When Should I Take My RMD? A Guide for Retirees
“When should I take my RMD?” is a good question many retirees face, and the honest answer is…I don’t know! If you’re trying to time it during the year, you’ve usually got a 50/50 chance, but no one can predict exactly what the market will do in the short term. What I do know is that historically, the U.S. Stock Market trends upward about 70% of the time. I also know that the U.S. tax code complicates nearly everything! RMDs are no exception.
When Should I Take My RMD?
Figuring out when to take your RMD (required minimum distribution) for 2026 depends on numerous factors, some of which are more personal preferences! Here are three factors that generally matter when deciding the best time to take your RMD:
1. RMD Transfer Deadline is December 31, 2026
If you haven’t taken your RMD for 2026 yet and this is a year other than your first RMD year, you have to take it and have the transfer completed no later than December 31, 2026.
2. You MUST Take an RMD the Year You Retire*
An RMD is required in the calendar year you retire! If you turned 73 this year and are planning to retire December 31, 2026, you’ll need to plan on withdrawing an RMD.
*Unless you’re in your first year of RMDs. If that’s the case, you can delay and take two RMDs next year.
Keep in mind that you can only delay your RMD that first year, and it essentially puts two RMDs into one tax year, as well as using the account balance at the end of the previous year (likely higher) to calculate both RMDs.
While taking two RMDs in one year is generally considered a bad move, there are a few scenarios where delaying might avoid additional unnecessary tax:
If you worked most of the prior year and had a high salary
If you are realizing a large capital gain that same year (perhaps selling your business interest)
If 1 or 2 are true and you have a high balance on your retirement account
3. Taking Your RMD Depends on Your Risk Tolerance
Outside of the specific rules covering RMDs, the decision of when to take them during any given year comes down to how you feel (your risk tolerance) and what your situation requires. Ask yourself these questions:
Do you need the income immediately?
Does your financial plan require a set level of income this year from your RMD account?
What’s the demand on the account for future years according to your financial plan?
How Do I Calculate my RMD?
Calculating your RMD requires a statement from all accounts subject to RMDs noting the following:
Prior Year-End Balance: $__________
(Your account balance on December 31 of last year)
IRS Distribution Period Factor: __________
From the IRS Uniform Lifetime Table based on your age this year
Your Annual RMD: $__________
Step 1 divided by Step 2
Calculating RMD with Multiple Retirement Accounts
If you have more than one retirement account, you’ll have to determine the RMD from each account separately and take the aggregate amount. Depending on the type of account, you may pull some of the total from one or more accounts. Confused? Here’s an example:
Let’s say you are fully retired and turned 73 this year. You have three traditional IRAs and two old employer-sponsored 401(k) accounts. You’ll have to calculate ALL of the RMDs individually for each account. For this example, I am using 26.5 as the Distribution Period taken from the IRS Lifetime Table.
Account #1: IRA balance on 12/31/25 $50,000 $50,000/26.5 = $1,886.79 RMD
Account #2: IRA balance on 12/31/25 $75,000 $75,000/26.5 = $2,830.19 RMD
Account #3: IRA balance on 12/31/25 $100,000 $100,000/26.5 = $3,773.58 RMD
Account #4: 401k balance on 12/31/25 $125,000 $125,000/26.5 = $4,716.98 RMD
Account #5: 401k balance on 12/31/25 $150,000 $150,000/26.5 = $5,660.38 RMD
Pretty easy so far, right? Yep, not so fast…While you can combine multiple IRA RMDs and take the entire amount out of one account, you have to take RMDs individually out of each 401k. So in the case of our example, you could take any amount combination out of the three IRAs as long as the total equaled or exceeded $8,490.56. The 401k RMDs cannot be combined, so you would have to take that specific amount from each 401k. This is one reason why account consolidation in retirement is beneficial!
Should I Take My RMD Out in One Distribution or Split It Up Throughout the Year?
One balanced approach to taking your RMD is to take part of the distribution now and the rest later in the year to ultimately satisfy the RMD. That way you’re not trying to perfectly time the market—you’re spreading the risk. A couple of reasons you might consider splitting up your RMD throughout the year rather than taking a lump sum:
You need money to cover specific expenses and are afraid you’ll spend it all if it’s available to you, or
You want to leave assets in the accounts to maximize their potential returns.
When trying to maximize returns, I caution against this approach if you are counting on that money to cover expenses and can’t afford to risk the loss of it in the market.
How Can I Avoid Taxes on My RMD?
If you are inclined to gifting, you can satisfy your RMD requirements through a Qualified Charitable Distribution (QCD). The amount you donate counts towards your annual RMD, and it will not count as income on your tax return. Therefore, a QCD lowers your Adjusted Gross Income (AGI), and a lower AGI protects your Medicare premiums and benefits. You also don’t need to itemize your taxes when using a QCD, so you can still take the Standard Deduction on your return.
The Big Picture: Taking Your RMD in a Tumultuous Market
With the high level of uncertainty in the world today, how do you know when it’s time to take your RMD earlier than you may have previously intended? As I mentioned before, this all depends on your risk tolerance and your specific situation. Unfortunately, I don’t have a crystal ball to tell you the right approach, but here’s how I’m thinking about things in our current market:
Strait of Hormuz: When the Strait of Hormuz fully reopens—and it will, because it has to—we could see a strong market response as energy supplies stabilize. It’s not an energy problem; it’s a transportation-to-market problem. In the meantime, the US is working on other deals to bring energy (oil) to the market, which could also lead to a strong market response.
Government Funding Issues: When policymakers resolve the current funding issues—and they will, because they have to—that should also help restore confidence. They do historically resolve these issues, even if it’s with a “continuing resolution” or, at worst, a temporary government shutdown.
Market Reactions to Media: In the meantime, there will be other issues brought up by the media—and they will, because they have to. Information is being passed with increasing speed and decreasing discernment, causing markets to react to headlines with short-term volatility along the way.
At the end of the day, this isn’t about predicting the market; it’s about making the best decision for your plan and your peace of mind. Let’s make sure whatever we do aligns with both!
The Blueprint for Your Financial Future
Knowing the right time to take your RMD each year isn’t the only thing you need to worry about when you’re retired or even still preparing for retirement. A comprehensive financial plan can give you the blueprint for your build, but sometimes you need a professional to put it all together and ensure it runs smoothly!
If you’re looking for a partner to help you build your dream retirement and maintain it for years to come, book a free consultation with me. I’ll be a champion for your financial future every step of the way.
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