IRA and 401(k) RMD Planning To Protect Your Retirement Assets
Required minimum distributions (RMDs) are one of the most misunderstood – and most expensive – parts of retirement.
One missed rule, one mistimed withdrawal, or one inherited IRA handled the wrong way can quietly trigger unnecessary taxes, penalties, Medicare surcharges, and lost legacy… especially in California’s high-tax environment.
In this educational session, Christian Cordoba, founder of California Retirement Advisors, CERTIFIED FINANCIAL PLANNER®, and member of Ed Slott’s Elite IRA Advisor Group℠ since 2007, walks through how IRA and 401(k) RMDs really work — during your lifetime and for your heirs — and how to use the rules proactively instead of reactively.
You’ll discover:
- Why retirement accounts are not like regular investments — and why the IRS treats them differently
- How the new RMD ages (73 now, 75 for some) and your required beginning date actually work
- How to calculate RMDs, which accounts can be aggregated, and where people most often go wrong
- Why waiting to “deal with RMDs later” can create a future RMD tax tsunami
- How Roth IRAs, Roth 401(k)s, QCDs, and tax diversification can help reduce your lifetime tax bill
- What changed for inherited IRAs under the SECURE Act — and why many families are still using the wrong rules
Click the video below to watch:
What You’ll Learn (Without the Jargon)
RMD rules aren’t just technical tax details — they affect your income, lifestyle, healthcare costs, and the legacy you leave to your spouse and children.
Here’s a summary of the key concepts covered in the presentation.
1. Why Retirement Accounts Are Different
Not all dollars are created equal.
Most pre-tax retirement accounts (traditional IRAs, 401(k)s, 403(b)s, SEP, SIMPLE, etc.) are tax-deferred, not tax-free:
- Distributions are taxed as ordinary income, not capital gains
- There is no step-up in basis at death (unlike a taxable brokerage account)
- You can’t simply move these accounts into a trust during life without triggering tax
- At some point, the IRS forces you – or your beneficiaries – to take the money out
That means a large IRA or 401(k) isn’t just an asset… it’s also a future tax bill.
The larger your pre-tax balance, and the fewer beneficiaries you have, the more important it is to plan how and when that tax bill gets paid – not just for you, but for your spouse and heirs.
2. Understanding RMD Ages, Penalties & the Required Beginning Date
RMDs don’t start the day you retire; they start based on your age and the type of account.
Key points covered in the session:
- RMD age moved from 70½ → 72 → now 73
- For those born 1960 or later, RMDs will eventually start at age 75
- Your Required Beginning Date (RBD) is generally:
- April 1 of the year after you turn 73 (under current law)
- You must still take an RMD for the year you turn 73 — you just have the option to delay that first one into the following year (which may force you to take two RMDs in that year)
The penalty for missing an RMD used to be a brutal 50% of what you should have taken. While that penalty has been reduced under newer rules, it’s still painful — and the IRS is now more likely to enforce it because it’s “more reasonable.”
The presentation explains:
- When it may (or may not) make sense to delay your first RMD into the next year
- How still working can delay RMDs on some employer plans — but not IRAs
- Why you must be careful if you have multiple plans, annuities, or inherited accounts
3. How RMDs Are Calculated – and Coordinated
At its core, an RMD is just a math problem: Prior year’s December 31 balance ÷ life expectancy factor = your RMD
Chris walks through:
- How the Uniform Lifetime Table works
- When to use special tables (such as for a spouse more than 10 years younger)
- How the percentage you must withdraw grows each year, not just the dollar amount
Aggregation rules discussed:
- You can aggregate RMDs from your own traditional IRAs and take the total from one IRA
- You cannot aggregate:
- IRAs with 401(k)/403(b) RMDs
- IRAs with inherited IRAs
- Different employer plans (each plan generally needs its own RMD)
Getting this wrong can mean:
- You took “enough” money overall…
- But from the wrong account — and still owe penalties
4. Planning Before RMDs: Avoiding the “RMD Tax Tsunami”
One of the most important ideas in the session: Your taxes can drop sharply for a few years when you retire — before RMDs begin — and then spike back up once RMDs hit.
If you simply “enjoy the low taxes now” and do nothing, you may wake up at 73 or 75 with:
- Large RMDs you don’t need for spending
- Higher federal and California income taxes
- Bigger Medicare (IRMAA) surcharges
- Less flexibility for surviving spouse and heirs
Chris calls this the RMD tax tsunami – paying more tax, on more income, than you actually need.
The presentation shows how to use this “runway” window (often between retirement and your RMD age) to:
- Fill lower tax brackets intentionally
- Consider Roth conversions in a controlled, strategic way
- Shift money from the “red” tax-deferred bucket to the “green” tax-free bucket
- Potentially reduce your lifetime tax bill — not just this year’s
5. RMD Strategy: Timing, Investments & Charitable Giving
Once you understand your RMD amount, you still have big decisions:
When to take it during the year
- Early in the year (especially after strong market gains)
- Later in the year (if you expect volatility or changing tax circumstances)
- Automatically monthly vs. one lump sum
What to sell or distribute
- Proportionally from all holdings?
- From specific investments you’ve earmarked for distributions?
