Can You Avoid Required Minimum Distributions (RMDs)?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Avoiding RMDs: Is it Possible?

There’s no direct method to completely avoid RMDs for accounts that are subject to them. However, there are strategies to minimize their impact or use them efficiently:

  1. Roth Retirement Accounts: Contributions to Roth IRAs or Roth 401(k)s are made with after-tax dollars, and these accounts are not subject to RMDs. Switching to or contributing more to Roth accounts can be a strategy to avoid RMDs.
  2. Nonqualified Retirement Accounts: Investing in non-retirement accounts (nonqualified) also circumvents RMDs as these accounts don’t have mandatory distribution rules.

Productive Uses of RMDs

If you’re subject to RMDs, consider these strategies to use them effectively:

  1. Long-Term Care Insurance: You can use RMDs to purchase long-term care insurance, especially policies that are not “use it or lose it.” This ensures that your RMDs are invested in future healthcare needs.
  2. Life Insurance: Purchasing life insurance with RMDs can provide a financial legacy for beneficiaries, potentially tax-free.
  3. Fixed Indexed Annuity: Investing in a fixed indexed annuity with an enhanced death benefit can offset inheritance taxes for beneficiaries. This financial product can provide a death benefit higher than the annuity’s value, offering tax advantages for heirs.


While avoiding RMDs entirely may not be feasible, strategically managing or reinvesting these distributions can maximize their benefits and minimize the tax impact. Understanding these options can help in planning a more efficient retirement strategy.

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Questions From Our Readers

Which value is used for calculating Required Minimum Distributions (RMDs) on an annuity?

The accumulation value of the annuity is typically used for calculating Required Minimum Distributions (RMDs). The accumulation value is the total value of your annuity, including your original investment and any earnings it has accrued over time.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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