For many people, the goal of retirement planning is simple: accumulate as much as possible, then stop working. But the moment you retire, a new and often overlooked phase of planning begins- one that can have a significant impact on how much of your wealth you actually keep.
Between the day you stop working and the age when Required Minimum Distributions (RMDs) kick in, there is often a window of several years where taxable income drops significantly. That window is one of the most valuable (and most underutilized) tax planning opportunities in a financial plan.
Here's how to make the most of it.
Understanding the Window
When you retire, your income typically stops or drops sharply. If you haven't started Social Security yet and aren't required to take distributions from your retirement accounts, your taxable income could be unusually low, perhaps the lowest it's been in decades.
That low-income period doesn't last forever. Starting at age 73 (age 75 for those born in 1960 or later), the IRS requires you to begin taking RMDs from traditional IRAs and 401(k)s. Those distributions are taxed as ordinary income, and they don't stop. In fact, they will likely grow larger over time as the formula adjusts each year and potential market growth further adds to the calculation.
For many retirees, RMDs can push income into higher tax brackets, trigger taxes on Social Security benefits, eliminate tax deduction phase-outs, and increase Medicare premiums. The years before RMDs begin are an opportunity to act before that pressure arrives.
Strategy #1: Roth Conversions
A Roth conversion involves moving money from a traditional IRA (pre-tax) into a Roth IRA (after-tax). You pay income tax on the amount converted in the year you do it, but after that, the money grows and can be withdrawn tax-free.
During the low-income window before RMDs, you may be able to convert meaningful amounts while staying in a lower tax bracket than you would have faced during your working years or will face once RMDs begin.
The key is being intentional about how much to convert each year. Converting too much in a single year can push you into a higher bracket or create other complications (more on that below). A financial plan helps calibrate the right annual amount.
Strategy #2: Managing IRMAA Brackets
Medicare Part B and Part D premiums are not fixed; they increase based on your income from two years prior. This income-based surcharge is known as IRMAA (Income-Related Monthly Adjustment Amount). In 2026, the standard Medicare Part B premium is $202.90/month, but for higher-income retirees it can climb to over $600 per person, per month.
What counts as income for IRMAA? Your Modified Adjusted Gross Income (MAGI), which includes IRA distributions, Roth conversions, capital gains, and even Social Security benefits depending on income.
This matters in two ways during the pre-RMD window:
- Conversions can raise your IRMAA surcharge. Converting a large sum in one year could trigger higher Medicare premiums two years later. This doesn't mean you shouldn't convert; it means the size and timing of conversions should be planned with IRMAA thresholds in mind.
- Once RMDs begin, IRMAA is harder to control. Doing thoughtful Roth conversions now can reduce future RMD income and help you stay below IRMAA thresholds in later years when your options are more limited.
The planning goal isn't to avoid IRMAA at all costs. Being intentional about when and how income is recognized helps you avoid inadvertently crossing a threshold by a small amount.
Strategy #3: Qualified Charitable Distributions (QCDs)
If you're charitably inclined and over age 70½, a Qualified Charitable Distribution is one of the most tax-efficient tools available. A QCD allows you to transfer up to $111,000 per year (2026 limit) directly from your IRA to a qualified charity. The distribution counts toward your RMD — but it's excluded from your taxable income entirely.
Compare this to the alternative: taking the RMD as income (taxable), then making a charitable gift (deductible only if you itemize, and many retirees don't). A QCD bypasses that entirely- the money never touches your taxable income in the first place.
Why does this matter in the pre-RMD window? You can begin using QCDs at age 70½, which may be before RMDs begin at 73 (or at 75). This creates a two-to-three-year period where QCDs reduce your IRA balance proactively — shrinking future RMDs before they even start. For clients who are already giving charitably, this is essentially free tax savings.
Putting It All Together
These three strategies aren't mutually exclusive. In fact, they work best when coordinated within a single plan. For example, you could:
- Use QCDs to give charitably without increasing taxable income
- Convert the remaining "room" in your current tax bracket to Roth
- Keep total income below the IRMAA threshold for the following year
Done well, this kind of planning in the years between retirement and RMD age can meaningfully reduce your lifetime tax burden and give you more flexibility in how you use your assets later in retirement.
Conclusion: The Window Closes
The pre-RMD years are not a time to simply wait for retirement to settle in. They're an active planning period- arguably one of the most important in your entire financial life. The combination of lower income, flexibility in distributions, and available strategies creates conditions that won't exist once RMDs begin.
Whether you're newly retired or still a few years from the finish line, understanding this window is the first step. Working with an advisor to build a coordinated strategy around it is where the real value is created.
Reach out to discuss how these strategies fit into your overall retirement plan.
Sources
Medicare 2026 Fact Sheet, medicare.gov
IRS Retirement Topics: Required Minimum Distributions (RMDs), https://www.irs.gov/publications/p590b
Roth Conversions: IRC Section 408A (Roth IRA rules, conversion treatment as ordinary income)https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
Qualified Charitable Distributions: Publication 590-B: Qualified Charitable Distributions
https://www.irs.gov/publications/p590b
Disclosures
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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