Retirement Retirement Planning

6 Perfectly Legal Ways Retirees Can Shrink Their RMDs in 2026

These often-overlooked strategies might help you reduce your RMDs.

Edited by Laura Hohenstein

Updated Jan. 21, 2026

If you have a non-Roth retirement account, you'll typically need to take required minimum distributions (RMDs) once you turn 73 to avoid facing IRS penalties. These withdrawals matter since they not only give you less flexibility in retirement but can also increase your taxable income and Medicare premiums. If you don't account for RMDs in your retirement plan, you could end up with a surprise tax bill.

While you might not avoid RMDs altogether and should know there's no universal solution, you can consider these six legal ways that retirees can shrink their RMDs in 2026.

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Do Roth conversions before RMDs apply

If you're already retired, you might think that it's too late to convert traditional retirement contributions to a Roth IRA and minimize RMDs. While those who are 73 or older must take a full RMD in the year they do a Roth conversion, your age isn't a drawback when you make this money move before RMDs apply.

You'd transfer funds from the traditional account to the Roth IRA and pay income taxes due on both the original pre-tax contributions and any growth. Depending on your account balance, you might convert a large lump sum or strategically transfer funds over several years.

Because of the taxes due upon conversion, you'll need to time the conversion strategically. Typically, you'll benefit most when you do the conversions in years when you're in a lower tax bracket than when you'll make withdrawals.

After completing the conversion, you won't have to take RMDs from your Roth IRA, and future distributions will be tax-free as long as you meet the IRS requirements.

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Take advantage of the "still working" exception

While RMDs apply to most tax-advantaged retirement accounts regardless of employment status, some working retirees overlook a loophole for 401(k) accounts and similar employer-sponsored plans.

The IRS allows active employees with such plans to take advantage of the "still-working" exception, which means they can delay RMDs until April 1st of the year after they retire from the sponsoring company. The catch is that your 401(k) plan must have a provision allowing this delay, and you must own less than 5% of the company you're working for.

While you'd still have to make any RMDs from IRAs and other plans not with your current employer, this legal option might help you lower your taxable income for the year in which you qualify. However, it comes with a few downsides. Besides needing to work longer than you might prefer, you'll likely face larger RMDs and potentially bigger tax bills later after leaving the company.

Make qualified charitable distributions (QCDs)

If you've planned to give some of your retirement savings to charities, you can consider shrinking your taxable RMDs through qualified charitable distributions (QCDs) from eligible IRAs. Examples include traditional, Roth, and inactive SIMPLE and SEP IRAs.

You'd need to be at least 70.5 years old and arrange for your IRS custodian to directly transfer up to the annual QCD limit ($111,000 in 2026) to an eligible charitable institution, which excludes individuals and entities like private foundations. And if you're married, your spouse can transfer the same maximum annual QCD amount from eligible IRAs.

While the eligible transferred amount counts toward your RMDs, you won't include the money as part of your taxable income for the year. You'll still need to report it on your return, and you won't get an additional charitable contribution deduction. There are also some complexities involving QCDs, so working with a financial advisor or tax expert is wise.

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Make your younger spouse the sole beneficiary

If you're married to someone more than 10 years younger, you might not know that you can reduce your RMDs if you make your spouse your IRA's sole beneficiary. The IRS considers life expectancy to determine your RMD amount, and it will consider both of your ages when you choose this strategy.

Rather than using the single life expectancy table to find your specific age, you'll be able to use the joint and last survivor life expectancy table to locate the intersection of your ages. For example, if you were 73 and your spouse were 60, the IRS would consider your life expectancy to be 28.6 years based on the joint table.

Ultimately, a longer life expectancy leads to smaller RMDs. However, you should consider beneficiary designations carefully and remember that this strategy doesn't delay your RMDs.

Strategically coordinate withdrawals across account types

If you have a mix of traditional and Roth accounts, you may be overlooking how you might reduce both your RMD amounts and tax bill through strategic withdrawals before you turn 73.

One strategy is to prioritize withdrawing funds from traditional accounts in your earlier retirement years, as early as age 59 1/2. While you'll need to pay taxes on that money, you could time these withdrawals in years when you have minimal other taxable income. You might pair this with delaying Social Security to reduce your income now and enjoy a higher benefit amount later.

By doing so, your lower account balance at age 73 would mean smaller annual RMDs. Plus, you can let the money in Roth accounts continue to grow tax-free. However, you should consider speaking with a financial advisor to determine the best way to manage withdrawals and maximize your savings.

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Purchase a qualified longevity annuity contract (QLAC)

Some retirees overlook annuities as part of their retirement plan because they worry about the associated fees, potential returns, or limited flexibility. However, they can be helpful if you're looking for guaranteed lifetime income and worry about potentially outliving your savings.

A qualified longevity annuity contract (QLAC) can help you reduce your RMDs in your earlier retirement years. You can use your retirement savings to purchase this annuity, up to a lifetime limit of $210,000 for the 2026 tax year. While RMDs will ultimately apply to these funds, you can delay taking them and paying taxes on the payments until you turn 85.

Once you start receiving payments, they will typically be equal monthly amounts, which means there is a trade-off in flexibility. Plus, you should consider your future taxable income to determine if you might end up in a higher bracket once your QLAC's RMDs begin.

Bottom line

Since RMD rules are strict in 2026, considering these options can help you avoid unpleasant tax consequences. But remember that no RMD-shrinking strategy is right for everybody, so consider your overall financial situation and the pros and cons to determine what makes sense for you.

This is also a good time to make sure you avoid running out of money in retirement, including having a realistic budget, diversifying your retirement income options, and withdrawing funds sustainably.

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