RMD Optimizer

Required Minimum Distributions are the IRS's way of collecting taxes on the money it let you defer for decades. Once you turn 73 (75 starting in 2033), you must withdraw a portion of your traditional IRA / 401(k) / 403(b) every year, whether you need it or not. The IRS divides your end-of-prior-year balance by a Uniform Lifetime Table divisor to set the minimum. Miss it and the penalty (newly reduced by SECURE 2.0) is 25% — or 10% if you correct within 2 years.

The pre-RMD window matters more than the RMD years. From the year you retire to the year RMDs start, you typically have very low taxable income — maybe just Social Security and some dividends. That puts you in the lowest brackets you'll see for decades. Each dollar of Roth conversion done here costs you 10-22% in tax now but permanently removes RMD income that would have been taxed at 22-32% later (and would have stacked on Social Security taxation and IRMAA Medicare surcharges). The math almost always favors converting aggressively in this window — but most people don't even realize the window exists.

QCDs are the most overlooked retirement strategy. Once you turn 70½, you can send up to $105K/year (2026, indexed) directly from your IRA to charity. The distribution counts toward your RMD but doesn't increase your AGI. Lower AGI = lower IRMAA, lower SS taxation, lower NIIT, lower state tax. And it works whether you itemize or take the standard deduction. For anyone with charitable intent and an IRA, this is the most powerful tax-efficient giving strategy that exists.

SECURE Act 2.0 changed the game.Passed at the end of 2022, it: (1) raised the RMD age from 72 to 73 immediately and to 75 starting in 2033, giving you more low-bracket years; (2) eliminated RMDs from Roth 401(k)s during the owner's lifetime (matching Roth IRAs); (3) cut the missed-RMD penalty from 50% to 25% (and to 10% if corrected within 2 years); (4) added new Roth 401(k) employer-match treatment options. The window for low-bracket conversions just got a lot longer.

Account withdrawal priority isn't what you think. The textbook advice is “taxable first, then tax-deferred, then Roth.” That's often wrong. The tax-optimal sequence usually fills each year's low brackets from tax-deferred (which would otherwise be taxed at higher brackets later via RMDs), uses taxable for top-of-the-bracket withdrawals, and preserves Roth for the very last years (when you can pull tax-free without affecting any other tax). The math depends on your specific bracket structure and remaining balances — which is what this tool resolves.