Is Taking Your Required Minimum Distribution in November a Smart Move?

You've probably got a lot on your end-of-year to-do list -- holiday shopping, meal prep, maybe a trip to plan. You may have some last-minute financial moves to make, too, including taking your required minimum distribution (RMD) if you're 73 or older.

Technically, you have until Dec. 31, 2025 to do this, or April 1, 2026 if you just turned 73 in 2025. But November could be a smart time to get it out of the way for a few reasons.

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Why November could be a good time to take your RMD

Most people have to take their RMDs by the end of the year, so that doesn't leave a lot of time. If you haven't taken yours yet, acting within the next couple of weeks makes sense. You'll get it out of the way before the holidays get into gear. You'll also have plenty of time to address any potential issues that could arise, like clerical errors or accidentally underestimating your RMD.

You could wait to take your RMD if you just turned 73 this year. However, if you put it off until 2026, you'll have to take two RMDs next year. You might prefer to space them out, especially if you're worried about a recession hurting your savings. If you wait to take both of your RMDs next year and your portfolio is down, you may have to sell more of your assets to get the money you need.

Just make sure you don't miss your deadline, whether that's in December or April. If you do, you'll pay a 25% penalty on the amount you should've withdrawn. That's likely more than what you'd pay in income tax for taking your RMD as scheduled.

How to calculate your RMD

Calculating your RMD correctly is key to avoiding penalties. To start, you'll need to know your account balance as of Dec. 31, 2024. Check with your plan administrator if you're not sure what this was. Then, divide this by the distribution period next to your age as of Dec. 31, 2025 found in the IRS' Uniform Lifetime Table. The result is your RMD.

For example, if you're 73 and you had $100,000 in your IRA at the end of 2024, you'd divide $100,000 by the 26.5 distribution period for 73-year-olds to get an RMD of about $3,774. You're free to take out more than this, but that's the minimum you need to withdraw.

You must take RMDs from all traditional 401(k)s unless you're still working and own less than 5% of the company you work for. In that case, you can skip RMDs from your current employer's plan until the year you retire.

You don't have to take RMDs from Roth accounts because you already paid taxes on that money in the year you made your contributions. You will have to take RMDs from traditional IRAs, though.

What if you don't want to take RMDs?

If you don't need your RMD, you could do a qualified charitable distribution (QCD) instead. This is where you donate your RMD to a charity. You still have to give up the money, but the IRS won't tax you on it if you give it to a tax-exempt organization.

The catch is, you cannot withdraw the money from your retirement account and give it to the charity. You must give your plan administrator instructions to send the money directly to the organization for the move to count as a QCD. You can donate up to $108,000 this way in 2025.

If you're thinking about going this route, it's still best to act within the next couple of weeks. Give yourself some time to decide which organization you'd like to donate to and then contact your plan administrator to begin the process.

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