Should You Take Your RMD at the Beginning or End of the Year? Here's What to Consider.

With 2025 shrinking in the rearview mirror as we move well into 2026, a few retirees may be getting antsy. Namely, anyone that will be 73 years old or older at any point this year may have an itch to get their required minimum distribution from a retirement account out of the way so they can focus on other things.

And for some of these older investors, taking care of this business now will result in the exact same outcome as it would by doing it at a later date. For most retirees though, the timing of your RMD can make at least a small difference to your long-term bottom line.

With that as the backdrop, here are a few things to consider regarding when during the year it makes the most sense to take your required minimum distribution.

But first things first... what's an RMD?

What are required minimum distributions, or RMDs?

If you're not familiar with them, just as their name suggests, required minimum distributions are annual withdrawals from non-Roth retirement accounts that the IRS requires beginning in the year you turn 73. (Since withdrawals from Roth IRAs generally aren't taxable, they're not subject to RMDs.)

The size of your required withdrawal depends on your age and the amount of money you've got tucked away in retirement accounts that are subject to RMDs -- the older you are, the bigger your required distribution is as a percentage of your individual retirement account's (IRA's) value. If you're only turning 73 this year, for instance, your RMD is just a little less than 3.8% of the account's value as of the end of last year. If you're going to be 85, that number inflates to 6.25%. At the age of 95, the RMD inflates to nearly 11.24% of a retirement account's previous-year-end balance. The IRS provides a worksheet to help you figure out your required distribution, although your IRA's custodian or brokerage firm should supply you with the year-end account value information you'll need to make this calculation.

Also, bear in mind this is just a minimum. You can take out more than the minimum if you like.

There's some flexibility in how you complete your RMD, too. For example, if you happen to own more than one retirement account, you don't necessarily have to take a distribution from each of them. You can combine their values and just make a withdrawal from one. You can also do the same if you have multiple 403(b) accounts, although for RMD calculation and withdrawal purposes, you can't co-mingle 403(b) money and ordinary retirement account savings. And, if you happen to own more than one 401(k) account (not a rollover IRA but an actual 401(k) account) from a previous employer, each of them will need its own separate RMD.

The deadline to complete a required distribution is by the end of the calendar/tax year, with one exception. For the year in which you turn 73, you've actually got until April 1 of the following year to make the withdrawal. Just keep in mind this will mean two taxable withdrawals in one tax year, potentially bumping you into a higher tax bracket.

But the question remains -- should you take your RMD at the beginning or nearer the end of the year?

Food for thought

The answer to the question is a decisive "it depends"... on a lot of different factors.

One of these factors is whether or not you actually need a cash-based distribution to provide spendable retirement income. If delaying an RMD is going to pose unnecessary financial strain, by all means sooner is better than later. Your tax bill (payable the following year) won't get any bigger or smaller by waiting.

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That's one of the simpler issues to consider. Things turn far more complex if you need to sell a stock, bond, exchange-traded fund (ETF), or mutual fund to free up cash to turn a required distribution into liquid retirement income. If this sounds like you, it makes more sense to sell at a market high than it does to lock in a subpar exit price while the market's at a low.

Think about it. Your RMD amount is etched in stone as of the end of the prior year. The value of the assets that will produce this distribution, however, will continue to ebb and flow. By selling at a high, you're removing a relatively small proportion of your retirement holdings, leaving more value in the tax-deferred account. No, you'll never really know if you're getting out at a peak; it's always possible your investments will be worth even more in the near future. That's a risk to be sure. Just be sure you're balancing this risk with realism.

That being said, there's no rule that says you must take the entirety of any given year's required minimum distribution in one shot. You can make several withdrawals over the course of the year, essentially hedging your timing bet. Just make sure you take out enough during the year to fully satisfy your RMD.

Finally, while the discussion thus far has presumed you'll take a cash-based required distribution and perhaps even sell something to free up cash, your RMD doesn't have to be paid in cash. You can also take what are called "in-kind" distributions of assets already held in the retirement account. Your broker or IRA's custodian will simply assign this transfer a dollar-based value as of the day it's made. This option obviously makes sense if you'd like to hang on to a particular investment, and/or you're going to do something similarly constructive with this money no matter where it is.

There's no particular tax benefit or penalty with taking in-kind distributions, by the way -- the IRS is going to tax the dollar amount of value withdrawn, no matter what it is at the time.

The more important criteria

So, to answer the question plainly, taking your RMD at the beginning or end of the year isn't quite the right question to ask. The primary timing consideration is whether you're selling something at a time that could cause long-term damage to your portfolio's performance. It's not always easy to know, but you can still make a reasoned effort to mitigate the risk stemming from not knowing.

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