As a financial advisor working with physicians nearing retirement, I hear the same concern come up regularly: “I don’t want or need those RMDs — they’re just creating a tax bill I’d rather not have.”
Required Minimum Distributions — the annual withdrawals the IRS requires from traditional IRAs, 401(k)s, and most other tax-deferred accounts — aren’t always a welcome milestone. For physicians who’ve spent decades accumulating wealth, the distributions can feel like the government forcing income on you at the worst possible time: when you’re older, potentially in a higher bracket, and no longer need the cash.
I recently had a conversation with a client whose mother is in exactly this situation. At 73, her mother is required to take RMDs but doesn’t want or need the money — every dollar withdrawn just generates an unwanted tax bill. It’s a common scenario among more affluent retirees. And RMDs only increase as you age: by your 80s, you typically need less income, not more.
Under SECURE 2.0, the RMD starting age depends on your birth year: age 73 if you were born between 1951 and 1959, and age 75 if you were born in 1960 or later. Either way, the sooner you start planning around RMDs, the more options you have. Here are six strategies to consider.
1. Invest in a Qualified Longevity Annuity Contract (QLAC)
A QLAC is a type of deferred annuity funded with money from a qualified retirement account — a 401(k), 403(b), or IRA. It lets you move a portion of those assets into an annuity contract, and the money held in the QLAC is excluded from your RMD calculations until the annuity payouts begin, which can be deferred as late as age 85.
For 2026, the QLAC contribution limit is $210,000 per person (up from $200,000, now inflation-indexed under SECURE 2.0). A married couple can potentially shelter up to $420,000 from RMDs by each maxing out their individual QLAC. While this won’t eliminate RMDs entirely, it meaningfully reduces them in the early years of retirement — when many physicians have the least need for additional income.
To put it in concrete terms: if that same 73-year-old puts $210,000 into a QLAC and defers payouts until age 85, she could receive over $4,000 per month for the rest of her life — guaranteed income precisely when she’s most likely to need it.
2. Make Qualified Charitable Distributions (QCDs)
If you’re charitably inclined, Qualified Charitable Distributions are one of the most tax-efficient strategies available. Starting at age 70½ — note that’s earlier than your RMD start age — you can transfer money directly from your IRA to a qualified charity. Those distributions count toward your annual RMD but are entirely excluded from your taxable income.
For 2026, the annual QCD limit is $111,000 per person (up from $105,000, now indexed to inflation under SECURE 2.0). A married couple can direct up to $222,000 to charity this way in a single year.
What makes QCDs especially powerful: you don’t need to itemize deductions to benefit. The exclusion from income is cleaner and more valuable than taking the RMD, paying taxes, and then donating — a sequence that costs you a significant percentage at your marginal rate before the charity sees a dollar. And because QCD eligibility starts at 70½, you can begin this strategy up to three years before RMDs kick in, building a habit and reducing your pre-RMD IRA balance in the process.
3. Start Withdrawals Early
This one feels counterintuitive — why take money out before you have to? But it’s one of the most underutilized strategies for managing future RMDs, and it’s especially relevant for physicians who retire in their late 50s or early 60s.
The window between retirement and RMD age — often five to fifteen years — is frequently the lowest-income period of a physician’s financial life. Earned income has stopped, Social Security hasn’t started, and RMDs haven’t kicked in. By taking voluntary withdrawals from your traditional IRA or 401(k) during this window, you reduce the balance that will be subject to mandatory distributions later, while paying taxes at a more favorable rate than you might face in your 70s and 80s when other income sources stack up.
A secondary benefit: strategic early withdrawals can create breathing room to delay Social Security, letting your benefit grow by roughly 8% per year until age 70. That’s a compounding guaranteed return that’s hard to beat and provides a more valuable income stream in the years when RMDs are also at their highest.
4. Consider Gifting to Heirs
This strategy is particularly relevant for physicians with aging parents sitting on large IRAs — a scenario that comes up more often than you’d think. While gifting doesn’t avoid RMDs directly, it can meaningfully reduce the overall tax burden on inherited retirement assets.
