How to Avoid the Dreaded RMD (Required Minimum Distribution)

Jason Matthews |

Many retirees dread the day they reach the age when they must begin taking RMDs (Required Minimum Distributions). After spending all their hardworking years saving and being great stewards of their money, the government steps in and says, “Hey, we want you to take a withdrawal so we can tax you.” And yes, that absolutely sucks.

Who should get to decide when and how much you withdraw from your retirement accounts? It should be your God-given right to make that decision. Unfortunately, it's not—that’s another conversation for another time.

But if you're blessed enough to reach RMD age, there are a few strategies that can help reduce or even eliminate your RMDs. Just remember: DO NOT ATTEMPT THESE STRATEGIES ALONE. HIRE A PROFESSIONAL TO GUIDE YOU THROUGH THE PROCESS!

Take the Still-Working Exception

If you’ve reached RMD age but are still working, you may be eligible to delay your RMDs by using the “still-working exception.” This rule allows you to postpone taking RMDs from your employer-sponsored retirement plan until you separate from service.

This is a great perk for those still employed—you won’t be forced to withdraw from your employer retirement plan just yet.

You might be wondering: What if I also have an IRA (Individual Retirement Account)? The good news is that you can roll over your IRA into your employer-sponsored retirement plan and delay RMDs on those funds as well.

Get a QLAC

You may be asking, What is a QLAC? I’ve never heard of that before.

QLAC stands for Qualified Longevity Annuity Contract. It’s a type of deferred income annuity that allows retirees to delay annuity payments until as late as age 85. The funds you place in a QLAC are not included in the calculation of your RMDs—a huge benefit.

A few things to note about QLACs:

  • They are fixed annuities—not tied to the market—and offer a fixed interest rate.
  • There are limits on how much you can contribute. In 2025, the maximum is $210,000.
  • Death benefits are limited, typically offering either a return of original premium or a life annuity for the beneficiary.

Qualified Charitable Distributions (QCDs)

Throughout the year, many of us give to our church, nonprofits, or maybe even our kid’s baseball team (wink wink). We give because we want to help, and we expect a tax write-off. But when tax season rolls around, we often find out from our tax preparer that we can’t write off those charitable donations!

Why? Because we take the standard deduction and don’t have enough deductions to itemize.

So how can we still benefit from giving—and reduce our RMDs at the same time? Enter the QCD (Qualified Charitable Distribution). Instead of writing a check from your bank account, you have your IRA send the donation directly to the charity.

Here are the perks:

  • It fulfills your RMD requirement
  • It lowers your Adjusted Gross Income (AGI)
  • It may reduce taxes on Social Security benefits
  • It may lower Medicare Part B and D premiums
  • It could help avoid the 3.8% Net Investment Income Tax (NIIT)

It’s a no-brainer for those who enjoy giving—but follow the rules:

  • The IRA owner must be over 70½ years old
  • The QCD must go directly to the charity (not to you first!)
  • The limit in 2025 is $108,000

That’s why it pays to have an advisor who knows what they’re doing.

Acceleration of Distributions

I hate to say it—and you may hate to hear it—but consider voluntarily taking distributions early. Why? Because the longer your money sits in a tax-deferred account, the larger your future tax bill could be. This could push you into a higher tax bracket and result in increased Medicare premiums later on.

There are two strategic ways to approach early withdrawals:

  1. Take voluntary distributions to meet current income needs
    If you need money now, withdrawing from your pre-tax account helps meet those needs and reduces future RMDs.
     
  2. Do Roth conversions for long-term tax savings
    With Roth IRAs, there are no RMDs. By converting funds from your tax-deferred bucket into the tax-free forever bucket now, you could lower your future tax bill significantly.
     
  3. Are we saying to withdraw or convert everything? Absolutely not! This is a balancing act. You want to withdraw just enough to benefit you long term without bumping yourself into a higher tax bracket today.

I hope these strategies help reduce—or eliminate—that dreaded check you might have to write to Uncle Sam. But please, talk to a knowledgeable professional to guide you along this journey. Contact me for a free consultation.