Still paying taxes on your IRA after 65? Here's exactly how Traditional and Roth IRAs are taxed in retirement — and the RMD rule most retirees miss.
Yes — in most cases, you still pay taxes on your IRA after age 65. Whether you owe taxes depends on the type of IRA you have. Withdrawals from a Traditional IRA are taxed as ordinary income, no matter your age. Withdrawals from a Roth IRA are generally tax-free after age 59½, as long as the account has been open at least five years. Turning 65 does not change how the IRS taxes your retirement accounts — the rules are based on account type and, later, on Required Minimum Distribution age, not on reaching 65 specifically.
This distinction matters more than most retirees realize, because it affects how much of your retirement income actually lands in your pocket versus goes to the IRS.
The core difference between these two account types comes down to when you pay the tax bill.
All withdrawals from a Traditional IRA are taxed as ordinary income, unless you're using a Qualified Charitable Distribution (QCD) after age 70½. There's no special "senior" tax break at 65, and there's no capital gains treatment — every dollar you pull out is added to your taxable income for the year, taxed at your marginal rate, just like a paycheck.
This also means Traditional IRA withdrawals can push you into a higher tax bracket, increase the taxable portion of your Social Security benefits, or trigger higher Medicare premiums (IRMAA) if you're not careful about timing.
Qualified Roth IRA withdrawals are tax-free. Because you already paid tax on the money before it went into the account, the IRS doesn't tax it again — as long as you're over 59½ and the account has been open for at least five years. Roth IRAs also have no Required Minimum Distributions during the original owner's lifetime, which gives retirees more control over their taxable income each year.
Once you reach RMD age, the IRS no longer leaves the decision up to you. You are forced to take money out of your Traditional IRA and pay taxes on it, whether you need the income or not. This is one of the most misunderstood rules in retirement planning: even if you're financially comfortable and don't need the cash flow, the government requires the withdrawal — and the tax bill that comes with it.
Failing to take your full RMD can result in a steep IRS penalty, so this isn't a rule to overlook as you approach retirement.
Yes — a Qualified Charitable Distribution (QCD) lets you send IRA funds directly to a qualified charity, and that amount is excluded from your income. Available starting at age 70½, a QCD can satisfy some or all of your RMD for the year without adding a dime to your adjusted gross income. For charitably inclined retirees, this is one of the few legitimate ways to reduce the tax impact of Traditional IRA withdrawals.
For some retirees, converting Traditional IRA funds to a Roth IRA before RMD age can reduce lifetime taxes — especially during an "income valley." An income valley is a stretch of years, often between retirement and the start of Social Security or RMDs, when your taxable income is temporarily lower. Converting during this window means you pay tax on the conversion at a lower rate now, rather than at a potentially higher rate later once RMDs begin and push you into a higher bracket.
This strategy isn't right for everyone, and the math depends on your income, tax bracket, time horizon, and goals — but it's one of the most valuable planning opportunities retirees tend to miss.
Oak Road Wealth Management is a fee-only fiduciary financial planning firm based in Lee's Summit, Missouri, serving clients nationally. As fiduciaries, we're legally obligated to act in our clients' best interest — which means our retirement and tax planning guidance is built around what's right for you, not what generates a commission.
Yes. Traditional IRA withdrawals are always taxed as ordinary income, regardless of your age. Roth IRA withdrawals are generally tax-free after 59½ if the account meets the five-year rule. Turning 65 itself has no special effect on IRA taxation.
Traditional IRA withdrawals are taxed as ordinary income when you take the money out, since contributions were typically tax-deductible going in. Roth IRA withdrawals are tax-free in retirement, since contributions were made with after-tax dollars. The exception on the Traditional side is a Qualified Charitable Distribution (QCD) after age 70½, which can avoid income tax on the amount donated directly to charity.
Yes. Once you reach Required Minimum Distribution (RMD) age, the IRS requires you to withdraw a minimum amount from your Traditional IRA each year and pay taxes on it — whether or not you need the income.
It can, particularly during an income valley when your tax bracket is temporarily lower. Paying tax on a conversion now, at a lower rate, can reduce the taxes you'd otherwise owe later on larger, forced RMD withdrawals.
This article is for general educational purposes and is not personalized tax or investment advice. Tax rules are complex and depend on your individual circumstances — consult a qualified tax professional or financial advisor before making decisions about IRA withdrawals or Roth conversions.
Written by Andrew Matz, Financial Planner at Oak Road Wealth Management.
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