Photo by Vitaly Gariev on Unsplash
Most people think of a required minimum distribution as a single tax bill. You take money out of your IRA, you pay tax on it, and that’s the end of it.
It’s rarely that simple. In our work with retirees, we often see an RMD set off a chain reaction. The withdrawal itself is taxed, of course. It can also make more of your Social Security taxable, shrink a valuable new deduction, and raise your Medicare premiums two years later.
None of these costs shows up on your return with a label that says “RMD.” That’s what makes them so easy to miss.
What an RMD is
The government lets your traditional IRA and workplace retirement plan grow tax-deferred for decades. Eventually, it wants its share. RMDs generally begin at age 73, or age 75 if you were born in 1960 or later.
Those withdrawals are generally added to your taxable income for the year. Roth IRAs and designated Roth accounts in workplace retirement plans have no RMDs during the owner’s lifetime.
Here’s the part that matters most. An RMD doesn’t just get taxed on its own. It raises your income, and many other numbers on your tax return tie to it.
It can make more of your Social Security taxable
Some retirees are surprised to learn that Social Security can be taxed at all. Whether yours is depends on your “combined income.” That’s your adjusted gross income, plus any tax-exempt interest, plus half of your Social Security benefits.
Once combined income passes $25,000 for an individual or $32,000 for a married couple filing jointly, part of your benefit becomes taxable. At higher levels, up to 85% of your benefits can be taxed.
So an RMD can work against you twice. You pay tax on the withdrawal itself. The withdrawal can also pull more of your Social Security into your taxable income.
It can shrink the new senior deduction
A federal law passed in 2025 created an extra $6,000 deduction for people 65 and older. It’s available for tax years 2025 through 2028.
There’s a catch. The deduction starts to phase out once your modified adjusted gross income passes $75,000, or $150,000 for joint filers. A large RMD can push you over that line and reduce a deduction you might otherwise get in full.
It can raise your Medicare premiums
This is the one that catches people off guard the most. Medicare charges higher Part B and Part D premiums to people whose income is above certain limits. You may hear these extra charges called IRMAA.
For 2026, the standard Part B premium is $202.90 a month. Higher premiums apply once income is above $109,000 for individuals, or $218,000 for joint filers. An individual filer who lands just over that line pays $284.10 a month for Part B instead.
There’s also a timing twist. Medicare uses your tax return from two years earlier, so your 2026 premiums are based on your 2024 income. That means an RMD you take this year can raise your premiums two years from now, long after you’ve forgotten about it.
Waiting on your first RMD can backfire
The IRS gives you until April 1 of the year after you reach your RMD starting age to take your first RMD. Every RMD after that is due by December 31.
Putting off the first one can feel like a nice break. If you wait, though, you’ll take two RMDs in the same tax year. That stacks up your income and can trigger all of the effects above at once.
Ways to soften the blow
You can’t avoid RMDs, but you can plan around them. Here are a few strategies we talk through with clients.
Give to charity straight from your IRA. If you’re 70½ or older, you can make a qualified charitable distribution. The money goes directly from your IRA to a charity and isn’t included in your gross income. QCDs count toward your RMD, and the limit for 2026 is $111,000.
Use the years before RMDs begin. The stretch between retirement and your first RMD is often a lower-income period. Taking some money out then, or converting part of a traditional IRA to a Roth IRA, can shrink the balance your future RMDs are based on. You’ll owe tax on a conversion, so the timing and the amount matter.
Know where the lines are. When you know where the Social Security, senior deduction, and Medicare thresholds fall, you can decide how much to withdraw and when.
Don’t skip an RMD. Missing one can trigger a 25% excise tax on the amount you should have taken. That drops to 10% if you correct it within two years.
The bottom line
An RMD is never just one number. It ripples through the rest of your tax return and even your Medicare bill. A little planning before the withdrawal happens can keep a required distribution from quietly costing you more than it should.
If you’d like help seeing how your RMDs fit into your bigger picture, we’re happy to walk through it with you.
