Should You Take Your 2026 RMD Early in the Year or Later?
Key Points
Failing to take a required minimum distribution (RMD) typically results in a huge penalty.
Taking your RMD early in the year could help with cash flow.
It could also prevent a scenario where you run out of time or forget to take your distribution by year's end.
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If you have your nest egg in a traditional retirement account, once you turn 73, you'll have to start taking required minimum distributions (RMDs). Your first RMD can be delayed to April 1 of the year after you turn 73 without incurring a penalty. Otherwise, RMDs are due by Dec. 31 each year.
It's in your best interest to take your RMDs and not miss the deadline. If you don't take a given RMD, you'll lose 25% of whatever sum you don't remove from your retirement account. So if your RMD is $10,000, failing to take it on time means forfeiting $2,500 of your hard-earned savings.
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But just because RMDs are due by Dec. 31 each year doesn't mean you have to wait until the end of the year to withdraw those funds. You can take your RMD at any time. The question is, are you better off taking your RMD early this year or waiting?
The case for taking your RMD early
The benefit of taking your RMD early on in the year? You get the task done with and don't risk a penalty.
Plus, depending on your situation, taking your RMD earlier in the year could help with your cash flow. Also, it could pay to take your RMD earlier from an investment perspective.
If you're happy with the value of your portfolio now, you may want to take your RMD at a time when the market is in a good place. If the market deteriorates in 2026 and you take your RMD later on, you might have to sell some of your assets off at a lower value.
The case for waiting to take your RMD
The longer you wait to take your RMD, the more your money gets to grow in a tax-deferred fashion. If you don't have an immediate need for your RMD, and you expect the market or your specific investments to perform well in 2026, then it could pay to leave that money in your IRA or 401(k) plan a bit longer and take a withdrawal closer to December.
Waiting to take your RMD might also help with tax planning. If your 2026 income ends up being higher than expected, you may decide to do a qualified charitable distribution to negate your RMD tax bill rather than take that money out to use yourself. Delaying your RMD could help you get a better sense of your total income for the year before making that choice.
There's no right or wrong answer
When it comes to taking RMDs, there's no such thing as perfect timing. You may decide that you're more comfortable taking this year's withdrawal in late January or sometime in February so you know it's done with. Or, you may decide that waiting makes sense for you.
If you do decide to wait, though, set a calendar reminder for no later than early December to make that withdrawal. That way, you're less likely to forget about your RMD and get penalized accordingly.
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