Here’s the situation: when a non-spouse inherits a traditional IRA, they generally must deplete the account within 10 years under the SECURE Act rules. For a physician in peak earning years inheriting a large IRA from a parent, those forced distributions will likely land in the 32% or 37% bracket — some of the most expensive dollars they’ll ever pay tax on.
A smarter path: if the original account holder is in a lower tax bracket and doesn’t need the RMDs for living expenses, they can take those distributions, pay tax at their (lower) rate, and gift the after-tax proceeds to heirs. The heirs receive cash — not a tax-deferred IRA that will generate a large tax bill at the worst possible time.
5. Convert to a Roth IRA (or Roth 401k)
Roth conversions remain one of the most powerful tools for eliminating future RMDs. Unlike traditional IRAs and 401(k)s, Roth IRAs have no required minimum distributions during the owner’s lifetime. And thanks to SECURE 2.0, Roth 401(k) accounts no longer require RMDs either — a change that took effect in 2024 and aligns Roth 401(k)s with the longstanding Roth IRA treatment.
The strategy is straightforward: by gradually converting portions of your traditional retirement accounts to Roth during lower-income years, you shrink the pre-tax balance that will eventually be subject to RMDs — and the remaining balance grows tax-free forever.
The ideal conversion window is exactly the early-retirement gap described in Strategy 3: after earned income stops but before Social Security and RMDs begin. A married couple with no other income can convert up to approximately $133,000 per year within the 12% federal bracket in 2026, or up to $403,550 before reaching the 24% bracket.
Tax rates are now permanent. The One Big Beautiful Bill Act, signed in July 2025, permanently extended the TCJA tax rate structure (10/12/22/24/32/35/37%). The tax rate “sunset” that had been scheduled for the end of 2025 no longer applies. This removes one urgency argument for conversions, but the core case — converting pre-RMD at lower rates to eliminate future mandatory distributions — remains fully intact.
Watch the IRMAA cliff. For physicians nearing Medicare age, large Roth conversions can trigger IRMAA surcharges — Medicare premium increases that kick in at $218,000 MAGI for married couples filing jointly in 2026. Because IRMAA uses a two-year lookback, a large conversion in 2026 raises your Medicare premiums in 2028. This doesn’t mean don’t convert — it means stay deliberate about how much you convert in a given year, ideally calibrating just below the IRMAA thresholds.
The key is to plan conversions methodically over multiple years rather than in large single-year chunks. Spreading the conversions smooths out the tax impact and gives you more control over IRMAA exposure.
6. Continue Working and Utilize the Still-Working Exception
If you’re still working past your RMD starting age — 73 or 75, depending on your birth year — and you don’t own more than 5% of your employer, you may be able to delay RMDs from your current employer’s 401(k) plan until the year you actually retire. This is known as the still-working exception.
A few important constraints to know:
- The exception applies only to your current employer’s plan — not to IRAs, not to old 401(k)s from previous employers.
- The plan must adopt the exception — most do, but it’s worth confirming.
- You cannot own more than 5% of the company sponsoring the plan.
For physicians who transition to part-time, locum tenens, or academic roles later in their careers, this exception can meaningfully extend the tax-deferred growth period in a current employer plan while you continue contributing. It won’t help with your IRAs or old accounts, but paired with the other strategies above, it becomes one more tool for keeping your taxable income lower in early retirement.
Every Situation Is Unique
The goal here isn’t necessarily to avoid RMDs entirely — after all, these are your retirement savings, and they’re meant to be used. The goal is to manage them strategically so that distributions happen on your terms, at rates that make sense for your financial picture, rather than being forced on you by the IRS calendar.
For most physicians, the highest-leverage approach is a combination: Roth conversions during the early-retirement window to shrink the pre-tax base, QCDs to satisfy remaining RMDs charitably, and the still-working or QLAC strategies as supporting layers. Which combination is right for you depends on your current and projected tax brackets, your charitable goals, your Medicare timing, and your estate planning priorities.
By thinking strategically about RMDs well before they become mandatory, you can set yourself up for a significantly more tax-efficient retirement — and ensure your hard-earned savings are deployed in ways that actually serve you and your family.
