Overview
- Traditional IRA and 401(k) holders must begin required minimum distributions at age 73, with some later birth years starting at 75.
- Because RMDs are taxable income, a sizable first withdrawal can make Social Security benefits taxable and trigger Medicare IRMAA surcharges.
- Moving money from a traditional account to a Roth can eliminate future RMDs, but the conversion amount is taxed in the year of the move.
- Large Roth conversions done while receiving Social Security or enrolled in Medicare can cause the same taxes on benefits and premium surcharges as RMDs.
- If the cash from an RMD is not needed, retirees can use it to cover taxes or premiums, invest it in a taxable brokerage account, or repurchase investments to remain invested.