RMD Strategy: Managing Required Minimum Distributions at $1M–$5M

At $1M–$5M in pre-tax retirement accounts, Required Minimum Distributions aren't just an inconvenience — they're a multi-decade forced liquidation schedule that can add $40,000–$120,000/year in taxable income starting at age 73 or 75, often pushing you from the 22% bracket into 32% or higher and triggering Medicare IRMAA surcharges two years later. The planning window to reduce this is now, not at 72.

Which accounts trigger RMDs — and which don't

Subject to RMDs: Traditional IRA, 401(k), 403(b), 457(b), SEP-IRA, SIMPLE IRA. All pre-tax accounts where contributions reduced taxable income.

Not subject to RMDs (during owner's lifetime): Roth IRA (never has lifetime RMDs). Roth 401(k) and Roth 403(b) also eliminated lifetime RMDs starting January 1, 2024, under SECURE 2.0 § 325.¹ If you have a Roth 401(k) and haven't rolled it to a Roth IRA, this change now applies.

Inherited accounts: Non-spouse beneficiaries of any retirement account — including Roth IRAs — must deplete the inherited account within 10 years. Under T.D. 10001 (July 2024), if the original owner had passed their Required Beginning Date, beneficiaries must also take annual RMDs in years 1–9.²

RMD age rules under SECURE 2.0

SECURE 2.0 § 107 changed the RMD start age in two stages:³

• Born 1951–1959: RMDs begin at age 73. Required Beginning Date is April 1 of the year following the year you turn 73.
• Born 1960 or later: RMDs begin at age 75. Required Beginning Date is April 1 of the year following the year you turn 75.

Taking your first RMD in year 2 means two RMDs in that calendar year (the delayed first plus the current year's), which often produces a larger combined tax bill than simply taking the first RMD on schedule. Most advisors recommend against delay.

How RMDs are calculated

Each year: RMD = prior December 31 account balance ÷ Uniform Lifetime Table (ULT) divisor for your age.⁴

The ULT divisor shrinks as you age — from 26.5 at 73 to 16.0 at 85 to 12.2 at 90. On a growing portfolio, this means RMD amounts often increase year-over-year even as a percentage of the account grows, because both the numerator (balance) and the shrinking denominator compound together. A $1M IRA growing at 6% generates RMDs that rise from $37,736/yr at 73 to over $60,000/yr by the mid-80s before the larger percentage withdrawals finally draw the balance down.

RMD Projection Calculator — 2026

Enter your current age, pre-tax balance, and expected growth rate to see your projected RMD schedule from your first required distribution year through age 90. If you haven't started RMDs yet, the calculator projects your balance forward to your RMD start age first.

The IRMAA cascade: how RMDs raise Medicare costs two years later

Medicare IRMAA surcharges use income from two years prior. An RMD that pushes your 2026 MAGI above $109,000 (single) or $218,000 (MFJ) triggers a $974/year per-person surcharge on your 2028 Medicare Part B premium — with higher tiers adding up to $5,754/year per person at the top bracket.⁵

For a $1.5M IRA at age 73, the first RMD alone ($56,600) stacked on $80,000 of other income produces $136,600 in MAGI — above the single-filer IRMAA first tier — before you've made any active choices. The IRMAA planning guide covers how to target specific tier boundaries and use strategies like QCDs and income spreading to minimize the cascade effect.

5 strategies to reduce your lifetime RMD burden

1. Roth conversions before RMD age (highest leverage)

Every dollar converted from a traditional IRA to Roth before your Required Beginning Date permanently removes it from the RMD calculation. A 60-year-old with a $1M IRA who converts $50,000/year for 13 years converts $650,000 — reducing peak annual RMDs by $25,000–$35,000/year at sustainable tax rates of 22%–24%. After RMD age, conversions are still possible but require taking the RMD first (you cannot convert an amount that would have otherwise been an RMD). See the Roth conversion sweet spot finder to calculate your annual optimal conversion amount.

2. Qualified Charitable Distributions at 70½+ ($111,000/year)

Once you reach age 70½, you can make Qualified Charitable Distributions (QCDs) directly from your IRA to a qualified charity — up to $111,000 per person in 2026.⁶ QCDs satisfy your RMD for the year without counting as taxable income — they don't appear in adjusted gross income at all. For charitable givers, this is superior to taking the RMD and donating cash: cash donations require itemizing, and most $1M–$5M investors take the standard deduction. A married couple both 72+ can exclude up to $222,000 combined from income via QCDs annually. See the charitable giving strategy guide for mechanics.

