The IRS will make
you withdraw money
You can't leave money in a traditional IRA or 401(k) forever. The IRS mandates minimum withdrawals starting at age 73 — whether you need the income or not. A large traditional balance means large forced income and potentially large tax bills.
What is an RMD?
When Congress created traditional retirement accounts, they deferred taxes — but they didn't eliminate them. The deal: invest pre-tax, defer the tax, but eventually pay up. RMDs are the IRS's mechanism for collecting that deferred tax.
Each year, you must withdraw at least a minimum amount based on your account balance and a life expectancy factor from the IRS Uniform Lifetime Table. The formula is simple:
The life expectancy factor starts at 26.5 at age 73 (meaning you must withdraw at least 1/26.5 ≈ 3.77% of your balance) and decreases every year, forcing larger and larger percentage withdrawals as you age.
The IRS life expectancy table
| Age | IRS Factor | Min Withdrawal % |
|---|---|---|
| 73 | 26.5 | 3.77% |
| 75 | 24.6 | 4.07% |
| 77 | 22.9 | 4.37% |
| 80 | 20.2 | 4.95% |
| 83 | 17.7 | 5.65% |
| 86 | 15.2 | 6.58% |
| 90 | 12.2 | 8.20% |
IRS Publication 590-B, Uniform Lifetime Table (2022 revision). At 90 you must withdraw 8.2% of your balance — every single year.
See your RMD schedule
Adjust the traditional balance at age 73 to see the required distribution schedule. Notice how the dollar amounts grow even as the balance may decline — the rising percentage requirement is relentless.
Why large RMDs are a problem
A $3M traditional balance at 73 creates a $113k first-year RMD. Added to Social Security and any other income, this easily pushes you into the 22–24% federal bracket — regardless of what you want to spend.
High RMD income triggers Medicare premium surcharges (IRMAA). In 2025, income over $103k/yr (single) or $206k/yr (MFJ) adds hundreds per month to your Medicare Part B and D premiums.
You must take RMDs even in bad market years. This means selling assets at depressed prices on a schedule the IRS dictates, not when makes strategic sense.
Heirs who inherit a traditional IRA must withdraw all funds within 10 years, accelerating the tax hit. Large balances become a large tax burden for your children.
What you can do
The best time to manage RMDs is before they start — specifically, in the gap between retirement and age 73. Roth conversions during this window shrink your traditional balance and reduce future RMDs.
Between retirement and the start of Social Security, your income often drops to its lowest point in decades. You can strategically convert traditional funds to Roth — paying tax at the current low rate — to shrink the balance that will be subject to RMDs. Even converting $50–100k/year for a few years can meaningfully reduce future RMD obligations.
Model your RMDs in the optimizer
The Roth Conversion Optimizer projects your traditional balance at 73, models the full RMD schedule, and shows exactly how much you could save in lifetime taxes with conversions.