Required minimum distributions (RMDs) start at age 73, and they can quietly push you into a higher tax bracket by adding income you're forced to take whether you need it or not. The core of RMD tax planning strategies at age 73 is simple: the years before 73 are when you have the most control. Once RMDs begin, your options narrow. Acting early, while you still have flexibility, is where the real planning happens.
What is an RMD, and why does it start at 73?
An RMD is the minimum amount the IRS requires you to withdraw each year from most pre-tax retirement accounts once you reach a certain age. Under current law, that age is 73. The money in those accounts was never taxed going in, so the government uses RMDs to make sure it eventually gets taxed coming out.
- Required minimum distribution (RMD)
- The minimum amount you must withdraw each year from certain retirement accounts, starting at age 73 under current law. It's taxed as ordinary income.
- Pre-tax account
- A traditional IRA or 401(k) where contributions and growth were not taxed yet. Withdrawals are taxed as ordinary income.
- Ordinary income
- Income taxed at your regular federal rate: the same category as wages, not the lower rate that can apply to some investment gains.
Your first RMD can be delayed until April 1 of the year after you turn 73. But if you wait, you'll take two RMDs in that year, which can stack income and make a bracket problem worse.
The years before 73 are the years you control. Once RMDs start, the IRS sets the floor, and your choices get narrower.
How can RMDs push you into a higher tax bracket at age 73?
The problem isn't the RMD by itself. It's how the RMD lands on top of everything else you already report: Social Security, pensions, dividends, and any part-time income. Add a large RMD to that base, and the top slice of your income can fall into a higher bracket.
Here's the quiet part: RMDs are calculated as a percentage of your account balance, and that percentage rises as you age. So the more you've saved in pre-tax accounts, the larger the forced withdrawal, and the bigger the potential bracket impact.
The ripple effects beyond your bracket
A higher taxable income can do more than raise your tax rate. It can also:
- Increase the taxable portion of your Social Security benefits.
- Trigger higher Medicare Part B and Part D premiums through income-related adjustments.
- Reduce the benefit of certain deductions or credits tied to income.
This is why RMDs are best seen as one piece of a coordinated retirement income picture, not an isolated event. For a deeper look at how withdrawals interact with taxes, see our guide on how to reduce taxes on IRA distributions and 401(k) withdrawals.
What RMD tax planning strategies work best before age 73?
The most useful RMD tax planning strategies at age 73 actually start well before that birthday (often in the gap between retirement and 73, when your income may be lower and more flexible). Here are concepts to review with your own advisor and CPA.
1. Consider partial Roth conversions in lower-income years
A Roth conversion moves money from a pre-tax account to a Roth account. You pay ordinary income tax on the amount converted now, but that money (and its future growth) can then come out tax-free later, and it is not subject to RMDs during your lifetime. Done in smaller, planned amounts during lower-income years, conversions are designed to shrink the pre-tax balance that drives future RMDs.
2. Coordinate the order of your withdrawals
Which account you draw from first (taxable, pre-tax, or Roth) changes your tax picture over time. A coordinated withdrawal sequence is designed to smooth out taxable income across your retirement years instead of letting it spike at 73.
3. Use qualified charitable distributions if you give anyway
If you're charitably inclined, a qualified charitable distribution (QCD) lets you send RMD money directly to a qualified charity. The amount can count toward your RMD while staying out of your taxable income. Eligibility and limits apply under current law.
4. Model the impact before you retire
The single biggest advantage is time. Projecting your future RMDs while you still have years of flexibility lets you see the bracket problem coming, and act on it while the options are widest.
Comparison: acting before 73 vs. waiting
| Factor | Planning before age 73 | Waiting until RMDs begin |
|---|---|---|
| Control over taxable income | High: you choose the timing and amount | Low: the IRS sets the required floor |
| Roth conversion room | Often wider in low-income years | Narrower, and layered on top of the RMD |
| Ability to smooth brackets | Strong: spread income over many years | Limited: income can spike each year |
| Medicare premium impact | Can be planned around | Harder to manage after the fact |
How does this fit into a coordinated retirement income plan?
RMD planning is rarely a standalone move. It touches your tax return, your Social Security timing, your Medicare premiums, and how long your money lasts. When those pieces are handled by separate professionals who don't talk to each other, opportunities get missed, and a decision in one area can quietly undo progress in another.
At Anchor, we operate as a fiduciary under the Investment Advisers Act, a duty that applies across the whole advisory relationship. Our role is strategic planning and coordination. We work with your CPA and attorney, not around them. That coordination is where RMD planning usually earns its keep, because the RMD question can't be answered well in isolation. You can read more about how that model differs in Multi-Family Office vs Financial Advisor and about the fiduciary distinction in Fiduciary vs Reg BI Best Interest.
An RMD strategy that ignores Social Security, Medicare, and your withdrawal order isn't a strategy. It's a guess with good intentions.
Frequently asked questions
At what age do RMDs start?
Under current law, RMDs begin at age 73. Your first one can be delayed to April 1 of the following year, but delaying can stack two RMDs into one tax year. Check current IRS guidance, as ages have changed in recent years.
Are RMDs taxed as ordinary income?
Yes. Distributions from most pre-tax retirement accounts are taxed as ordinary income in the year you take them. That's why a large RMD can push the top slice of your income into a higher bracket.
Can Roth conversions eliminate my RMDs?
No strategy eliminates taxes owed on money you've never been taxed on. Partial Roth conversions are designed to reduce the pre-tax balance that drives future RMDs by paying tax on smaller amounts earlier, often in lower-income years. Outcomes depend on your situation and current law.
Do Roth accounts have RMDs?
Roth IRAs are generally not subject to RMDs during the original owner's lifetime under current law. Rules for inherited accounts and for Roth balances inside employer plans can differ, so confirm the specifics with a qualified tax professional.
Why should I plan for RMDs years before I turn 73?
Because the years before 73 usually give you the most control over your taxable income. Once RMDs begin, the IRS sets a required minimum, and your ability to smooth income across brackets narrows.
Do RMDs affect my Medicare premiums?
They can. A higher taxable income from RMDs may increase income-related adjustments to Medicare Part B and Part D premiums. This is one reason RMD planning works best as part of a coordinated income strategy.
Sources
- IRS, Retirement Plan and IRA Required Minimum Distributions FAQs. RMD start age, calculation basis, and timing rules.
- IRS, Retirement Topics: Required Minimum Distributions (RMDs). How RMDs apply across account types and QCD rules.
- SSA, Income Taxes and Your Social Security Benefit. How added income can increase the taxable portion of benefits.
- Medicare.gov, Medicare Costs. How income affects Part B and Part D premiums.
This article is for educational purposes only and does not constitute financial, tax, or legal advice. Anchor Financial Group is a registered investment adviser; investing involves risk, including the possible loss of principal, and past performance does not guarantee future results. Consult a qualified advisor about your specific situation.
