April RMD? Five Tax Strategies to Manage Your 2025 Income

April 1 isn’t just April Fool’s Day. It’s also the latest date to take your first RMD from tax-deferred retirement accounts like IRAs and 401(k)s if you turned 73 last year.

Missing this deadline can result in steep penalties — up to 25% of the distribution shortfall — making it essential to understand the rules and plan strategically. (Though the penalty can be reduced to 10% if corrected through a proper filing within two years.)

Here’s more of what you need to know, beginning with a quick review of required minimum distributions.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

What are RMDs?

Required minimum distributions (RMDs) are mandatory withdrawals from specific retirement accounts once you reach a certain age.

• The SECURE Act of 2019 raised the RMD age from 70½ to 72
• SECURE 2.0 increased it further to 73 for those born after December 31, 1950
• For individuals born in 1960 or later, the RMD age will rise to 75 starting in 2033

While most RMDs must be taken by December 31 each year, the first RMD can be delayed until April 1 of the year following your RMD-triggering age.

However, delaying means you’ll need to take two distributions in the same year: one by April 1 and another by December 31.

Both will be taxable on your 2025 return (typically filed in early 2026), potentially increasing your overall tax liability.

Accounts subject to RMD rules

RMDs apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer-sponsored plans like 401(k)s, 403(b)s, and 457(b)s.

Roth IRAs are exempt during the owner’s lifetime, and as of 2024, Roth accounts in employer-sponsored plans are also free from RMD requirements.

Tax strategies to manage RMD income

RMDs increase taxable income, which can push retirees into higher tax brackets, affect Social Security taxation, and even raise Medicare premiums.

Part B and D premiums are subject to an Income-Related Monthly Adjustment Amount (IRMAA), which is determined based on your modified adjusted gross income (MAGI) from the previous two years. (For 2025, the IRMAA brackets are based on 2023 MAGI.)

To minimize these and other income impacts, consider the following tax strategies.

Note: These are just a few possible strategies for managing RMD income and tax burden. Consult a trusted professional who can help you determine your best approach.

1. Withdraw strategically at age 59½

If you don’t need immediate income from your retirement accounts, you might want to consider withdrawing funds strategically starting at 59½.

Taking smaller distributions early can reduce the balance that will later be subject to RMD calculations.

For example, imagine a retiree with $600,000 in a traditional IRA at age 59½. By withdrawing $25,000 annually over the next decade (assuming modest growth), they could reduce their account balance by $325,000 before age 73.

This approach can help lower future RMD amounts and spread taxable income across more years to avoid higher income tax brackets later.

2. Use Qualified Charitable Distributions (QCDs) to reduce taxes

Individuals aged 70½ or older can use QCDs to satisfy their RMD requirements while reducing taxable income. (A QCD is basically a distribution from your individual retirement account (IRA) to a qualified charity of your choice.)

A QCD allows you to donate up to $108,000 annually directly from your IRA to a qualified charity without including the amount in your taxable income.

For instance, if your annual RMD is $15,000, but you don’t need it for personal expenses, donating it through a QCD fulfills your RMD obligation without increasing your tax liability.

3. Consider benefits of Roth conversion RMD rules

A Roth conversion involves transferring funds from a tax-deferred account, like a traditional IRA, into a Roth IRA. Roth accounts are not subject to RMDs during the owner’s lifetime and grow tax-free.

Converting funds triggers taxes on the converted amount upfront, but it can reduce future RMDs and provide long-term benefits like tax-free withdrawals for heirs.

4. Delay RMDs if still working

If you’re still working past age 73 and participating in an employer-sponsored plan, like a 401(k), you may be able to delay RMDs until retirement, provided you own less than 5% of the company.

The “still working exception” doesn’t apply to IRAs but can help defer taxable income if your plan allows it.

5. Aggregate your accounts

While each account’s RMD must be calculated separately, certain types of accounts allow aggregation for distribution purposes.

Example: If you have multiple traditional IRAs with combined annual RMD requirements totaling $20,000, you could withdraw that amount from just one account rather than taking separate withdrawals from each account.

Avoiding common RMD mistakes

In addition to not missing RMD deadlines, it’s important to avoid other common RMD mistakes.

For example, one mistake involves miscalculating the RMD amount, which can lead to penalties if too little is withdrawn.

To calculate your RMD, you need to use the balance of your retirement account as of December 31 of the previous year and divide it by a life expectancy factor from IRS tables. These tables, like the Uniform Lifetime Table or Joint Life Expectancy Table, provide factors based on your age and circumstances.

For instance, if you are 73 years old, the IRS assigns a specific factor for your age, which you use to divide your account balance and determine the RMD amount.

If you have multiple accounts, the RMD is calculated separately for each account, but you can withdraw the total amount from one or more accounts.

Note: Special rules apply if your spouse is significantly younger and is the sole beneficiary, which may result in a lower RMD calculation using different IRS tables.

Another common oversight is forgetting to adjust RMDs when inheriting an IRA. Beneficiaries often have different RMD rules and deadlines than the original account owner.

Being mindful of these and other distribution potential pitfalls can help ensure you manage your RMDs correctly and avoid unnecessary penalties or complications.

For more information, see: Seven Common RMD Mistakes to Avoid.

RMD April deadline: Bottom line

The April 1 deadline for first-year RMDs is a key milestone for retirees who turned 73 last year, but it’s also an opportunity to evaluate strategies that minimize taxes and optimize retirement savings.

Proper planning can help ease the financial burden of mandatory distributions.

Consulting a financial advisor or tax professional is essential for tailoring these or other strategies to your unique circumstances while ensuring compliance with IRS rules.

Related

• Required Minimum Distributions: What Every Retiree Should Know
• Protect Your Retiremnets; Seven RMD Mistakes to Avoid
• Your Retirement Income and the IRS