Dear Liz: I have read advice on how to minimize taxes for people who potentially could have higher incomes and taxes after age 70 when they have pensions, Social Security payments and retirement account RMDs. The most common strategy seems to be doing Roth conversions during the later stages of employment, particularly if one spouse retires before the other so family income decreases.
However, I have not read good advice for older people when this problem has already started (other than noting that one way to avoid paying taxes is to donate the RMD funds). Is there any strategy for people who already have this triple income to reduce paying taxes and high Medicare premiums? We lived below our means for our working lives to save for retirement, but now see our savings dissipate due to the taxes and Medicare premiums.
Answer: Your situation illustrates why it’s so important to get good tax advice years before RMDs start, because you have fewer options after that point.
The alternative you mentioned is called a qualified charitable distribution. QCDs allow you to transfer a certain amount (up to $111,000 per individual in 2026) directly from your IRA to a charity. The transfer can satisfy your RMD requirement, but the amount is not included in your taxable income.
Another option is buying a qualified longevity annuity contract, or QLAC. These deferred income annuities start paying out guaranteed income for life once you’ve reached a certain age (up to age 85). You can use up to a certain lifetime amount of IRA money ($210,000 per individual in 2026) to purchase the contract. That money is excluded from RMD calculations until payouts begin.
As with any annuity, you’ll want to research your options, understand the downsides — including lack of liquidity, because the amount you spend typically can’t be recovered — and seek out fiduciary advice before you proceed.
Even though I am an attorney reasonably well versed on estate planning, nearly all my tax and estate associates said no to Roth conversions. The IRMMA either was under the radar or was so low, and it was at one time, that only taxes were an issue. Most advisors were looking at keeping income high for surviving spouse. I now tell people don’t plan for two, plan for when there is only one. An IRMMA premium for widow making $171,000 is the same for a couple making $400,000. House, homeowners, and most expenses stay the same. Medical, car and food go down, which comes to about a 35-30% savings, not the 50% that is used for most programs. The Protect American Widows/widowers Act (PAWS) would address that inequity by allowing the widow to file jointly for an additional few years to counter the “widows tax.” Like some many other bills it has been stalled in Congress since 2024. I also amy finding a lot of errors this year in Social Security payments, RMD’s and 1099 reports. Social security made one payment to a bank but credited it on two different years as income, causing tax and IRMMA increases. Try getting that one fixed.
I was born in 1959 so my full retirement age is 66 and 10 months. According to the SSA.gov website’s Retirement Calculator, if I continue to delay my benefits, my monthly benefit will increase each month until I turn 66 & 10 months. Thereafter, the benefit increases when I am 67 & 5 months (which is January 2027), 68 & 5 months, 69 & 5 months, and at age 70. So, it appears that I should file for benefits at those times. Is that accurate?
Nope. Your monthly benefit increases each month you delay until age 70. After your full retirement age, the delayed retirement credit boosts your benefit by 8% annually, or about .67% each month.