• The IRS Rules: Required Minimum Distributions
• Options for Taking Your First Requirement Minimum Distribution
• RMDs: What You Need to Know
• RMDs Unpacked: The Math Behind Your Required Withdrawals and Tax Strategy
• 5 Strategies to Take Control of Your Required Minimum Distributions (RMDs)
• Can Required Minimum Distributions (RMDs) Cause You to Overwithdraw in Retirement?

Once required minimum distributions begin, you have a surprising amount of flexibility over when the money actually comes out. You can take your RMD immediately in January, wait until the final few months, or spread the withdrawals out over the course of the year.

And at first glance, the choice seems almost meaningless. The IRS has already determined how much you need to withdraw, and no matter when you take it, the taxable distribution still lands in the same tax year. 

But once you look beyond the basic requirement, the timing starts to matter in ways that are not always obvious. And even if you’re years away from taking RMDs, this is a decision you’ll eventually face if you have money in pre-tax retirement accounts. Understanding it ahead of time can make it easier to build those distributions into your broader retirement and tax plan instead of reacting to them later. 

So, in today’s episode, I’m breaking down the tradeoffs between taking your RMD early, late, or throughout the year, three situations that can make one approach more useful than another, and a simple way to decide which schedule fits your plan. 

Whether RMDs are already part of your life or still years away, the goal is to help you make that decision thoughtfully and proactively when the time comes.

Welcome to another episode of the Stay Wealthy Retirement Show. I’m your host, Taylor Schulte, and every week I cover the most important financial topics to help you stay wealthy in retirement. Ok, onto today’s episode.

3 Things RMD Timing Actually Affects (And How to Choose Your Schedule)

What Timing Can’t Change

Let’s start with the part of this decision that has already been made for you.

Your RMD or required minimum distribution for any given year is based on your pre-tax account balances on December 31 of the previous year, divided by a life-expectancy factor from the IRS table. So your 2026 RMD depends on what your pre-tax IRAs and or 401ks were worth at the end of 2025. 

If markets fall this year, the amount doesn’t shrink. If they rise, it doesn’t grow. And this same process repeats every year once required distributions begin, at age 73 today, or 75 if you were born in 1960 or later.

Because of the mechanics of this process, a lot of retirees conclude that the timing of their distributions is irrelevant. The amount is the same, the tax year is the same, and the tax bill is the same. So why should it matter whether your RMD comes out in January, December, or gradually throughout the year? 

It’s a fair question, and the option you choose isn’t going to make or break your retirement plan. However, there are still three things the timing of your distributions can affect. Let’s go ahead and walk through each of them one at a time.

1. How Long Your Money Keeps Growing Tax-Deferred

The first thing timing affects is compounding, and it’s the primary argument for waiting until the end of the year to take your RMD.

Put simply, every dollar that stays inside your IRA is a dollar that’s still growing tax-deferred. So if you take your distribution in January, that money leaves the account about eleven months earlier than it would if you waited until December.

Here’s a simple example. Imagine you’re 75 with a $1 million IRA, which means your RMD is a little over $40,000. And let’s say your investments earn 10% this year.

If you take the RMD in January and spend it, only the remaining balance participates in that 10% return. On the other hand, if you wait until December, the full $1 million stays invested nearly all year before the withdrawal comes out.

Same exact RMD amount and same exact tax bill. But by waiting, you’d finish the year with roughly $4,000 more in the IRA.

Now, let’s keep that benefit in perspective. An extra four thousand dollars on a million-dollar account is about four-tenths of one percent (or 0.4%). It’s real, and over many years it can add up, but for most retirees, it’s not enough to materially change the outcome of a retirement plan.

It’s also worth highlighting that it can work the other way around, too. If the markets have a tough year and the account drops by 10% instead, it would have been the better move to take the RMD at the very beginning of the year, leaving less money exposed to the decline. 

But, historically, the U.S. stock market has ended the calendar year in positive territory three out of every four years, so while there’s no guarantee in any single year, delaying the distribution has generally worked in your favor over long periods of time.

But that advantage gets smaller if you don’t actually need the RMD to live on. For many of our clients, we simply transfer some or all of the required distribution into a regular brokerage account and reinvest it in a similar long-term allocation, allowing the money to stay invested and participate in any market upside. In that case, the main thing you give up by taking the RMD earlier is the tax deferral on the amount withdrawn. And on a $40,000 distribution, that difference may be fairly small. 

If holding the money in a taxable account creates roughly a 1% annual tax drag, we’re talking about a few hundred dollars. 

Sure, it’s worth capturing when it’s convenient, but probably not worth reorganizing your year around.

2. The Risk of Missing It (or Mistiming It)

So if the argument for waiting is compounding, the argument for taking your RMD earlier is mostly about reducing the chance of a mistake, which is the second thing timing affects.

And the most common mistake is simply forgetting to take a distribution that was supposed to happen “before year-end.” It sounds simple to avoid, but it can easily slip through the cracks if you’re managing the process on your own, especially with everything that piles up in December. And yes, you can set them up for auto-pay at most institutions, but many choose to do it manually so they can be more tactical with the timing. 

