Is There a Right Time to Take Your Required Minimum Distributions (RMDs)?
Key Points
You must take your 2026 RMDs by Dec. 31, unless you're turning 73 this year.
Taking them early ensures you don't forget, but waiting could allow your investments to grow more.
Failing to take your RMDs on time will result in a 25% tax penalty.
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Once you turn 73, you have to start taking mandatory annual withdrawals from your tax-deferred retirement accounts, such as traditional individual retirement accounts (IRAs) and 401(k)s. These are called required minimum distributions (RMDs).
You have an entire year to make them -- or even longer if it's the first year you're required to take RMDs. But it's natural to wonder whether there's an optimal time to do so. The truth is, it depends on your personal preferences and how you anticipate your investments behaving in the coming months.
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How RMDs work
The government requires you to take RMDs from all tax-deferred retirement accounts, except your current 401(k) if you're still working and own less than 5% of the company. The amount you must withdraw depends on your age and account balance as of Dec. 31 of the previous year. For example, for 2026, you'd look at your balance as of Dec. 31, 2025.
You divide this balance by the distribution period next to your age in the IRS Uniform Lifetime Table. The result is your RMD. For example, if you're 73 and have $250,000 in a traditional IRA, your RMD from that account would be $250,000 divided by the 26.5 distribution period for 73 year olds -- or about $9,434.
When should you take your RMDs?
You're required to take your RMDs by Dec. 31 of the year in question. However, there's an exception for the year in which you turn 73 because you have until April 1 of the following year. So if you're turning 73 in 2026, you could put off your RMD until April 1, 2027. But you may not want to do that because you'll have to pay taxes on both withdrawals in the same year.
Skipping your RMD will result in a 25% tax penalty on the amount you should have withdrawn. This is almost certainly more than what you'd pay in taxes if you'd made the withdrawal as scheduled.
If you're worried that you might forget to take your RMD, acting soon could be a wise move. You may also wish to take your RMD earlier in the year if you believe a recession might be coming. If you wait and your investments take a hit, you may have to sell more of them to fulfill your RMD requirement, which could leave you with less to cover future retirement expenses.
On the other hand, if you expect your investments to perform well throughout the rest of 2026, you might want to wait until closer to the end of the year. That way, the money can remain invested and growing for a few more months.
It's also fine to adopt a middle-of-the-road strategy where you withdraw a little from your accounts each month, rather than taking the RMD all at once. The only thing that really matters is that you withdraw your full RMD before the deadline.
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