Tis The Season For RMDs (Required Minimum Distributions)

November 5, 2025

What Are RMDs?

RMDs are mandatory withdrawals from tax-deferred retirement accounts, like traditional IRAs and 401(k)s, once you reach a certain age. These withdrawals are taxed as ordinary income.

• The current RMD age is 73 (for those born between 1951–1959).
  
  
• Starting in 2033, it increases to 75 (for those born 1960 or later).
  
  
• Missed RMDs can trigger a 25% IRS penalty (reduced to 10% if corrected quickly).
  
  
• Roth IRAs are exempt during the owner’s lifetime.

Why It Matters

Larger pre-tax balances mean larger RMDs and therefore: Higher income taxes, possible Medicare premium surcharges (IRMAA), and more taxable Social Security benefits. Planning ahead can help control these effects.

Strategies to Reduce Future RMDs

1. Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, you can donate up to $108,000 per year directly from your IRA to a qualified charity. The donation counts toward your RMD and is excluded from taxable income. The funds must go directly from your IRA custodian to the charity—no personal withdrawals first. A QCD can satisfy your RMD, but any extra amount can’t be applied to future years.

2. Roth Conversions (Before RMDs Begin)

Convert part of your traditional IRA or 401(k) into a Roth IRA to reduce future RMDs.
Roth IRAs grow tax-free and have no RMDs during your lifetime. Important: A Roth conversion does not count toward satisfying your RMD. Conversions are best done before age 73 while you control your tax bracket.

3. Smart Withdrawal Timing

You can delay your first RMD until April 1 of the following year, but that may force two RMDs in one tax year. If you’re still working and not a 5% owner, you may be able to delay RMDs from your current employer plan. Gradually drawing from pre-tax accounts before RMD age can help smooth taxes over time.

Bottom Line

RMDs are unavoidable for most retirees, but smart planning can make them more manageable.
Using Roth conversions, QCDs, and timely withdrawals can reduce taxes and give you more control over your income in retirement. Greenberg Financial Group can help you create a personalized strategy to manage RMDs and align your retirement income with your financial goals. Call us anytime to update or create your financial plan!