax of 25% of the amount not taken. If you correct it within the correction window (generally two years), the rate drops to 10%. You report it on Form 5329. The IRS can waive the penalty if the shortfall was due to reasonable error and you are taking reasonable steps to fix it; you request the waiver with Form 5329 and an explanation (IRS RMD FAQs).

Also note: you can always withdraw more than the RMD, but excess withdrawals in one year do not count toward next year's RMD. And although custodians often calculate RMDs, the IRS says the account owner is ultimately responsible for taking the right amount.

Common RMD misunderstandings

• "I can skip it if markets are down." Not under current law. The RMD is based on the prior year-end balance regardless of what happened since.
• "My custodian takes care of it." Custodians report and often calculate, but the owner is responsible for the correct total, especially across multiple IRAs at different firms.
• "Bigger withdrawals now count toward later RMDs." They do not. An extra withdrawal this year does not reduce next year's required amount, although it does shrink the balance that future RMDs are calculated on.
• "The first year is optional." Only the deadline is flexible (April 1 of the next year). The amount is still required, and delaying creates a two-RMD year.
• "Roth 401(k) money is safe from RMDs, so rollover timing doesn't matter." Roth balances are not subject to lifetime RMDs, but traditional balances in the same plan still are.

Inherited accounts: a separate clock

If you inherit a retirement account, different rules apply. For owners who died after 2019, most non-spouse beneficiaries must empty the account within 10 years, with exceptions for spouses, minor children, disabled or chronically ill beneficiaries and people not more than 10 years younger than the owner. An inherited IRA can dump a lot of income into your peak early-retirement window, competing for the same low brackets you planned to use for your own conversions. If an inheritance is likely, include it in your projections.