How to avoid (or reduce) taxes on your RMD — 7 legal ways

First, the honest part: you can't skip the RMD

Let's be clear before the tactics, because the search phrase is misleading: there is no legal way to make a required minimum distribution disappear once you're subject to it. Under SECURE 2.0, RMDs from traditional IRAs and workplace plans begin at age 73 for anyone reaching 73 between 2023 and 2032, rising to 75 in 2033 (IRS — RMD FAQs). Skip one and the penalty is an excise tax of 25% of the shortfall, reduced to 10% if you correct it within the two-year window and file Form 5329.

So "avoiding taxes on your RMD" really means two separate jobs: reducing the tax on the RMD you must take this year, and shrinking the RMDs you'll be forced to take in future years. The seven tactics below split cleanly along those lines. If you want the wider picture of how every retirement dollar is taxed on the way out, start with our guide to retirement withdrawals and taxes; this page is the narrow how-to for the RMD line specifically.

The seven tactics at a glance

None of these is exotic and none is aggressive. They're the standard toolkit; the value is in sequencing and starting early.

1. Give it away with a QCD

If you give to charity at all, this is the single most tax-efficient tool available to a retiree. A qualified charitable distribution sends money directly from your IRA custodian to a public charity, and the amount is excluded from your income — not deducted, excluded. It counts toward your RMD dollar-for-dollar, up to $111,000 per person in 2026 (indexed annually under SECURE 2.0; see IRS Pub. 590-B). You must be 70½ or older — notably younger than RMD age, so the tool is available before you're even forced to take distributions.

Because the QCD never lands on your 1040, it does something a cash gift plus deduction can't: it lowers your adjusted gross income, which protects you from IRMAA, extra Social Security taxation, and the net investment income tax. One sequencing rule matters — the first dollars out of an IRA in an RMD year are deemed RMD dollars, so make the QCD before you take any other distribution. Full mechanics, traps, and the married-couple math are in our 2026 QCD guide, and the rules for giving from an inherited account are covered in QCDs from an inherited IRA (the inherited IRA RMD calculator computes what that account requires of you each year).

2. Time your first RMD around the age-73 trap

Your first RMD has a special deadline that quietly ambushes people. Every RMD after the first is due December 31. The first one, for the year you turn 73, can be deferred all the way to April 1 of the following year — your required beginning date (IRS — RMD FAQs). It sounds like a gift. It's often a trap.

Defer that first RMD to April 1 and you'll take two RMDs in the same calendar year — the deferred first one plus that year's own, due December 31. Stacking two years of forced income into one can push you into a higher bracket, over an IRMAA threshold, and into more Social Security taxation all at once. Usually the cheaper move is to take the first RMD in the year you turn 73 and keep the income spread evenly. The exception: if the year you turn 73 is unusually high-income (a final year of wages, a business sale) and the next year will be quiet, deferring can genuinely help. Run the two-year projection before you decide.

3. How to reduce RMD taxes with gap-year Roth conversions

The tactics above manage this year's RMD. This one attacks the root cause. RMDs are simply a percentage of your prior year-end traditional balance — so the smaller that balance, the smaller every future RMD. The most powerful lever is a Roth conversion done in the "gap years" between retirement and age 73, when your income (and often your bracket) is at its lowest. Roth IRAs have no lifetime RMDs for the owner, so every dollar you move to Roth is a dollar permanently removed from the RMD base.

Two rules to respect. First, a conversion is taxable in the year you do it — the point is to pay at today's lower rate instead of the higher rate a ballooning RMD would later force. Second, once you're in an RMD year, the RMD must come out first and a conversion can't count as your RMD. That's exactly why the gap years matter: converting before 73 has no RMD competing with it. Our Roth conversion guide covers the rules, and the calculator shows what filling a bracket each gap year does to your lifetime RMD income — the effect compounds and is frequently the largest number on the page.

4. Use the still-working exception

If you're still employed at 73, you may be able to postpone RMDs from your current employer's 401(k) or 403(b) until April 1 of the year after you retire — the "still-working" exception (IRS — RMD FAQs). Three limits to know:

• The plan must allow it. It's optional; check your summary plan description.
• It's for your current employer only. IRAs and 401(k)s left at former employers still follow the normal age-73 timeline.
• Not for 5%+ owners. If you own more than 5% of the sponsoring business, you don't qualify.

Used well, this defers the workplace-plan RMD into lower-income retirement years. One planning note: rolling old IRAs into that active 401(k) before 73 can extend the exception to that money too — a maneuver worth pricing out with an advisor.

5. Withhold from the RMD itself

This one doesn't cut the tax, but it prevents a needless penalty on top of it. Retirees who stop having wages withheld often trip the IRS's estimated-tax underpayment penalty. The elegant fix: have federal tax withheld directly from your RMD. Withholding is treated as paid evenly throughout the year no matter when it actually happens — so a single RMD taken in December with enough tax withheld can cover your entire year's safe-harbor requirement and erase an underpayment penalty that quarterly estimates would have left in place. It's the reason many planners deliberately schedule the RMD late in the year and route the tax straight out of it.

6. Fix your asset location

Which investments sit in which account changes how fast your traditional balance grows — and RMDs grow right along with it. Broadly, holding your fastest-growing assets in Roth and taxable accounts, and your slower, income-oriented holdings in the traditional IRA, keeps the RMD base from compounding as aggressively. The traditional dollars still grow, but a smaller balance at each year-end means a smaller forced distribution. This is a multi-year, whole-portfolio decision rather than a single trade, and it pairs naturally with the conversion strategy above — you're steering growth toward the buckets the RMD rules never touch.

7. Steer around IRMAA and the tax torpedo

For higher-income retirees the real damage from an RMD often isn't the bracket — it's what the extra income drags along with it. Because an RMD is ordinary income, it can lift your Medicare Part B and Part D premiums through IRMAA, which runs on a two-year lookback (your 2026 income sets your 2028 premiums). It can also push more of your Social Security benefit into the taxable column — up to 85% — and expose other investment income to the 3.8% NIIT. Diligent savers can build balances so large that RMDs alone spike all three at once: the "tax torpedo."

The defenses are the tools already on this page, aimed at your AGI: QCDs remove the RMD from income; gap-year conversions shrink the RMD before it ever forms; and bracket-aware timing keeps you under the next threshold. For the full IRMAA tier table and the levers that keep you below a bracket, see how to avoid IRMAA.

What to do with an RMD if you don't need it

A common frustration: the law forces income you didn't ask for. You must still take the distribution, but you have good options for the cash once it's out.

• Give it before you take it. If charity is on your list at all, a QCD means the money never becomes taxable income — strictly better than taking the RMD and donating cash.
• Reinvest it. Move the after-tax proceeds straight into a taxable brokerage account so the money keeps working. Note this doesn't undo the tax — the RMD is taxed the year you take it regardless.
• Fund a Roth conversion's tax bill. Use the RMD cash to pay the tax on a conversion of other traditional dollars, shifting more of your balance into the RMD-free Roth column.
• Gift to family. You can pass RMD proceeds to children or grandchildren within the annual gift-tax exclusion without federal gift-tax consequences.
• Consider a QLAC. Before RMDs begin, moving part of an IRA into a qualified longevity annuity contract (up to an IRS inflation-indexed limit) removes that amount from the RMD calculation until payments start later in life. Confirm the current-year dollar cap before acting.