Summer may feel like the “off-season” for finances—markets are quieter, inboxes are lighter, and many of us are thinking more about vacations than tax strategies. But that slower pace actually makes now the perfect time to get ahead of next year’s tax bill, especially when it comes to required minimum distributions (RMDs) and other tax-related financial strategies.
There’s a lot that can, and should, happen during this summer downtime: little things that keep you compliant with your tax strategy and help you avoid penalties. That means paying your estimated taxes if you have them, taking your required minimum distributions on schedule, and considering Roth conversions while you have the bandwidth to think them through.
Normally, this activity tends to pile up in the October/November/December timeframe because there’s more information to work with, but that usually translates into a year-end rush. Starting now, in August and September, also gives you a clear picture—and more time to act. At Curio Wealth, we’re actively working with clients on withdrawal strategies, Roth conversions, and RMD tax withholdings as I write this post.
RMDs start at age 73. Although the deadline for withdrawal every year is December 31st, the strategies that minimize their tax impact need to be set in motion well before that. Below are some things to think about now that can help you make next year’s RMDs less of a surprise and more of a plan.
Not sure how to time your RMDs, manage withholding, or make charitable giving more tax-efficient? Contact us at Curio Wealth to talk through a strategy tailored to you.
Three Things You Can Do To Make The Most Of Your RMD
The amount of your RMD each year is largely determined by your account balance on December 31st of the previous year. Every January, your financial custodian or IRA provider will provide you with the exact number, so it’s never a surprise. But there are some interesting things you can do with an RMD that can help you reduce your future tax liability.
1. Withhold Taxes Directly From Your RMD
One of the simplest RMD-related tax-planning moves is to have taxes withheld directly from the payment itself. Because your RMD amount is fixed based on your account balance as of December 31 of the prior year, you know exactly how much you’ll need to withdraw in 2026. That makes it a predictable, reliable source of income—and a predictable, reliable source of tax withholding.
Instead of writing separate checks for quarterly estimated taxes, you can elect to have federal (and, in many cases, state) income tax withheld from your RMD distribution. That means you can avoid underpayment penalties without having to track quarterly deadlines or guess at how much you owe each quarter.
From a mechanical standpoint, this is straightforward: When you request your RMD, you’ll be asked what percentage (or dollar amount) you’d like to withhold for taxes. You can adjust that withholding up or down depending on your overall tax situation—other income, deductions, credits, and so on. For many retirees, using RMD withholding as their primary tax-payment method simplifies cash flow, reduces paperwork, and keeps them comfortably in compliance with IRS rules.
2. Time Your Withdrawal Strategically
When you take your distribution during the year can affect how you manage your portfolio and taxes. You can take your RMD anytime during the year, so it’s advantageous to determine your cash flow needs before withdrawing.
If you know you need a certain amount of cash to cover that year’s living expenses, you may want to withdraw the RMD in January or February so you can use it throughout the year, rather than having to, say, sell stocks to get cash later—which may trigger capital gains taxes. By taking your RMD early in the year, you get the cash into your pocket sooner so you’re less reliant on selling taxable investments just to meet your spending needs.
3. Make Charitable Contributions Directly From Your IRA
If you’re planning to make charitable donations in the upcoming year, consider using a technique called a Qualified Charitable Distribution (QCD).
Normally, you might collect your RMD—which shows up on your tax return as taxable income—and then donate a portion of it to charity. A better alternative is to directly transfer money from your IRA to the charitable organization. It effectively reduces your RMD amount and optimizes the tax benefits of giving.
Here’s why that’s the case: On your tax return, you can either take one large deduction (the standard deduction) or you can itemize expenses—interest, taxes, medical expenses, and charitable donations—if they would equate to more than the standard deduction.
So let’s say you take your RMD of $100,000, and your only deductions are state income taxes of $5,000 and a real estate tax of $5,000—a total of $10,000. In that case, you would take the standard deduction of $31,000 (which is larger than $10,000).
In that same scenario, even if you add an additional $5,000 charitable contribution from cash, your itemized dedication would still be smaller than the standard deduction ($15,000). So you still receive zero tax benefit. Whereas if you send the money directly from your IRA to a charity, it never shows up on your tax return. So sending $10,000 directly to a charity could potentially save you around $1,500.
Tip: Bundle Charitable Giving To Maximize DeductionsIf your itemized deductions are consistently not enough to help you surpass the standard deduction, consider giving a large amount once, in one tax year, to make use of the itemized deduction. You can then reduce your giving (if you’d like) over the next 2–3 years. This strategy allows you to take advantage of the tax deduction for your donations. |
Make This Summer Count
You don’t need to overhaul your entire financial plan in one sitting to make meaningful progress on your tax strategy. Small, intentional moves during the summer—like reviewing your RMD timing, adjusting your withholding, or exploring a Roth conversion—can add up to significant tax savings. And when you pair those actions with smart charitable giving strategies, you’re actively working towards a more tax-efficient retirement.
At Curio Wealth, we help you navigate these decisions with confidence. If you’re unsure where to start, reach out. We’ll walk through your situation, run the numbers, and help you prioritize the moves that matter most for your goals.
