RMD Strategies for High Net Worth Retirees: What the Generic Advice Misses

Written by Dan PasconeSeptember 21, 2026

TL;DR

Most "don't worry about RMDs" advice is right for most people, but it doesn't hold up once you've got $5-7 million or more in a 401(k) or IRA.

The new senior deduction phases out at $150,000 of income for a couple ($75,000 single), well below what a large RMD produces on its own.

If one spouse later files alone, the same tax bracket roughly halves. We call this the survivor's tax problem.

A QLAC can shrink the RMD calculation directly, and a QCD can satisfy part of it without ever counting as taxable income.

Every retirement channel on YouTube is telling you not to worry about your required minimum distributions. They cite bigger standard deductions, a new senior tax break, and a higher starting age. For most people, that's genuinely good advice. If you've built a seven-figure-plus 401(k) or IRA, it's likely not written for you.

Why "Don't Worry About RMDs" Doesn't Apply Above Seven Figures

Start with the deduction everyone's excited about: a new bonus deduction for people 65 or older, worth up to $6,000 per person on top of the standard deduction, through 2028. What rarely gets mentioned is that it phases out starting at $150,000 of income for a married couple and $75,000 for a single filer. If you've spent a career maximizing equity comp, deferring income, and building a seven-figure retirement account, your income in retirement is unlikely to sit below those lines, so the exact break making everyone else feel better about RMDs often doesn't apply to you.

Here's the actual math. For a married couple, the 32% bracket starts at just over $400,000 of taxable income in 2026. With $5, $6, or $7 million-plus sitting in pre-tax accounts, and required minimum distributions starting at 73 or 75 depending on your birth year, a distribution on an account that size doesn't nudge your bracket. It can blow straight through it.

The Survivor's Tax Problem

Here's the part that catches people off guard, even after they've done real planning. While you're married, your household shares one set of tax brackets built for two people. If one spouse passes away, your income mostly stays the same: you keep the assets, you keep a similar amount of Social Security, and your RMD is calculated the same way it always was. But your tax brackets get cut roughly in half, because you're now filing as a single person. That 32% bracket that started around $400,000 for a couple starts around $200,000 for an individual.

We call this the survivor's tax problem, and it's exactly why we don't just plan for this year's return, we plan for what the return could look like if you're filing alone. An RMD a couple absorbs comfortably could push a surviving spouse into a materially higher bracket on the exact same withdrawal. It's also one more reason the tax and estate pieces of your plan need to move together: how assets are titled and passed on matters just as much as how they're withdrawn, which is where trust planning for high earners comes in.

RMDs Are Really About Sequencing, Not Income

If RMDs at this level aren't really about whether you'll have income, and they're not about deductions, what are they about? Which accounts you draw from, in which years, in what order, long before you turn 73 or 75. That sequencing question is where the real planning happens, and it's also where a piece that rarely gets discussed alongside Roth conversions matters most.

What Most People Miss: The Medical Expense Play

If you've been aggressive about Roth conversions, moving money out of your IRA every year to get ahead of RMDs, there's a version of that strategy that can cost you later, tied to your health. The IRS lets you deduct medical expenses once they exceed 7.5% of adjusted gross income. In most working years, that threshold is hard to clear. Later in retirement, many people face a real expense that clears it easily: moving into a continuing care retirement community. These communities often require a large upfront entrance fee, which could run several hundred thousand dollars, in exchange for guaranteed levels of care as your needs change without having to move again. A meaningful portion of that entrance fee typically qualifies as a deductible medical expense in the year you pay it.

Here's the strategy: in the year you move in, you can pull a large lump sum from your traditional IRA to cover the fee. That withdrawal spikes your taxable income, but the medical portion of the entrance fee can offset a large share of that same income in the same year. You're effectively pulling money out of a pre-tax account with very little tax cost, in exactly the year you need the cash the most.

The same logic applies in later years if you're paying meaningfully for long-term care out of pocket. Now think about what happens if you'd already converted everything to Roth in your 60s, paying 24% or more along the way. You'd have used your own after-tax money to fund those distributions, and that medical deduction would go almost entirely to waste.

That's the case for keeping real money in pre-tax accounts once you're past the point of needing it for income. It isn't a hedge against the market. It's a hedge against a health expense a meaningful share of retirees statistically face. That's also why we rarely tell clients to go all Roth or all pre-tax. We build toward meaningful balances in three places, pre-tax, Roth, and taxable, so there are options no matter what happens: rising rates, lean on the Roth; a lower-income year, that's a conversion opportunity; a large medical or long-term care expense, that's when pre-tax dollars come out with the least friction.

Two Tools to Shrink Your RMDs

QLAC (qualified longevity annuity contract).

