The Pre-RMD Window: Why the Years Before Age 73 Matter for Your Tax Bill

Retirement Tax Planning Is About Timing, Not Avoidance

Most people think of tax planning as something that happens in April, when the forms are due and the choices have already been made. In retirement, the more important planning often happens years earlier, during a quiet window that many people don't realize they have.

The key idea is this: retirement tax planning is really about what you do before the IRS forces withdrawals from your tax-deferred accounts. Once those mandatory withdrawals begin, your flexibility shrinks. The years leading up to them are where the real decisions get made.

What RMDs Are and When They Begin

A required minimum distribution, or RMD, is the amount the government requires you to withdraw each year from tax-deferred retirement accounts such as traditional IRAs and most 401(k) plans. These accounts were funded with pre-tax dollars, which means you never paid income tax on the money going in. The IRS eventually wants its share, so it sets a deadline for when withdrawals must start.

Under the SECURE 2.0 Act, RMDs generally begin at age 73. Every dollar you take out is taxed as ordinary income, the same category as wages, at whatever rate applies to your total income for that year. There is no special lower rate for these withdrawals, and the amount you must take grows as a percentage of your account balance as you age.

That combination, a large tax-deferred balance and a growing mandatory withdrawal, can push retirees into higher tax brackets than they expected, sometimes at the very moment they have the least control over the outcome.

Why the Pre-RMD Years Are So Valuable

For many people, there is a stretch of time between retiring and turning 73 when income is unusually low. Paychecks have stopped. Social Security may not have started yet, or may be modest. RMDs haven't kicked in. This low-income window is a planning opportunity precisely because your tax bracket is temporarily lower than it will be later.

During this stretch, you have something you won't have once RMDs begin: control over how much taxable income you generate. You can choose to recognize income on your own terms rather than waiting for the government's schedule to do it for you.

How Roth Conversions Fit In

One of the most common strategies for these years is a Roth conversion. A conversion means moving money from a traditional (pre-tax) account into a Roth account. You pay ordinary income tax on the amount converted in the year you do it, but the money then grows tax-free, and qualified withdrawals in the future are not taxed. Roth accounts also are not subject to RMDs during the original owner's lifetime.

The appeal of converting during a low-income window is straightforward. You control the tax cost now, at a rate you can see and plan around, instead of letting future RMDs pile up on top of other income later. A person in a lower bracket today might convert a measured amount each year, filling up the lower brackets deliberately rather than being forced into higher ones down the road.

The Costs That Can Stack Up Later

Waiting until RMDs begin can create a cascade of related costs that many retirees don't anticipate. Three tend to stack together:

• §RMD income itself. Large mandatory withdrawals add to your taxable income each year, potentially pushing you into a higher bracket.
• §Social Security taxation. Depending on your total income, up to 85% of your Social Security benefits can become taxable. Higher RMDs can trigger or increase this.
• §Medicare IRMAA surcharges. IRMAA, short for the Income-Related Monthly Adjustment Amount, raises your Medicare Part B and Part D premiums when your income exceeds certain thresholds. These surcharges are based on your income from two years earlier, so a high-income year can raise your premiums well after the fact.

When these three interact, a single large withdrawal can cost more than the tax on the withdrawal alone. Planning ahead is partly about keeping these thresholds in view before they become unavoidable.

The Real Goal: Spreading Taxes Out Intelligently

It's worth being clear about what this kind of planning can and cannot do. The goal is not to eliminate taxes. Money that went into a tax-deferred account was always going to be taxed eventually, and no strategy erases that entirely.

The realistic goal is to spread the tax burden out intelligently, smoothing income across years so you avoid sharp spikes that trigger higher brackets, greater Social Security taxation, and Medicare surcharges all at once. Paying a moderate, predictable amount over several years is often better than paying a large, unpredictable amount later with fewer options.

Why Timing Matters Most

The underlying lesson is about control. Before age 73, you decide how much taxable income to create and when. After RMDs begin, the calendar decides for you. That is why the years before mandatory withdrawals can matter so much, not because of any single clever move, but because they are the window when you still have choices to make.