4 Ways Advisors Help Clients Manage RMDs

"Using your RMD to make a charitable donation through a QCD is a smart way to support a cause you care about and lower your tax bill at the same time," said Larry Sprung, a certified financial planner and the founder of Mitlin Financial.

"We have a client that was making monthly charitable contributions; they have been doing this for years," he said. "She recently started her RMDs, and we spoke with her about QCDs. Rather than making monthly contributions to the charity, she now makes an annual contribution, a larger one than she used to, because she is saving taxes on her RMD. She was grateful we pointed out how she could use a QCD, rather than her after-tax savings, to make these contributions."

2. Roth Conversions

"We explore Roth conversions as a proactive RMD planning tool for some clients, especially during lower-income working years or in the window between retirement and the start of required minimum distributions," said Theresa Pablos, a CFP and associate financial advisor at Equalis Financial. "In the right situation, partial Roth conversions can help smooth income over time, lower pre-tax balances subject to RMDs, and improve tax flexibility later in retirement. Like any tax strategy, Roth conversions should be evaluated within the context of the client's full financial picture.

"We worked with a recently retired couple who had not yet started RMDs," Pablos added. "We determined that partial Roth conversions could make sense based on their tax situation, since projections showed they may be in a higher tax bracket once RMDs begin in a few years."

Dale R. Terwedo, CFP and founder of TFS Advisors, added, "Roth conversions also occur across a broad spectrum. Some conversions occur anticipating the desire to have a tax-free source of income in the future, while others are converting for the purpose of passing it to heirs.

"Whenever a conversion is discussed, we take into consideration the current tax picture of the client," he said. "If they are converting before Medicare is active, we take into consideration their tax brackets and work with their CPA to determine the best strategy to maximize the conversion while minimizing the taxes owed. This process is easier if the client has retired before Medicare and if they have sources of income that can be flexible or have a low tax impact. If the conversion is after Medicare, we also have to take the impact of the surcharge on Medicare premiums," the income-related monthly adjustment amount, known as IRMAA.

He added an example client situation:

"The client is approaching retirement before age 65 with assets in both IRA (Roth and Traditional) and non-IRA accounts. Social Security has not begun, and the recommendation is to delay the start of the benefit to maximize the monthly income later. The client is in good health and also married, although the spouse has not reached the FRA (full retirement age).

"The recommendation is to use high-cost basis assets from the non-IRA accounts to generate income but limit taxable income. During that time, begin Roth conversion without subjecting the client to higher tax brackets. This is a multi-year approach working with their CPA. It is important to be cognizant of IRMAA as they approach Medicare. A lower taxable income also helped the client qualify for a senior real estate tax exemption, so this too is a factor.

"When the client reaches their RMD age, those amounts not needed for income are reinvested in the non-IRA account for future growth."

3. In-Kind RMDs

RMDs are generally taken as a cash distribution from the retirement account. Gary Pia, CFP and founder of Mission Street Wealth Planning, cited a situation where taking the distribution in stock can be beneficial.

"This one doesn't come up as often, but it's a situation worth knowing," he said. "A client came to me with a concentrated position in company stock inside his IRA, accumulated over a long career. He needed to satisfy his RMD but was concerned about selling shares at what he believed was a depressed price.

"We distributed shares in-kind rather than liquidating. The shares transferred to his taxable brokerage account at their fair market value on the date of transfer, satisfying the RMD obligation. He then had flexibility about when to sell in the taxable account, and the position received a stepped-up cost basis at the point of transfer. This approach isn't right for every situation, but for clients with concentrated holdings or strong conviction about timing, it's a valuable option that many don't realize exists."

4. A Combo Strategy

Dan O'Rourke, CFP and Director of Multifamily Office Solutions at Strathmore Capital Advisors, discussed a client situation involving the use of a combination of strategies.

"We onboarded a married couple (ages 66 and 65) with approximately $6.5 million in investable assets, the vast majority held in traditional IRAs and only about $300,000 in a taxable brokerage account," he said. "They are delaying Social Security for several more years and have two stated priorities: leaving a tax-efficient legacy to heirs and making consistent, meaningful charitable gifts.

"The elephant in the room was looming RMDs. Based on portfolio size and growth assumptions, we projected that once RMDs begin in 7–8 years, required distributions alone could push the couple into substantially higher tax brackets — particularly when layered on top of Social Security and future tax rate uncertainty."

The advice to the client: "Rather than waiting until RMDs begin, we recommended a multiyear Roth conversion strategy, completing annual conversions while intentionally staying within the 24% marginal tax bracket. In their current situation, that translates to roughly $150,000 per year in Roth conversions.

"From an estate planning perspective, this also created a cleaner outcome for heirs. While inherited Roth IRAs are still subject to the Secure Act's 10-year rule, beneficiaries are not required to take annual RMDs during that window and do not need to plan for income taxes on withdrawals — maximizing the potential for continued tax-free growth."

He cited a secondary strategy for the client as well.

"The couple gives approximately $20,000 per year to charity and historically did so via annual cash gifts," he said. "Because they itemize but hover close to the standard deduction threshold, we advised establishing a donor-advised fund (DAF) and frontloading five years of charitable contributions in 2025.

"To fund the DAF, they contributed highly appreciated shares from their brokerage account, eliminating future capital gains tax on those assets and generating a significant charitable deduction in a single tax year. Bunching the contributions also helped them avoid the new 0.5% AGI limitation on charitable deductions taking effect this year."

He concluded by discussing the benefits to the client: "The large 2025 charitable deduction meaningfully reduced taxable income for the year, which in turn allowed the clients to increase their Roth conversion amount without creeping into a higher tax bracket. In effect, charitable planning and Roth conversions worked together accelerating tax-free growth, shrinking future RMDs, and aligning the plan with the couple's values.

"A key reason this strategy worked cleanly was close, real-time collaboration between investment and tax planning," he said. "These decisions were coordinated internally with Strathmore Capital Advisors' Director of Tax, who serves as the clients' tax professional. This relationship allows us to model conversions, deductions, and future RMD outcomes in tandem rather than retroactively coordinating with an external CPA after decisions are already made."