The Accelerated RMD 5-Bucket Strategy

Most retirees understand that RMDs (Require Minimum Distributions) begin at age 73–75. What almost no one realizes is how large those distributions can become — and how quickly they can push even disciplined savers into higher tax brackets and reduced financial flexibility.

Take George, one of our clients. He had saved well, with $1.9 million in his IRA, and felt reasonably prepared for retirement. But when we showed him what the IRS would eventually force him to withdraw, everything changed.

At age 75, George’s projected RMD exceeded $236,000 per year.
Just ten years later, that number grew to more than $404,000, all taxed as ORDINARY INCOME.

This is the RMD time bomb hiding beneath many retirees’ portfolios — and it hits hardest for those who saved the most.

In this article, we’ll break down why traditional retirement advice often makes RMD problems worse, how an often-neglected 15-year planning window can dramatically reduce future taxes, and how our SUPERCHARGED 5-BUCKET SYSTEM helps retirees regain control of their income, taxes, and legacy.

Why RMDs Punish Good Savers

RMDs increase every year your IRA grows. And because the IRS also requires larger withdrawal percentages as you age, the forced distributions can rise dramatically — even during years when you don’t need the income.

This creates a painful cycle for many retirees. Large IRAs trigger large RMDs, which then create higher tax bills, Medicare IRMAA surcharges, and greater taxation of Social Security. These compounding effects slowly erode the retirement lifestyle you worked so hard to build.

Ironically, the people hit hardest are often the same people who spent decades making responsible financial choices.

The 15-Year Opportunity Window (Age 59½ to 75)

If you’re at least 59½, you’ve entered one of the most powerful planning periods of your life. This is when you can access your IRA without penalties and start shaping what your RMDs will look like later.

This window of opportunity lasts about fifteen years and gives you time to reposition assets, manage taxes intentionally, and strengthen your retirement plan long before RMDs begin. Even if you’re already in your 60s or early 70s, you still have time to make meaningful improvements.

What doesn’t work is waiting. Delaying action almost guarantees higher RMDs and less flexibility once the IRS takes control of your withdrawal schedule.

Why Leaving Your IRA to Your Kids Has Become a Tax Burden

Before SECURE ACT 2.0, many retirees planned to leave their IRA to their children with minimal tax impact. That strategy no longer works.

Today, most beneficiaries must empty an inherited IRA within 10 years. If your children are in their peak earning years, those forced withdrawals often push them into the 32%, 35%, or even 37% tax brackets.

Your life’s savings can become their tax problem.

However, you can redirect a portion of your IRA into vehicles that create a cleaner, more tax-efficient legacy. The step-up in basis offered by a non-qualified brokerage account eliminates lifetime capital gains at inheritance, making it one of the most powerful planning tools available.

Used intentionally, this move lowers your future RMDs and creates a smarter legacy without relying solely on ROTH conversions.

The Supercharged 5-Bucket Retirement System

Most retirees use only one or two strategies to manage income and taxes. That approach leaves gaps. Retirement planning works best when every action supports a coordinated purpose.

Our SUPERCHARGED 5-BUCKET SYSTEM brings structure to your income, tax planning, and legacy decisions. Instead of reacting to RMDs or market conditions, you guide your assets with clarity and intention.

Here’s how each bucket supports the overall strategy.

Bucket 1: Meaningful Spend-Down

Many retirees assume that spending less always leads to better outcomes. Unfortunately, avoiding withdrawals often guarantees larger RMDs in the future.

A meaningful spend-down uses intentional IRA withdrawals to enhance your lifestyle while reducing future tax exposure. You might reinvest in your home, travel more, create family experiences, give charitably, or simply enjoy a lifestyle that reflects the way you planned to retire.

This approach helps shrink long-term RMDs and lets your money support the life you want now, instead of sitting untouched until the IRS forces it out later.

Bucket 2: Step-Up in Basis Legacy Planning

If you want to leave assets behind, an IRA is no longer the most tax-efficient choice. Non-qualified brokerage accounts offer a major advantage: the STEP-UP IN BASIS. When your heirs receive these assets, the embedded capital gains accumulated during your lifetime disappear for tax purposes.

Imagine you put $100,000 into a regular brokerage account and it’s now worth $600,000.

