Taxes
How RMDs Can Affect Retirement Taxes
The short answer
Required Minimum Distributions (RMDs) are withdrawals the IRS eventually requires from pre-tax accounts. Because they’re taxable, large accounts can create larger — and sometimes surprising — tax bills later in retirement.
Why RMDs catch families off guard
For years, your pre-tax 401(k) or IRA grows without being taxed. But that tax was deferred, not erased. Once RMDs begin, those withdrawals count as income — which can raise your tax bracket, increase the taxable portion of Social Security, and push up Medicare premiums (IRMAA).
Planning ahead can soften the impact
Strategies families explore — well before RMDs begin — include partial Roth conversions in lower-income years, coordinating withdrawals across account types, and charitable giving strategies. The key is that most of these work best when planned early.
Have questions about your own situation? Tracy is glad to talk it through with you — clearly and without pressure.