I'm Starting IRA Withdrawals at Age 65. Will They Count Toward My RMDs Later?

Withdrawals taken from an IRA at age 65 do not count toward required minimum distributions (RMDs) later on. RMDs apply only once you reach the required beginning age, which is either 73 or 75 depending on when you were born. Any distributions taken before that age are considered voluntary withdrawals and reduce the account balance that future RMDs are based on, but they don’t satisfy future RMD obligations. When RMDs begin, you’ll still have to take the calculated amount each year based on your remaining balance and life expectancy.

A financial advisor can help you calculate your future RMDs and plan for how to manage them.

Understanding Required Minimum Distributions (RMDs)

Pre-tax retirement savings accounts like your individual retirement account (IRA) let you defer income taxes on the money you contribute and any growth within the account. However, these taxes are not completely avoided, only delayed. When you withdraw money later on, the withdrawals are taxed as ordinary income.

RMDs stop you from leaving the money in the IRA to grow tax-free forever. The IRS requires you to withdraw a specified amount of money each year after you reach age 73 (75 for people born in 1960 or later).

Calculating Your RMD

Each year’s RMD is calculated based on your age and the account balance on Dec. 31 of the previous year. You simply divide the account balance by the IRS divisor that corresponds with your age. (The IRS has tables that list the divisors that correspond with each age.) For example, if you turn 73 in 2025, you would take your account balance from Dec. 31, 2024, and divide it by 26.5 (the divisor for people who are age 73).

Retirement savers who are concerned about paying income taxes in retirement may employ strategies to avoid or reduce RMDs. That’s because the RMDs are treated as ordinary income and, if they’re large enough, can cause your total taxable retirement income to increase so much that it pushes you into a higher marginal income tax bracket.

Managing Your RMDs

There are many tradeoffs to consider when planning an RMD strategy. There are unknowns at play regarding market returns, and interwoven tax implications for many routes.

For example, if you’re 65 in 2025, you won’t be subject to RMDs until age 75. Let’s assume you have an IRA worth $500,000 and you withdraw $50,000 at the end of each year for the next 10 years. Assuming a 7% annual return, your IRA would still have over $292,000 in it by the time you reach age 75. At that point, based on the IRS tables, your first-year RMD would be $11,900.

Now, let’s consider how this would reduce your RMDs compared to not taking any early withdrawals. Assuming the same 7% average annual return, the $500,000 IRA balance would grow to $983,575 by then end of 2034. Based on that balance, your RMD for 2035 would be just under $40,000.

In each case, you’ll have to weigh the tax obligations, which will depend on your other taxable income sources, to determine what suits your current needs and future goals best.

Use SmartAsset’s RMD Calculator to estimate how much you’ll need to withdraw from your retirement accounts once you reach RMD age.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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RMD Amount for 401(k) #2

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

IRA to Roth IRA Conversion

One way to manage RMDs is to convert all or part of the money in your IRA into a Roth IRA. A Roth conversion strategy avoids RMDs, because these accounts are not subject to RMD rules. Future withdrawals from the Roth account are also tax-free, when done according to the rules. That means they won’t cause your Social Security payments to be taxed, among other potential benefits.

Funds converted from an IRA to a Roth are immediately taxed as ordinary income, however, so this can result in a sizable current tax bill. Generally, a Roth conversion makes the best sense when you expect to be in a higher tax bracket after you retire. It may also be a smart move if you plan to leave retirement fund assets to your heirs, as Roth assets can be passed on tax-free.

Early Withdrawals

Early withdrawals are an easier and somewhat less effective way to manage RMDs. By withdrawing from your IRA after reaching age 59 ½ but before your RMDs begin, you can reduce the amount in your IRA. If you do that, future RMDs will be calculated on the smaller amount and so will be smaller, as well.

A financial advisor can help you create a plan for taking your RMDs that aligns with your personal financial situation.

Fine-Tuning Your RMD Strategy

As shown in the example, you can potentially reduce your first RMD by more than $28,000 by beginning withdrawals before RMDs are due. Bear in mind, however, that you’ll owe taxes on withdrawals. A $50,000 IRA withdrawal will increase your income and may raise you to a higher marginal tax bracket.

For instance, if you have $100,000 in annual taxable income now and file single, you’re likely in the 22% marginal bracket. Adding $50,000 in taxable income would move you into the 24% bracket and increase your tax liability.

If you were to choose the Roth conversion route, you may be able to reduce or manage the tax bill by gradually converting IRA funds to the Roth over several years. If you converted $50,000 each year, it would have the same effect on your current tax bill, but the money would still be able to grow tax-free in the Roth account. Of course, you can only follow this strategy if you don’t need the retirement fund withdrawals to pay for current living expenses, and you can adjust withdrawal amounts to suit a strategy that fits your needs.

Consider matching with a fiduciary financial advisor to speak about your personal situation.

Bottom Line

Starting IRA withdrawals early can potentially reduce future RMDs, but only indirectly. Anything you do to reduce the balance in your IRA will reduce RMDs, which are calculated based on your age and account size. Taking regular sizable withdrawals starting at age 65 could reduce your IRA balance enough to make a significant difference in future RMD amounts. However, you’ll owe taxes on withdrawals as ordinary income now. You may also want to look into a Roth conversion as another way to manage RMDs.

Retirement Planning Tips

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