You saved for decades. You did everything right.
Then the government hands you a bill you never agreed to.
It arrives the year you turn 73. It grows every year after. And most people never see it coming.
This is the Required Minimum Distribution tax trap. There is a way out. But the door only stays open for a few short years, and it closes on your 73rd birthday.
The Problem
A Required Minimum Distribution is the mandatory annual withdrawal the Internal Revenue Service requires you to take from traditional retirement accounts starting at age 73. It applies to traditional Individual Retirement Accounts, 401(k) plans, and similar pre-tax accounts. Under the Setting Every Community Up for Retirement Enhancement Act, known as SECURE 2.0, the start age is 73 for people born between 1951 and 1959, and it rises to 75 for those born in 1960 or later.
Here is the catch. Every dollar you deferred into those accounts was never taxed. The Internal Revenue Service has been waiting. When you turn 73, it forces you to start pulling that money out whether you need it or not, and it taxes those withdrawals as ordinary income.
For someone with a large pre-tax balance, this is not a small event. A big Required Minimum Distribution can push you into a higher tax bracket. It can raise the Income-Related Monthly Adjustment Amount, known as IRMAA, which is an extra Medicare premium surcharge applied to higher-income retirees. It can also make more of your Social Security benefit taxable. One forced withdrawal can trigger three separate tax consequences at once.
And skipping the distribution is not an option. The penalty for missing a Required Minimum Distribution is a 25 percent excise tax on the amount you failed to take, reduced to 10 percent if you correct the mistake quickly. The Internal Revenue Service does not forgive this gently.
Here is the part almost no one tells you. The years between the day you retire and the day your Required Minimum Distributions begin are often the lowest-tax years of your entire adult life. Your paycheck has stopped. Social Security may not have started. Your forced withdrawals have not kicked in yet. Your taxable income sits in a valley. That valley is where the real planning happens. Miss it, and the trap springs shut.
The Strategy
At King Legacy Group, we treat the pre-73 window as a project with a deadline. The goal is simple: shrink the pile of money that will one day be forced out, and move as much of it as possible into accounts that are never subject to Required Minimum Distributions at all. Two moves do the heavy lifting. Strategy first. The specific products that carry out the strategy come second, because products change while the strategy holds.
Move One: The Roth Conversion Ladder
A Roth conversion means moving money from a traditional pre-tax retirement account into a Roth account. You pay ordinary income tax on the amount you convert in the year you convert it. In exchange, that money grows tax-free from then on, comes out tax-free in retirement, and is never subject to Required Minimum Distributions during your lifetime.
In 2026 there is no income limit and no dollar cap on conversions. You can convert five thousand dollars or five hundred thousand. The art is in the sizing. The technique advisers favor is called bracket-filling: each year you convert just enough to fill the top of your current tax bracket without spilling into the next one. If you are comfortably inside the 22 percent or 24 percent bracket, you convert enough to reach the ceiling of that bracket and no further. You voluntarily pay tax now, at a rate you control, to erase a larger and less predictable tax bill later.
Why do this during the low-income valley? Because that is when your bracket has the most unused room. A conversion done at 24 percent today can spare you from distributions taxed at a higher rate later, on top of IRMAA surcharges and more taxable Social Security. You are not avoiding tax. You are choosing to pay it on your terms, in your lowest-cost years.
Move Two: The Longevity Annuity That Shrinks the Distribution Base
Your Required Minimum Distribution is calculated from your account balance. The bigger the balance the Internal Revenue Service can see, the bigger the forced withdrawal. So one direct way to reduce the distribution is to legally remove a slice of the balance from the calculation.
A Qualified Longevity Annuity Contract, known as a QLAC, does exactly that. A QLAC is a type of deferred income annuity purchased inside your Individual Retirement Account. The dollars you place into it are excluded from the balance used to compute your Required Minimum Distributions, up to a limit that has risen to 210,000 dollars for 2026. In plain terms, you move a portion of your account out of the yearly forced-withdrawal math and turn it into a future income stream that starts later, as late as age 85. You reduce the required distribution now, and you create guaranteed income for the years when you are most likely to need it.