You can move up to $210,000 per person from an IRA into a QLAC, and that balance is excluded from the RMD calculation immediately, shrinking required distributions as the contract accumulates. For a couple, that's up to $420,000 removed from the RMD math entirely.

QCD (qualified charitable distribution).

If giving is part of your plan, sending money directly from your IRA to a charity, instead of writing a check from your bank account, satisfies part of your RMD without it ever counting as taxable income, up to $111,000 per person for 2026. It's a meaningful lever if you're trying to stay below a Medicare IRMAA surcharge threshold, or simply keep a high-income year from pushing further into a higher bracket than it needs to.

A Concrete Example

Consider a couple we'll call Richard and Elaine, both 68, recently retired. Richard spent three decades in corporate finance and built a combined $6.5 million across a 401(k) and rollover IRA. Their RMDs, once they start at 73, are projected to land well into six figures a year, comfortably inside their 32% bracket as a couple, but they realized that if Richard passed away first, Elaine's same withdrawal would land in a bracket that started at roughly half the income. Their plan: move $210,000 each into a QLAC, removing $420,000 from the RMD calculation entirely and buying guaranteed income later in life. Direct a portion of future RMDs as QCDs to the causes they already support, satisfying part of the requirement without adding to taxable income. And deliberately keep a meaningful pre-tax balance rather than converting aggressively, so that if either of them eventually needs a CCRC or meaningful long-term care, there's pre-tax money available to draw against a real medical deduction instead of after-tax Roth dollars that would waste it.

Who This Is For

This is written for high-earning executives and retirees with $5 million or more concentrated in pre-tax retirement accounts, typically built through decades of maximized 401(k), deferred comp, or rollover contributions, who are approaching or already past their required minimum distribution age. If that's your situation, the sequencing decisions you make now, years before your first RMD, determine which version of this problem you and your spouse actually face.

Frequently asked questions

What is the survivor's tax problem in retirement?

It's what happens when one spouse in a married couple passes away: income mostly stays the same (assets, Social Security, and RMD calculations don't change), but the surviving spouse now files as a single person, so the tax brackets built for two people get cut roughly in half. An RMD a couple absorbs comfortably at 32% can push a surviving spouse well into that same bracket, or higher, on the identical withdrawal.

Does the new 65-and-older deduction actually help reduce my RMD tax bill?

For most retirees, yes. For high-balance retirees, often not much. The deduction is worth up to $6,000 per person through 2028, but it phases out starting at $150,000 of income for a married couple and $75,000 for a single filer, and a required minimum distribution on a multi-million-dollar account typically pushes income well past those lines on its own.

What is a QLAC and how much can I move into one?

A qualified longevity annuity contract lets you move up to $210,000 per person from an IRA (up to $420,000 for a couple) into an annuity that's excluded from your RMD calculation immediately, which shrinks your required distributions as the contract accumulates and can provide guaranteed income later in life. We walk clients through whether a QLAC fits their broader retirement income plan.

What is a qualified charitable distribution, and how much can I give tax-free in 2026?

A QCD sends money directly from your IRA to a qualified charity, satisfying part of your RMD without the distribution ever counting as taxable income, up to $111,000 per person for 2026. It's a different tool than a donor-advised fund, which is funded with after-tax or appreciated assets rather than directly from a pre-tax IRA.

Can moving into a continuing care retirement community actually reduce my taxes?

Often, yes. A meaningful portion of a CCRC's upfront entrance fee typically qualifies as a deductible medical expense once your total medical expenses exceed 7.5% of adjusted gross income, which is realistic for many retirees. Pulling a lump sum from a traditional IRA in the year you move in can let that medical deduction offset much of the taxable income the withdrawal creates.

Should I convert my entire IRA to a Roth to avoid RMDs altogether?

Not usually, at least not for households with real pre-tax balances. Converting everything early means paying tax at 24% or higher along the way, and it uses up after-tax dollars to fund distributions that a real medical or long-term care expense could otherwise have offset through a deduction. We generally build toward meaningful balances in pre-tax, Roth, and taxable accounts as part of a client's ongoing Life-Driven Planning process, rather than defaulting to one strategy for the whole balance. Our Roth conversion tax strategy guide covers how we weigh that decision in more detail.

If you're sitting on a seven-figure pre-tax balance and want to know how RMDs, survivor's tax exposure, and long-term care could actually play out on your numbers,

Book a Free Wealth Strategy Call

It's a low-friction conversation about your full financial picture, not a sales pitch.

Disclosure

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Tailored Wealth’s strategies are disclosed in the publicly available Form ADV Part 2A.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Tailored Wealth and its advisors do not provide legal, accounting, or tax advice. Consult your attorney or tax professional.