If you withdrew it, you’d owe tax on the $500,000 gain.

But if your children inherit those assets, the IRS pretends the base value is $600,000 — the value on the day they inherited it.

All your past growth gets wiped away. They get a clean slate.

By moving a portion of your IRA withdrawals into a brokerage account, you improve your long-term legacy while also lowering future RMDs. This simple step gives your family a cleaner, more efficient inheritance.

Bucket 3: Roth Conversions — Used in the Right Order

Roth conversions are often recommended as the default solution for reducing future RMDs. In reality, they work best only when done after optimizing the first two buckets.

Converting too early can push you into higher tax brackets or create unexpected Medicare premium increases. But when conversions come later — after reducing RMD pressure and improving legacy positioning — they can become a powerful tool for creating tax-free retirement income, especially when paired with a ROTH HYBRID PENSION.

This bucket is effective, but only when used intentionally.

Bucket 4: The Tax Reserve

Strategic withdrawals require thoughtful tax planning.
This bucket sets aside funds to handle expected tax obligations, estimated payments, and bracket management. Having this reserve available removes hesitation and lets you take advantage of opportunities without worrying about the tax bill that comes with them.

Bucket 5: Hybrid Pension Laddering

Inflation is one of retirement’s most underestimated risks. To keep pace, retirees need reliable income sources that don’t depend solely on market performance.

Hybrid Pension Laddering uses staggered Hybrid Pensions to build multiple income engines over time. Each one delivers 10%–20% CONTRACTUAL LIFETIME PAYOUTS, creating a rising income floor you can rely on — even during market downturns.

This bucket protects your lifestyle, enhances your ability to fund the other buckets, and dramatically reduces SEQUENCE OF RETURNS RISK.

The Hybrid Pension: The Income Engine Behind the Strategy

Here’s the core problem with most retirement plans: the 4% RULE simply doesn’t generate enough dependable income to support all five buckets.

The Hybrid Pension changes the math entirely.
It offers guaranteed lifetime income at levels that no traditional portfolio can sustainably deliver and still preserve principal. It also keeps your cash value accessible and protects your income even if the underlying value eventually reaches zero.

Most importantly, it restores something most retirees miss — a steady, predictable paycheck that feels like the income stability they had throughout their working years. With that stability back in place, retirees can spend confidently, invest wisely, and manage taxes more proactively.

Traditional options fall short:

• The 4% rule doesn’t give you enough dependable income.

• Investments go up and down, so withdrawals are risky.

• MYGAs and CDs grow safely but don’t provide lifetime income.

• SPIAs and DIAs give lifetime income but lock up your money forever.

None of them give you both high lifetime income and access to your money.

George’s Story: Recreating His Working-Years Lifestyle

Let’s return to George.

We redirected $1.5 million of his IRA into a Hybrid Pension using the 10% rule, generating a guaranteed $150,000 per year. When paired with his $58,000 Social Security benefit, his total income rose to $208,000 per year— significantly more than he would have been able to safely withdraw using the 4% rule.

After deductions, his taxable income remained in the 24% TAX BRACKET.

This shift allowed George to reduce future RMDs, protect his brokerage account for legacy planning taking advantage of the step-up in basis, remove the sequence of returns risk from his income plan, and implement all five buckets simultaneously. Most importantly, he regained the sense of security and predictability he enjoyed during his working years.

Why This Strategy Works: It Rebuilds the Structure You Used During Your Career

During your career, your paycheck created consistency. You spent confidently, saved steadily, invested strategically, and covered taxes without overthinking it.

Retirement becomes stressful when that structure disappears.

By rebuilding a reliable GUARANTEED RETIREMENT PAYCHECK, the 5-Bucket System restores the financial foundation you relied on for decades. You regain the freedom to spend, plan, and enjoy life — without worrying about running out of money or triggering tax surprises.

This isn’t aggressive planning. It’s simply common-sense retirement design, built around tools most retirees never hear about.

Final Thoughts: You Don’t Need to Fear RMDs

If you’re between age 55 and 75, you’re in an ideal position to lower your RMDs, reduce lifetime taxes, strengthen your legacy plan, and secure dependable income for life.

The IRS controls your minimum withdrawals — but you can still control the strategy behind them. And with the right sequence of moves, that strategy can reshape your entire retirement.