Put the two moves together and they reinforce each other. The QLAC carves down the balance that drives your Required Minimum Distribution. The Roth conversion ladder drains the remaining pre-tax pile year by year into an account that is never touched by Required Minimum Distributions. One shrinks the base. The other empties the pile. Both run best during the same low-tax window before age 73.
A Hypothetical Case Study
The following is a fictional, composite scenario for educational purposes only. It does not represent any actual client or client result.
Consider a couple we will call the Delgados, both age 68, recently retired, with a combined 1.2 million dollars in traditional Individual Retirement Accounts. They have not yet started Social Security. Their taxable income has dropped into a comfortable valley, and they have five years before Required Minimum Distributions begin at 73.
First, they move 210,000 dollars into a Qualified Longevity Annuity Contract. That 210,000 dollars is now excluded from the balance the Internal Revenue Service uses to calculate their Required Minimum Distributions, and it will pay them guaranteed income beginning at age 85, the season of life when long-term costs often rise. Their forced-distribution base immediately drops from 1.2 million to roughly 990,000 dollars.
Second, over their five low-income years, they run a Roth conversion ladder, converting roughly 80,000 dollars each year to fill the top of their 24 percent bracket without tipping into the next one. Over five years they move about 400,000 dollars into Roth accounts. That money now grows tax-free, comes out tax-free, and will never generate a Required Minimum Distribution.
By the time they reach 73, the pile that can be forced out has shrunk substantially, and a large share of their wealth sits in accounts the Internal Revenue Service cannot force them to tap. Their Required Minimum Distributions are smaller, their exposure to IRMAA surcharges is lower, and less of their Social Security is dragged into taxation. To round out the plan, some couples in this position also build a tax-free income layer using a 7702 account, an account named for the section of the Internal Revenue Code that governs it, which can provide tax-free income access without adding to the Required Minimum Distribution problem. The result is a retirement income stack designed for control instead of surprise.
These numbers are illustrative. Every family's brackets, balances, and goals are different, which is exactly why the sizing has to be done deliberately and reviewed each year.
Frequently Asked Questions
How can I reduce my required minimum distributions and the taxes they cause in 2026?
You reduce them by acting before age 73. Two moves do most of the work. First, use a Qualified Longevity Annuity Contract to remove up to 210,000 dollars from the balance used to calculate your Required Minimum Distributions, which directly shrinks the forced withdrawal. Second, run a Roth conversion ladder during your lowest-income years, converting enough each year to fill your current tax bracket, so pre-tax money moves into accounts that are never subject to Required Minimum Distributions. Together they lower both the size of the distribution and the taxes it triggers.
Should I do a Roth conversion before required minimum distributions start?
For many Retirement-Ready savers, yes, and the window before Required Minimum Distributions begin is usually the best time. In those years your income is often at its lowest, which means your tax bracket has the most unused room. Converting during that valley lets you pay tax at a rate you control now, rather than at a higher rate later when forced distributions, IRMAA surcharges, and taxable Social Security stack on top of each other. The right amount depends on your bracket, so the conversion should be sized carefully each year.
What is a QLAC and how does it lower my taxes?
A Qualified Longevity Annuity Contract, or QLAC, is a deferred income annuity you buy inside your Individual Retirement Account. The amount you place in it, up to 210,000 dollars in 2026, is excluded from the balance the Internal Revenue Service uses to calculate your Required Minimum Distributions. That means a smaller forced withdrawal and a smaller tax bill now, while the QLAC creates guaranteed income that can start as late as age 85.
Is it too late if I am already close to 73?
It is rarely too late to improve your position, but the sooner you act, the more room you have to work with. Every year inside the low-tax window is a year you can convert or reposition on favorable terms. If you are close to 73, the plan simply needs to be more focused and move faster, which is precisely the kind of situation that benefits from a professional review.
The pre-73 window does not reopen. Once Required Minimum Distributions begin, your options narrow and the trap has already sprung. The families who win this are the ones who plan during the quiet years, not the ones who react after the bill arrives. At King Legacy Group, we build the sequence for you: how much to convert, how much to shelter, and in what order, so your retirement income is designed rather than dictated. This is what a designed LivingLEGACY™ looks like in practice: control over your money, your taxes, and your timeline.
The pre-73 window is your best chance to defuse the tax trap on your terms. Schedule your strategy review here.
Complimentary. No pressure. A clear path to your LivingLEGACY™.
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