Saving & Spending Taxes

6 Legal Ways To Avoid Taxes on Required Minimum Distributions (RMDs)

There may be ways to avoid a big IRS bill.

By Josh Koebert , Edited by Jessica Gibson

Updated May 7, 2026

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If you have money in tax-advantaged retirement accounts, you will be required to start taking required minimum distributions (RMDs) in the year you turn 73 if you were born between 1951 and 1959. This age is 72 if you were born between July 1, 1949, and Dec. 31, 1950, and 75 if you were born in 1960 or later.

That means you must start withdrawing a minimum amount of money from your accounts on a schedule determined by the IRS.

When you withdraw the money from these accounts, you will have to pay taxes on those distributions at your ordinary income tax rate. This can sometimes lead to a big tax bill. However, there are ways you can avoid wasting money on these taxes. Here are six possible options.

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First, what is an RMD?

When you have a tax-advantaged retirement plan, such as a 401(k) or IRA, the IRS wants to ensure you eventually withdraw money from the account so it can collect taxes.

To ensure the government gets its piece of your earnings, required minimum distributions start at age 70.5, 72, 73, or 75, depending on the year you were born, for the following types of accounts:

Traditional IRAs
SIMPLE IRAs
SEP IRAs
403(b) plans
401(k) plans
457(b) plans
Profit-sharing plans
Other defined contribution plans
Roth IRA beneficiaries

If you do not take your RMDs when required, or if they aren't large enough, you will have to pay a 25% penalty on the amount not distributed as required. But if you do take them, you'll be taxed at your ordinary rate on the money.

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1. Roll funds over into a Roth IRA

With traditional IRAs, you can typically deduct your contributions from your income taxes, depending on your MAGI, filing status, and whether you're covered by a workplace retirement plan. With Roth IRAs, you contribute after-tax funds, so you don't have to worry about taxes later.

Because RMDs are not required from a Roth IRA, you may be able to avoid having to take these minimum distributions if you move your retirement money from a traditional IRA, 401(k), or another tax-advantaged account.

You can do this with a Roth IRA conversion, which occurs when you roll money from a traditional IRA into a Roth IRA.

However, rolling over your money into a Roth is a taxable event. You will owe taxes on any pre-tax funds you convert.

2. Keep working

If you were born between 1951 and 1959 and have a workforce retirement plan, you do not have to take RMDs starting at age 73 if you're still working and don't own more than 5% of the business.

In these situations, you could wait to take RMDs until the year you retire.

However, this works only for your current employer's plan. If you have a traditional IRA or a 401(k) from a company you no longer work for, you will still need to take your RMDs at 73.

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3. Consider a Qualified Longevity Annuity Contract (QLAC)

If you don't need the funds from RMDs starting at your required age, you can use some of the money in your 401(k) or IRA to purchase a Qualified Longevity Annuity Contract or QLAC.

You may contribute up to $210,000 to a QLAC.

When you fund a QLAC, you can choose to begin receiving income from it on a designated start date, which can be as late as age 85. Any of the money you have invested in your QLAC will no longer count when RMDs are calculated. This means you don't have to withdraw as much, which lowers your tax bill.

4. Marry someone younger

Oddly, the age of your spouse can affect the amount of required minimum distributions you are mandated to take. The IRS allows you to use different life expectancy tables depending on your unique situation.

The amount of your RMD is based on the balance of your accounts at the end of the previous year and a life expectancy factor based on your and your spouse's ages.

If your spouse is at least 10 years younger than you and is the sole beneficiary of your IRA, you'll use the Joint Life and Last Survivor Expectancy Table.

5. Donate money to charity

If you don't need the money to supplement your retirement income, you can donate all or part of your required minimum distributions directly to a charitable organization through a qualified charitable distribution.

The IRA will send the money directly from your account to the qualified charity of your choosing. You can then exclude the charitable contribution amount from your taxable income.

You must be at least 70 1/2 to begin making QCDs, and you can make a maximum of $108,000 in qualified charitable distributions annually.

You also must take the QCD by the deadline for the year's required minimum distribution (for most, the deadline is Dec. 31).

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6. Time your first distributions right

Rather than the year you retire, you can wait until April 1 following the year in which you reach the applicable RMD age. Some retirees wait to take their RMD because they think they'll be in a lower tax bracket that year.

If you wait and take your first distribution the year after you turn 73, for example, you'll have to take another RMD by Dec. 31 of that year. Taking two RMDs could mean a larger-than-expected tax bill for that year.

Depending on your situation, it might be better to take your first RMD in the calendar year you reach the applicable RMD age to eliminate some money stress. A tax or financial advisor can help you decide the best timing for taking your RMDs.

Bottom line

If you're planning for retirement, RMDs can complicate things. You may not want to take money out of your retirement accounts on a set schedule determined by the IRS.

But you must comply with RMD rules to avoid penalties, and you must be ready to pay taxes on the distributed funds, especially if you're trying to grow your wealth.

Tax advisors and software can help you understand your tax obligations and ensure you're paying the least amount of income tax possible.

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