As we approach (or settle into) retirement, conversations naturally shift from accumulating wealth to preserving and wisely distributing it. And one topic that deserves thoughtful planning – yet often sneaks up on even the most financially sophisticated investors – is Required Minimum Distributions, or RMDs.
RMDs may sound like just another retirement rule, but when managed strategically, they can be an important part of your long-term wealth plan, tax strategy, and legacy goals.
Let’s break it down in plain English and talk through how to approach RMDs in a way that supports your broader financial picture.
First Things First: What are RMDs?
Once you reach a certain age – currently age 73 for most investors, with a scheduled rise to age 75 for younger cohorts – the IRS requires you to begin taking minimum withdrawals from most tax-deferred retirement accounts. That includes traditional IRAs and 401(k)s, among others.
Why? Because Uncle Sam has been patiently waiting to tax the dollars you tucked away with pre-tax contributions over the years. RMDs are the government's way of ensuring those dollars eventually become taxable income.
You don’t have to worry about RMDs from:
• Roth IRAs (during your lifetime)
• Taxable brokerage accounts
• Certain employer plans if you’re still working and don’t own more than 5% of the company
Everything else? Likely subject to rules. And the rules have real teeth – miss an RMD and the penalty can be as high as 25% of the amount you should have withdrawn.
Why RMDs Matter More for High-Net-Worth Investors
For many affluent retirees, RMDs are not about “needing the income” – they’re about managing taxes, maintaining lifestyle flexibility, and preserving wealth for future generations.
Larger retirement balances typically mean larger RMDs, which means more taxable income. As your financial partner, our goal is not to simply to follow the rules – it’s to do so in a way that helps keep your tax burden in check, supports your charitable goals, and ensures your portfolio stays aligned with your risk tolerance and financial targets.
Smart Strategies to Navigate RMDs Thoughtfully
A successful RMD plan is not simply about taking distributions – it's about strategizing distribution timing, tax exposure, and reinvestment needs.
Here are a few tactics we often discuss with clients:
1. Start Early with Roth Conversions
Once you retire – but before RMDs begin – there may be an opportunity to gradually convert traditional IRA or 401(k) assets to a Roth IRA. This can help:
• Reduce future RMD amounts
• Spread tax liability over multiple years at potentially lower rates
• Create a tax-free asset for legacy planning
Think of this as turning future forced taxable withdrawals into intentional, tax-efficient income planning.
2. Use Qualified Charitable Distributions (QCDs)
If charitable giving is already part of your life – and for many of you, it is – a QCD can pull double duty. Individuals aged 70½ and older can donate up to the annual IRS limit directly from an IRA to a qualified charity. These gifts count toward your RMD and aren’t treated as taxable income, which can help keep Medicare premiums and tax brackets in check.
It’s philanthropy with a tax benefit – an elegant combination.
3. Build a Thoughtful Withdrawal Strategy
RMDs don’t have to be spent; they simply need to be distributed. If you don’t need the income, we can reinvest the funds in a taxable account aligned to your long-term plan. The key is designing a tax-efficient investment strategy so those dollars continue working for you and your family.
Looking Ahead: Planning Creates Flexibility
RMD planning is not a “set it and forget it” item on your checklist. It’s part of an ongoing financial conversation – one that adjusts as markets move, tax laws evolve, spending needs shift, and family priorities change.
Like many aspects of wealth management, the most successful results come from proactive planning rather than reactive decision-making. Whether you are approaching RMD age, currently taking distributions, or thinking ahead for legacy planning, a thoughtful strategy can help ensure your retirement accounts support the future you envision.
The Bottom Line
At the end of the day, RMDs are simply a rule – but your retirement strategy is a roadmap. Our role is to help you navigate both: honoring IRS requirements while optimizing your financial life in a way that supports your long-term goals.
If you have questions about how RMDs may affect your plan, or you’d like to explore creative strategies to manage distributions efficiently, reach out to your NorthCoast advisor. We’ll work together to make sure each piece of your wealth plan – RMDs included – helps protect and advance your financial future.
NorthCoast Asset Management is a d/b/a of, and investment advisory services are offered through, Kovitz Investment Group Partners, LLC (Kovitz), an investment adviser registered with the United States Securities and Exchange Commission (SEC). Registration with the SEC or any state securities authority does not imply a certain level of skill or training. More information about Kovitz can be found at www.kovitz.com.
NorthCoast and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
The information contained herein has been prepared by NorthCoast Asset Management ("NorthCoast") on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions. © 2025 NorthCoast Asset Management.
PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS.
This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL.
The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties.