- Rely more on dividends and interest to cover part of your RMD so you sell fewer shares?
Qualified Charitable Distributions (QCDs)
If you’re age 70½ or older, you can send up to a certain amount each year directly from your IRA to a qualified charity:
- Counts toward your RMD
- Does not show up as income on your tax return
- Can help reduce taxes and IRMAA, but only if done correctly and in the right order
The session covers common QCD pitfalls — and when it may make sense for charitably inclined retirees.
6. Roth IRAs, Roth 401(k)s & Tax-Free Buckets
Roth accounts play a major role in RMD planning:
- Roth IRAs have no lifetime RMDs for the original owner
- As of recent rule changes, Roth 401(k)s also no longer require lifetime RMDs
- Roth dollars can help:
- Manage tax brackets in retirement
- Protect a surviving spouse from higher “single filer” tax rates
- Give heirs more flexible, tax-efficient inheritance
The presentation explains:
- Why conversions after RMD age are more limited (you can’t convert the RMD itself)
- Why the “sweet spot” for conversions is often between age 59½ and your RMD age
- How Medicare’s 2-year income lookback makes ages 59½–62 especially important for planning
Roth IRAs aren’t the only tool, but they’re a powerful piece of a tax-diversified retirement plan alongside:
- Tax-free municipal bonds (where appropriate)
- Properly structured cash value life insurance
- Coordinated use of taxable, tax-deferred, and tax-free accounts
7. Inherited IRAs & the New SECURE Act Rules
This is where many heirs — and even some advisors — are still confused.
Under older rules, non-spouse beneficiaries could “stretch” IRA distributions over their lifetime. Today, that stretch is largely gone for deaths after 2019, replaced by:
- The 10-year rule for most non-spouse beneficiaries
- New categories of beneficiaries with different rules:
- Eligible Designated Beneficiaries (EDBs) – those who can still stretch (to some extent), including:
- Surviving spouses
- Certain chronically ill or disabled individuals
- Minor children of the account owner (until they reach majority)
- Beneficiaries not more than 10 years younger than the decedent
- Eligible Designated Beneficiaries (EDBs) – those who can still stretch (to some extent), including:
- Non-Eligible Designated Beneficiaries (NEDBs) – most other individuals; generally subject to the 10-year rule
- Non-designated beneficiaries – estates, charities, and some trusts; subject to much less favorable timelines
New “at least as rapidly” (ALAR) rules mean that if the original owner was already taking RMDs, in many cases the beneficiary must:
- Continue annual RMDs AND
- Still empty the account by the end of the 10th year
The session also covers:
- Why proper titling of inherited IRAs matters (and how to do it)
- The basics of disclaiming an inheritance to pass it to contingent beneficiaries
- Spousal options (rollover vs. inherited IRA vs. staying in the deceased spouse’s schedule)
This is an area where one form filled incorrectly or one rushed decision at the bank can have irreversible tax consequences.
Simple Next Steps
You don’t have to become an RMD expert — but you do need to avoid the most common, costly mistakes.
Here are some practical next steps highlighted in the session:
- List all your retirement accounts
IRAs, 401(k)s, 403(b)s, SEP, SIMPLE, Roth IRAs, Roth 401(k)s, inherited accounts - Know your RMD start age and required beginning date
Based on your birth year and work status - Check your tax diversification
How much is in taxable, tax-deferred, and tax-free buckets? - Review your beneficiary forms
Your IRA/401(k) beneficiary form, not your will, controls who gets the money - If you’ve inherited an IRA, touch nothing until you understand your options
Especially before cashing checks or rolling anything over - Coordinate with a professional
Taxes, investments, RMDs, Medicare, and estate planning all intersect here
Why This Matters for Californians
California’s combination of:
- High state income taxes
- Long life expectancies
- Large retirement account balances for many successful families
…means that every RMD decision is amplified.
A mistimed RMD, missed inherited IRA rule, or lack of advance planning can quietly:
- Push you into higher federal and California brackets
- Trigger Medicare IRMAA surcharges
- Shrink what ultimately reaches your spouse and children
At California Retirement Advisors, we specialize in helping affluent Californians turn their retirement accounts into a coordinated, tax-efficient income and legacy plan.
Through our proprietary CRAve Life Advisory Process™ — enhanced by The Bucket Plan®, our Tax Management Journey, and Family Estate Organizer — we integrate:
- Taxes
- Income
- Investments
- Healthcare
- Legacy
…into one clear, actionable strategy designed around the life you want to live.
Watching the video is a powerful first step. But doing nothing afterward can be costly.
Get Clarity on Your RMDs and Next Best Steps
When you schedule your complimentary 20-minute Q&A with one of our licensed advisors — each trained in Ed Slott’s advanced IRA strategies — you’ll get:
- Straight answers on your IRA, 401(k), and inherited IRA RMD rules
- A high-level look at where RMDs and taxes may be building in your future
- Guidance on tax-smart next steps tailored to your California reality
If you’re ready to understand your RMDs, reduce avoidable taxes, and better protect your retirement assets, you can schedule your complimentary 20-minute Q&A below.
Best Regards,
California Retirement Advisors