Do 401(k) Withdrawals Before I Turn 73 Count Toward My RMDs?

If you’ve been tapping your 401(k) in your 60s, you might be wondering whether those withdrawals reduce what the IRS will require you to take later. Required minimum distributions (RMDs) can have a major impact on your taxes and retirement income once you turn 73, and misunderstandings can be costly. Knowing how early withdrawals interact with future RMDs is essential for avoiding surprises. A clear plan now can help you manage taxes, protect your savings and stay in control of your retirement cash flow.

While the basic rules are laid out below, you should also consider speaking with a financial advisor about building the best retirement income strategy based on your specific circumstances.

RMD Essentials

Required minimum distributions (RMDs) generally begin at age 73 for most retirement account holders. Once you reach that age, the IRS requires you to withdraw a minimum amount each year from traditional 401(k)s, IRAs and other tax-deferred retirement accounts. The required amount is based on your account balance and life expectancy factors published by the IRS.

Withdrawals taken before you turn 73 do not count toward future RMDs. In other words, taking money out of your 401(k) at 68 or 70 won’t reduce the amount you’re required to withdraw once RMDs begin. Each year’s RMD is calculated independently based on the account balance at the end of the previous year.

To determine your RMD, you divide your prior year-end account balance by the applicable life expectancy factor from the IRS Uniform Lifetime Table. The percentage you must withdraw increases gradually as you age. Failing to take the full RMD can result in a significant penalty on the shortfall.

RMDs are generally taxed as ordinary income, since traditional 401(k) contributions were made with pre-tax dollars. Strategic withdrawals before age 73, such as partial distributions or Roth conversions, may help smooth out taxable income over time. However, those earlier withdrawals won’t offset future RMD obligations.

Additional RMD Strategies

Some other ways to reduce, delay or avoid taking RMDs could also help. For one, if you are still working after retirement, you may be able to delay RMDs. This only affects 401(k) plans, not IRAs. And it only applies to 401(k) plans that belong to the company you are working for when you would otherwise have to take RMDs. That is, you’ll still have to take RMDs from 401(k) plans from previous employers. If you stop working, you’ll need to start RMDs. And some plans may not allow this at all.

Another approach that could help is to use funds in your 401(k) to purchase a special annuity. A Qualified Lifetime Annuity Contract (QLAC) lets you defer RMDs until as late as age 85. The IRS limits the amount of tax-deferred money you can use to purchase a QLAC to $210,000 for 2026. Also, you’ll have to pay taxes on future payments from the annuity and you can only delay these payments until age 85.

Roth conversions offer another potential solution. You can withdraw funds from your 401(k), paying taxes on the funds as regular income, then deposit them into a Roth IRA. Since Roth accounts are not subject to RMD rules, you won’t have to take mandatory withdrawals from the new Roth IRA.

The catch here is the prospect of a large current tax bill on the withdrawn funds. You may be able to mitigate this tax charge by only converting part of your 401(k) or by spreading the conversion out over several years. One approach is to set the annual or one-time conversion amounts so that they don’t push you into a higher tax bracket.

You can use this free tool to match with a fiduciary financial advisor to discuss your plans with a professional.

Tips for Planning for RMDs

Required minimum distributions can significantly affect your retirement income and tax picture once you reach age 73. Because RMDs are mandatory and taxable in most cases, planning ahead can help you avoid surprises and reduce unnecessary tax burdens. Taking a proactive approach in the years leading up to your first RMD can make your retirement income strategy more efficient and predictable.

Consider Gradual Withdrawals Before Age 73: Taking smaller, strategic withdrawals in your 60s or early 70s may help reduce the size of future RMDs. By spreading taxable income over multiple years, you may avoid large spikes in income that could push you into a higher tax bracket later.
Evaluate Roth Conversions: Converting portions of a traditional 401(k) or IRA to a Roth IRA before RMD age can reduce the balance subject to future required distributions. While you’ll pay taxes on the converted amount, qualified Roth withdrawals are tax-free and Roth IRAs are not subject to RMDs during the original owner’s lifetime.
Plan for Tax Bracket Management: RMDs are taxed as ordinary income, so it’s important to understand how they will interact with Social Security benefits, pensions or other income sources. Coordinating your withdrawal strategy may help you stay within a preferred tax bracket and minimize Medicare premium surcharges.
Use Qualified Charitable Distributions (QCDs): If you’re charitably inclined, you may be able to direct part of your RMD to a qualified charity once you’re eligible. A QCD can satisfy your RMD requirement while excluding that amount from taxable income, potentially lowering your overall tax liability.
Review Beneficiary and Estate Planning Goals: RMDs can also influence how much you plan to leave to heirs. Reviewing your beneficiary designations and estate strategy ensures your distribution plan aligns with your legacy goals and current tax laws.

Planning for RMDs is not just about meeting IRS requirements, it’s about managing income, taxes and long-term financial flexibility. By reviewing your strategy early and adjusting as needed, you can reduce stress and create a smoother transition into the RMD phase of retirement.

Bottom Line

Withdrawals from your 401(k) before age 73 do not count toward future required minimum distributions, and each year’s RMD is calculated separately based on your account balance and IRS life expectancy tables. Because RMDs are mandatory and taxable, they can significantly impact your retirement income and tax bracket. Planning ahead, through strategic withdrawals, Roth conversions or charitable strategies, can help you manage that impact.

Tips Retirement Planning

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