3. Qualified Longevity Annuity Contract (QLAC) — $210,000 in 2026

A QLAC is a deferred income annuity purchased inside a traditional IRA or 401(k) that starts paying income at a future date (up to age 85). The QLAC balance is excluded from RMD calculations until distributions begin.⁷ In 2026, the maximum QLAC investment is $210,000 (up from $200,000 in 2025, inflation-indexed under SECURE 2.0 § 202 per IRS Notice 2025-67). Practical effect: a 67-year-old who moves $210,000 of a $1M IRA into a QLAC set to begin paying at 82 reduces the RMD base to $790,000 for 15 years — lowering annual RMDs by roughly $8,000–$10,000 during that period. The tradeoff is illiquidity and counterparty risk with the insurance carrier.

4. Still-working exception (employer plan, not IRA)

If you are still employed and a participant in your current employer's 401(k) or 403(b), you can generally defer RMDs on that specific employer plan's balance until you retire — regardless of age.³ This exception does not apply to IRAs or to plans at prior employers. A 74-year-old still working and actively contributing to their current employer's 401(k) can leave that plan's balance growing untouched — but must still take RMDs from their traditional IRA and any old-employer 401(k) accounts that haven't been rolled into the current plan.

5. Leave Roth 401(k) balances in place — or roll to Roth IRA

Pre-2024, Roth 401(k) and Roth 403(b) accounts had lifetime RMDs just like traditional accounts. SECURE 2.0 § 325 eliminated these starting January 1, 2024.¹ If you have an old Roth 401(k) that hasn't been rolled to a Roth IRA, you no longer need to roll it for the RMD benefit — but rolling it still makes sense for investment flexibility and simplicity. More importantly: if you have an existing Roth 401(k) that was set up before 2024 and assumed RMDs were required, review your distribution planning — the mandatory distribution assumption is now gone.

Timing RMDs with Roth conversion strategy

One nuance: Roth conversions and RMD avoidance compete for the same bracket space. In the year you turn 73 (or 75), you must take your RMD before converting any additional IRA balance to Roth — you cannot treat the RMD amount itself as a conversion. If your RMD alone fills your 22% bracket, adding a Roth conversion on top means converting at 24% or higher. This is still often correct, but requires careful coordination. The 5-year pre-retirement checklist walks through the optimal sequencing for the years immediately before and after RMD age.

1. SECURE 2.0 Act (P.L. 117-328) § 325: Roth 401(k) and Roth 403(b) accounts no longer subject to lifetime required minimum distributions, effective plan years beginning after December 31, 2023. IRS Retirement Topics — RMDs
2. T.D. 10001, July 2024: Finalized regulations on inherited IRA annual RMD requirement (years 1–9 of the 10-year rule) when the original account owner died after their Required Beginning Date. Federal Register 2024-15068
3. SECURE 2.0 Act (P.L. 117-328) § 107: RMD age raised to 73 for individuals born 1951–1959 and to 75 for individuals born 1960 or later; still-working exception for current employer plans. IRS Retirement Topics — RMDs
4. IRS Publication 590-B (2025), Appendix B, Table III — Uniform Lifetime Table: applicable divisors for IRA owners whose spouse is not the sole beneficiary or not more than 10 years younger. Effective 2022 per T.D. 9930. irs.gov/publications/p590b
5. CMS 2026 Medicare Parts B and D IRMAA fact sheet: first-tier threshold $109,000 single / $218,000 MFJ; base Part B premium $202.90/month; top-tier surcharge $443.90/month per person. CMS.gov
6. IRS Notice 2025-67: 2026 QCD limit $111,000 per person (age 70½+), indexed for inflation under SECURE 2.0. irs.gov/pub/irs-drop/n-25-67.pdf
7. IRS Notice 2025-67 and SECURE 2.0 § 202: 2026 QLAC maximum premium $210,000 (increased from $200,000 in 2025); 25%-of-balance cap eliminated by SECURE 2.0; QLAC balance excluded from RMD calculations until annuity starting date. irs.gov/pub/irs-drop/n-25-67.pdf

MillionaireAdvisorMatch is a referral service, not a licensed advisory firm. We may receive compensation from professionals in our network. Content is for informational purposes only and does not constitute financial, tax, or investment advice. Values verified as of May 2026 against IRS Notice 2025-67, IRS Publication 590-B, SECURE 2.0 (P.L. 117-328), T.D. 10001, and CMS 2026 IRMAA guidance.