How to Avoid RMDs: Roth Conversions, QCDs, and Exceptions

The main legal ways to avoid RMDs are converting traditional IRA and pre-tax 401(k) balances to a Roth, routing distributions straight to charity through qualified charitable distributions, moving a portion of savings into a qualifying longevity annuity, and, if you are still working past 73, using the still-working exception on your current employer’s plan. None of these erase the rules entirely, but each one targets a different piece of the calculation, and used together they can drop your required withdrawals to a fraction of what they would otherwise be, or to zero. Under federal law, most retirement account owners must start withdrawing a calculated amount each year once they turn 73, and those withdrawals get taxed as ordinary income.¹ The starting age rises to 75 for anyone born in 1960 or later. Every dollar of an RMD adds to your adjusted gross income, which can push you into a higher tax bracket and trigger Medicare premium surcharges two years down the road.

Convert Pre-Tax Balances to a Roth IRA

Moving money from a traditional IRA or pre-tax 401(k) into a Roth IRA is the most powerful lever available. Roth IRAs have no lifetime distribution requirement for the original owner, so every dollar you convert is permanently removed from the pool subject to mandatory withdrawals.¹ The converted amount grows tax-free from that point, and qualified withdrawals in retirement come out tax-free as well.

The catch is that you owe income tax on the full converted amount in the year of the transfer. Timing matters. The best window for large conversions is often the gap between retirement and age 73, when your income is typically lower than it will be once Social Security and RMDs kick in. Converting during those lower-income years lets you fill up cheaper tax brackets and avoid being forced into expensive ones later. There is no annual cap on conversions, but converting too much in a single year can push you into a bracket that erodes the benefit, so many people spread conversions across several years.

A well-planned conversion strategy also considers Medicare. Part B and Part D premiums carry an income-related surcharge, and the standard 2026 Part B premium of $202.90 per month climbs sharply once modified adjusted gross income crosses $109,000 for singles or $218,000 for joint filers, based on the tax return from two years earlier.² Keeping each year’s conversion income under the nearest threshold protects future premiums.

Watch the Pro-Rata Rule

If you have both deductible and nondeductible contributions in your traditional IRAs, you cannot cherry-pick the after-tax dollars to convert. The IRS treats all of your traditional IRAs as a single pool and taxes the conversion proportionally based on the ratio of pre-tax to after-tax dollars across every account.³ Someone with $180,000 in deductible contributions and $20,000 in nondeductible contributions has a 90% pre-tax ratio, so 90% of any conversion is taxable regardless of which account the money leaves from. Rolling deductible IRA balances into a current employer’s 401(k) before converting can sometimes sidestep this issue, because employer plan balances are not counted in the pro-rata calculation.

The Five-Year Rule

Each Roth conversion starts its own five-taxable-year clock. If you withdraw the converted amount before that period ends and you are under age 59½, the 10% early withdrawal penalty applies to the taxable portion of the conversion.⁴ For anyone converting specifically to shrink RMDs at 73, the penalty is rarely an issue because they are already past the age threshold. Earnings on converted funds follow a separate five-year rule: they are only tax-free once you have held any Roth IRA for at least five taxable years and you meet a qualifying condition such as being over 59½.

Use a Designated Roth 401(k)

Starting in 2024, designated Roth accounts inside 401(k), 403(b), and governmental 457(b) plans no longer require distributions during the account owner’s lifetime.¹ Before that change, only Roth IRAs had that exemption, and many people rolled workplace Roth balances into a Roth IRA just to avoid RMDs. That extra step is no longer necessary. If your employer offers Roth 401(k) contributions, directing future salary deferrals to the Roth side builds a pool of money that will never be subject to mandatory withdrawals for you.

Use the Still-Working Exception

If you keep working past 73, most employer-sponsored plans let you delay RMDs from your current employer’s plan until the year you actually retire.⁵ The exception applies to 401(k), 403(b), profit-sharing, and similar defined-contribution plans, but the plan document must specifically allow the delay. If it does not, you follow the standard age-based schedule regardless of your employment status.

