Retirees: What You Can and Can’t Control About Required Minimum Distributions

After RMDs start, retirees have limited flexibility on when and how much they withdraw, but they can still choose which assets the money comes from.

For many retiree households, required minimum distributions are not a major issue. They already need to draw on retirement savings to cover everyday expenses, so they are not waiting for the government to tell them when to spend. Their cash flow is simply dictated by their needs.

For wealthier retirees, though, RMDs can be more troublesome. The first years of retirement are often relatively low-tax years because wages have stopped and retirees can control how much they take from their portfolios, and therefore how much tax they owe. Once RMDs begin at age 73, however, taxable income is largely beyond their control, and tax bills often rise.

RMDs can also trigger other consequences, including the Income-Related Monthly Adjustment Amount, an extra Medicare surcharge that applies when income rises above certain thresholds. The burden tends to be especially frustrating for people who started saving for retirement in the 1980s and 1990s, when pretax contributions were the standard approach. Roth IRAs were not available until 1997.

The main question is how much control retirees actually have over these withdrawals once they reach RMD age, including the timing, the size of the distribution, and the account used. Each deserves a closer look.

Can You Control the Timing of RMDs?

Control Level: Minimal

Retirees have only limited influence over when RMDs begin through their required beginning date, which is April 1 after the year they turn 73. For instance, if Candace turns 73 in June 2026, she has until April 1, 2027, to take her first RMD. Waiting can postpone the tax bill for nearly a year, but it also means taking a second RMD by the end of 2027. For that reason, delaying the first withdrawal is often not ideal, although special circumstances may make it worthwhile. Getting tax advice is a good idea.

People over 73 who are still working and covered by an employer retirement plan may also delay RMDs from that plan, as long as they do not own more than 5% of the company. But if they have a separate IRA, RMDs still must come from that account. Some 401(k) plans also allow participants to roll outside assets into the plan, which can help those assets avoid RMDs as well, although the withdrawals will eventually begin once employment ends.

After RMDs start, retirees may take them at any point during the year. Some prefer to withdraw early so they do not forget. That approach can also help because taxes withheld from RMDs are treated by the IRS as if they were paid evenly throughout the year, which can reduce the risk of underpayment penalties.

Others wait until late in the year so they can coordinate the distribution with year-end tax planning and charitable giving. Taking an RMD later also allows for a small amount of extra tax-deferred growth, though that benefit is usually too small to matter much.

A common misconception is that retirees can shrink their tax bill by timing RMDs around market declines. In reality, the amount is effectively set by the end of the prior year. For example, a RMD due in one year is based on the account balance at the end of the previous year. Even if markets fall afterward, waiting until then does not reduce the required amount. In short, there is no real tactical advantage to delaying an RMD for timing purposes.

In severe market downturns, Congress has occasionally suspended RMD requirements. That happened at the start of the pandemic and also in 2009. Such relief can protect retirees from being forced to withdraw when markets and portfolio values are depressed, but it has been rare.

Can You Control the Amount of RMDs?

Control Level: Moderate

Investors have somewhat more room to influence the size of their RMDs, although the best opportunities to reduce them, and the related taxes, usually come before RMDs begin. One important lever is contributing to Roth accounts instead of traditional tax-deferred accounts. The years after retirement but before RMDs begin are also a strong time to convert traditional IRA money to Roth, since retirees often have more control over taxable income then. Another option is to take withdrawals earlier from accounts that will eventually be subject to RMDs, which can reduce future balances while tax rates are still relatively low.

Qualified charitable distributions can also be useful for people between ages 70½ and 73. This is a good time to consult tax advice and determine whether these moves make sense. A financial or tax advisor can help estimate how much to convert or withdraw without pushing income into a higher bracket.

Once RMDs are underway, QCDs become one of the best ways to reduce taxes tied to those distributions. By sending part of an IRA directly to charity, up to $110,000 in 2026, retirees can avoid the taxes that would be due if they received the RMD and then donated the money separately. The QCD also counts toward all or part of the RMD requirement and lowers the balance that remains subject to future RMDs. For older adults who give to charity, this is usually more tax-efficient than taking the IRA distribution and then writing a check to the nonprofit.

Can You Control the Source of RMDs?

Control Level: Significant

This is one area where retirees have meaningful flexibility, and it is often underused: choosing which holdings or accounts to use for an RMD. This strategy does not change the tax owed on the withdrawal, but it can help manage portfolio risk or support other investment goals.

For example, suppose an IRA holds 10 investments, including U.S. stocks, non-U.S. stocks, bonds, and cash. As long as the required withdrawal amount is met, the retiree can decide where to take the money from. If U.S. equities have rallied for a long stretch, the retiree might take the RMD from those holdings, especially large-growth stocks, to rebalance and reduce risk. In a year like 2022, when both stocks and bonds were down, the retiree might choose cash instead. This approach can work especially well for those using a bucket strategy.

Retirees with more than one IRA can also direct RMDs to specific accounts. For instance, if one IRA holds index mutual funds and another smaller IRA contains individual stocks, a retiree who wants a simpler portfolio could take the entire RMD from the stock account and leave the fund account untouched. The key is to withdraw the correct amount from the IRAs; the choice of which IRA to use is up to the retiree. It is also worth noting that investments inside an IRA can be changed at any time without tax consequences, so RMDs are not needed for portfolio adjustments.

There is one important exception: if the retiree has different types of accounts subject to RMDs, such as an IRA and a 401(k), the calculation must be done separately for each one, and each account must satisfy its own RMD. In that case, a retiree cannot take everything from the IRA and ignore the 401(k).

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.