Is Taking Your RMD in May a Smart Move? Here's What the Math Says.

Will you be 73 years old or older at any point in 2026? If so, then you probably already know you're now required to regularly remove money from any non-Roth retirement accounts you may hold.

To this end, one of the most common questions people of this age ask themselves is when they should take their required minimum distribution (RMD). Is this month the right time to do so?

The answer is a resounding "it depends," although for plenty of retirees, now's arguably a much better time than not.

Think strategically

If you're not familiar with them, required minimum distributions are taxable withdrawals the IRS forces you to make from retirement accounts. The minimum in question depends on your age.

For 73-year-olds, it's roughly 3.8% of the account's value as of the end of last year. If you're 85, the RMD ramps up to 6.25% of the year-end value. Your IRA's custodian can provide the information you need to determine your specific RMD.

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The ideal timing of this withdrawal, however, largely depends on how your retirement account is currently invested. If you own a bunch of stocks that are well up for the year, now's a great time to take this distribution, simply because you'll be removing a mathematically smaller portion of your total holdings while still satisfying the IRS's minimum requirement. This is true whether you're going to sell something and take your RMD in cash or just make an in-kind transfer of assets from your IRA into an ordinary taxable brokerage account.

See, while the value of your retirement portfolio ebbs and flows throughout the year, the amount of your required minimum distribution doesn't. It's etched in stone based on the account's previous year-end value; this number won't change. It will only become proportionally less or more of your retirement account as your account value rises or falls in step with the broad market.

Table and calculations by author.

So, if you'd like to leave as much money as you can in your tax-sheltered IRA, the time to take your distribution is when the market is up -- like it is now.

Just don't paralyze yourself

Could the market be even higher a few months from now, providing you with an even better opportunity to satisfy the IRS's RMD rules while also leaving more money in the account? Sure, that's possible.

There's no assurance continued strength is in the cards, though. What we do know right now is that stock prices are up 8% since the beginning of the year. Certainty accounts for a lot.

To this end, however, there's no requirement to complete your required minimum distribution in one single transaction. You could take care of some of this business now and then some more of it later, essentially hedging your bet.

Also, the quest for the perfect timing of an RMD can easily do more harm than good. If you're of an age where withdrawals from your retirement account(s) are mandated, don't overthink it. It doesn't matter that much in the end, particularly if you're going to leave this money invested in the stock market anyway.

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