The exception has real limits. It does not cover traditional IRAs, SEP IRAs, or SIMPLE IRAs. Owners of those accounts must begin taking distributions by April 1 of the year after turning 73, even if they are still earning a paycheck. It also does not cover accounts left with a former employer. If you have an old 401(k) from a previous job and you are still working elsewhere, that old account is subject to RMDs on the normal schedule. Rolling previous employer balances into your current plan can shelter them under the exception, but only if the current plan accepts incoming rollovers. And anyone who owns more than 5% of the business sponsoring the plan cannot use the exception at all. That threshold applies whether the ownership is direct or through family attribution rules.⁵

Send Distributions Directly to Charity

A qualified charitable distribution lets you transfer money directly from a traditional IRA to a qualifying charity, and that transfer counts toward your RMD without being included in your taxable income. For 2026, the annual limit is $111,000 per person.⁶ A married couple with separate IRAs can each make QCDs up to that limit. You must be at least 70½ to use this strategy, which means you can start a few years before RMDs even begin.³

The transfer must go directly from your IRA custodian to a 501(c)(3) organization. If the money passes through your hands first, it counts as a regular taxable distribution even if you immediately send it to the charity. Donor-advised funds and private foundations do not qualify. A separate one-time election allows up to $55,000 to go to a split-interest entity such as a charitable remainder trust.⁶

QCDs are especially valuable for anyone who already gives to charity and takes the standard deduction. The standard deduction gives no separate tax benefit for charitable gifts, but a QCD provides a full exclusion from income whether you itemize or not.

Lock Up a Portion in a Longevity Annuity

A qualifying longevity annuity contract lets you set aside up to $210,000 of your retirement savings into a deferred annuity that does not begin paying out until as late as age 85.⁶ Money placed in the QLAC is excluded from your account balance when calculating annual RMDs, which directly lowers the amount you are forced to withdraw each year.

The tradeoff is liquidity. You are giving up access and investment flexibility in exchange for a smaller RMD now and a guaranteed income stream later. QLACs work well for people who have enough other assets to cover early-retirement expenses and want insurance against outliving their savings. They fit poorly if you might need that money before 85. A QLAC can be structured as a joint-life annuity covering a spouse, and the survivor can receive payments up to 100% of what the original owner would have received. If both spouses die before the premiums are fully recovered, a return-of-premium feature can pass the remaining balance to another beneficiary.

Why These Strategies Work

Your RMD for any given year equals your total tax-deferred account balance as of December 31 of the prior year, divided by a life expectancy factor from the IRS Uniform Lifetime Table.⁵ At age 73, the divisor is 26.5, so someone with a $500,000 balance would owe roughly $18,868 that year. At 74 the divisor drops to 25.5, and at 75 it is 24.6, so the required percentage rises each year.⁷ Each strategy above targets a different piece of that formula. A Roth conversion reduces the December 31 balance permanently. A QLAC removes a chunk of that balance from the calculation entirely. A QCD satisfies the withdrawal without adding to taxable income. The still-working exception delays the calculation from applying at all to a specific plan.

What Happens If You Skip an RMD

Failing to take a required distribution triggers a 25% excise tax on the shortfall, meaning the difference between what you were required to withdraw and what you actually took. If your RMD was $20,000 and you withdrew nothing, the penalty is $5,000 on top of the income tax you still owe on the distribution itself. The penalty drops to 10% if you correct the shortfall within two years.¹ You report the excise tax and request a waiver on Form 5329, and the IRS can waive part or all of the penalty if you show the shortfall was due to reasonable error and you have taken steps to fix it.⁸ Skipping is not a strategy.

Inherited Accounts Follow Different Rules

None of the strategies above rescues a beneficiary from the rules that apply to inherited retirement accounts. For deaths occurring in 2020 or later, most non-spouse beneficiaries must empty an inherited traditional IRA or 401(k) by the end of the tenth year following the original owner’s death.⁹ Five categories of eligible designated beneficiaries can still stretch distributions over their own life expectancy: a surviving spouse (who can also roll the account into their own IRA and treat it as their own), a minor child of the deceased (until reaching the age of majority, after which the ten-year clock starts), a disabled individual as defined under IRC Section 72(m)(7), a chronically ill individual certified by a licensed health care practitioner, and any beneficiary no more than ten years younger than the deceased.⁵

The same Roth logic works in reverse from the account owner’s side: converting assets to Roth before death still leaves the beneficiary bound by the ten-year emptying rule, but they will not owe income tax on those withdrawals. That is often the single most valuable thing a Roth conversion accomplishes for a family, separate from any lifetime RMD savings.

1
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
2
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
3
Office of the Law Revision Counsel. 26 U.S.C. 408 – Individual Retirement Accounts
4
Office of the Law Revision Counsel. 26 U.S.C. 408A – Roth IRAs
5
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
6
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living Notice 2025-67
7
Internal Revenue Service. Publication 590-B (2025), Distributions From Individual Retirement Arrangements (IRAs)
8
Internal Revenue Service. Instructions for Form 5329
9
Internal Revenue Service. Retirement Topics – Beneficiary