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RMD Planning Workbook

Required Minimum Distributions force you into higher tax brackets just when you don't need the money. The 5-year RMD avoidance playbook: Roth conversions, QCDs, asset location, and the RMD math nobody runs.

Best for: Anyone 60-75 with $200K+ in traditional IRA/401(k) approaching RMD age (75 under SECURE 2.0). The decisions you make in your 60s and early 70s can save $50K-$300K in lifetime tax + IRMAA.

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Who this is for

  • 60-75 with traditional IRA / 401(k) balances $200K+
  • Approaching age 75 (RMD start under SECURE 2.0)
  • Already taking RMDs and want to optimize timing/amount
  • Charitable retirees considering QCD strategy
  • Couples planning for first-spouse-passes-away tax cliff

What's inside

  • RMD basics — start age 75 (SECURE 2.0), divisor table, calculation
  • 5-year Roth conversion ladder model — pay tax in low brackets before RMDs hit
  • Qualified Charitable Distribution (QCD) — give to charity directly from IRA, no tax
  • Asset location strategy — what goes in trad vs. Roth vs. taxable
  • First-RMD-year quirks (delay until April 1 of following year vs. take by Dec 31)
  • Inherited IRA RMD rules (10-year rule, exceptions for surviving spouse, minor children, disabled)
  • Cheat sheet: RMD divisors, key dates, decision tree

Preview — RMD basics — what they are and when they hit

Required Minimum Distributions (RMDs) are mandatory annual withdrawals from traditional IRA, 401(k), 403(b), and similar tax-deferred retirement accounts. They start at age 75 under SECURE 2.0 (was 72 before, 70½ before that). The IRS forces you to start withdrawing — and paying tax on the withdrawals — whether you need the money or not.

Calculation: the IRS publishes a Uniform Lifetime Table with a 'divisor' for each age. RMD = prior year-end account balance ÷ divisor. At age 75, divisor is 24.6 — so 1/24.6 of the balance, or about 4.07%. At 85, divisor is 16.0, so 6.25%. Each year you take a higher percentage as the divisor decreases.

Roth IRAs do NOT have RMDs during the original owner's lifetime. Roth 401(k)s used to have RMDs but SECURE 2.0 eliminated them starting 2024.

Penalty for missing an RMD: 25% of the amount you should have withdrawn (was 50% before SECURE 2.0). If you correct within 2 years, drops to 10%. So missing an RMD is genuinely expensive.

6 more sections in the full version

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Full table of contents

  1. RMD basics — what they are and when they hit
  2. Why RMDs hurt: the IRMAA + bracket compounding
  3. Strategy 1 — Roth conversion ladder (the highest-leverage move)
  4. Strategy 2 — Qualified Charitable Distribution (QCD)
  5. Strategy 3 — Asset location
  6. Strategy 4 — RMD timing within the year
  7. Inherited IRA RMD rules (the SECURE Act 10-year rule)
Key takeaways
  • RMDs start at 75 (SECURE 2.0). Missed = 25% penalty.
  • Roth conversion ladder in 65-74 window converts traditional to Roth at low brackets.
  • QCD (70½+): up to $108K/year to charity directly from IRA, no tax.
  • Asset location: bonds in trad, growth in Roth, index in taxable.
  • First RMD year: usually take in-year, not delayed to April 1.
  • Inherited IRA: 10-year rule for most non-spouse beneficiaries.
Action steps
  1. Calculate your projected RMD at age 75 (current trad balance × growth × 1/24.6).
  2. Project your taxable income at 75 (RMD + SS + pension + dividends).
  3. Check if RMD income would cross IRMAA brackets — flag opportunities to reduce.
  4. Run a 5-10 year Roth conversion ladder model (free at /tools/roth-ladder).
  5. If charitable: plan QCD strategy starting at 70½.
  6. Review asset location across your accounts annually.
Cheat sheet — RMD quick reference
  • · Start age: 75 (SECURE 2.0)
  • · First RMD divisor: 24.6 (about 4.07% of balance)
  • · Penalty for missing: 25% (10% if corrected within 2 years)
  • · Annual deadline: December 31 (April 1 of year after for first RMD only)
  • · QCD limit: $108K/person/year (2025 indexed)
  • · QCD age: 70½+
  • · Inherited IRA: 10-year rule for most non-spouse beneficiaries
  • · Roth IRA: NO RMD during original owner's lifetime

FAQ

What if I don't need the RMD income?+

Use QCD (70½+) to direct it to charity (tax-free). Or take it and reinvest in taxable brokerage. Or use a multi-year Roth conversion ladder before RMDs hit to convert balances out of traditional.

Can I do Roth conversions and RMDs in the same year?+

Yes, but order matters: take your RMD FIRST (it cannot be converted to Roth — IRS rule), then convert additional traditional IRA to Roth.

What's the deadline for opening a Roth IRA for conversions?+

Roth conversions must be completed by December 31 of the tax year. The 5-year clock for Roth distributions starts January 1 of the conversion year.

Pairs well with

Social Security Claiming Strategy ($29)

Educational content only. SmartSeniorX is not a law firm, financial advisor, or tax preparer. For your specific situation, consult a licensed professional in your state.

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