And I’m highlighting this risk because missing the deadline can trigger a penalty equal to 25% of the amount you should have withdrawn. If you correct the mistake within roughly two years,  that penalty can drop to 10%, but that’s still a steep price to pay for an administrative oversight.

There’s also a practical issue. 

Because year-end is so busy for financial institutions, many ask that distribution requests be submitted several weeks before December 31 to avoid processing delays. So “waiting until the end of the year” often means late November or early December, not New Year’s Eve.

Historically, another reason retirees would choose to take their RMD earlier in the year was for estate planning reasons. Prior to new IRS regulation in 2024, if you happened to pass away late in the year before taking your RMD, your beneficiaries would have to act quickly to get it processed while grieving and dealing with everything else that comes with settling your affairs. With the new regulation in place, for deaths occurring in 2025 and later, the IRS gives the beneficiary until December 31 of the year after the owner’s death to take the miss year-of-death RMD. The formal deadline is the later of the beneficiary’s applicable tax-return due date or the end of the following calendar year.

Before we move on, there’s one potential downside to taking your RMD early worth sharing. Twice in the last two decades, in 2009 and again in 2020, Congress suspended required distributions in response to challenging market environments. Retirees who had already taken distributions were eventually given a way to put the money back, but it required extra paperwork and another deadline for them to track. That’s rare, and I wouldn’t build a strategy around it, but it’s still part of the case for not taking your RMD any earlier than necessary.

3. How the Distribution Fits the Rest of Your Plan

Ok, the third and final thing the timing of your RMD affects is the one I’d suggest paying the closest attention to, because this is where your distribution starts interacting with the rest of your tax plan.

Let’s start with Roth conversions. In any year you have a required minimum distribution, that required amount must be withdrawn before you can convert additional IRA dollars to a Roth. So if Roth conversions are part of your ongoing tax planning, waiting until December to deal with the RMD can create an unnecessary year-end scramble.

Charitable giving adds another wrinkle. A qualified charitable distribution, or QCD, lets someone age 70 ½ or older send money directly from an IRA to an eligible charity – in 2026, the limit is $111,000 per person. And when done properly, the QCD counts toward your current year required minimum distribution and is excluded from taxable income because the funds go directly from the IRA to the charity

But like Roth conversions, the order matters here, too. If your RMD is $40,000 and you withdraw the entire amount in January, then make a $10,000 QCD in March, the $10,000 gift can still qualify as a tax-free distribution, but it generally won’t undo or reclassify the taxable RMD you already took. So, if you want charitable giving to satisfy part or all of your RMD, it is usually best to complete the QCD first, then take any remaining RMD, and only after that consider a Roth conversion. And remember that RMD dollars themselves cannot be converted to a Roth IRA.

RMDs can also be useful for rebalancing. Since the money has to come out of the account anyway, you can use the forced withdrawal amount to trim investments that have grown above their target and bring the portfolio back into balance. And because the trades happen inside a pre-tax IRA, there are no capital gains taxes to worry about. If we experience another 2022 where both stocks and bonds are down, you might take the distribution from cash instead of selling any securities at all. Either way, the RMD becomes another tool for managing the portfolio allocation instead of a completely separate decision

Lastly, there’s tax withholding, which may be the strongest practical argument for waiting until later in the year. Here’s why: for federal estimated-tax purposes, taxes withheld from an IRA distribution are generally treated as though they were paid evenly throughout the year, even if the distribution doesn’t happen until November or December. 

Estimated-tax payments, on the other hand, don’t get that same treatment – they generally count when you actually make them. So, in some cases, a retiree can take an RMD or a voluntary IRA distribution late in the year, withhold enough federal tax to satisfy the IRS payment requirements, and avoid making quarterly estimated-tax payments throughout the year entirely. 

There are a few important guardrails, though. For example, the withholding still needs to happen by December 31, it needs to be large enough to satisfy the applicable IRS rules, and each state may treat estimated taxes differently.

And if you’d rather not wait until year-end, spreading your RMD across the year can work well too. Quarterly withdrawals can line up with your estimated tax payments, so the cash arrives around the same time the taxes are due. And that’s really the broader point: there isn’t one universally “best” month to take an RMD. The better timing is the one that fits most cleanly with your unique situation, your personal preferences, and your tax and retirement plan.

Which Schedule Fits You

Ok, so now that we’ve unpacked the three things RMD timing can affect, let’s turn them into something you can actually use, because the right schedule mostly depends on what the money is for.

If You’re Spending It

If you manage your own retirement income plan and rely on your RMD to help cover expenses, I’d lean toward spreading out the annual distribution. Monthly or quarterly withdrawals can function like a retirement paycheck, line up more naturally with your bills, and avoid selling everything on a single day. Most custodians can calculate the amount and automate the payments for you – just keep in mind that some automated investment services or Separately Managed Accounts may sell across the portfolio rather than letting you choose exactly what gets trimmed. And even with automatic distributions set up, I’d still confirm near year-end that the full RMD was satisfied to avoid a penalty.

If You’re Reinvesting It

If you don’t need the income and plan to reinvest the RMD, I’d lean toward taking it later in the year, but not at the last minute. October or November lets you capture most of the tax-deferred growth while leaving enough time for processing and any charitable gifts you want to make first. This is also where the withholding strategy can be especially useful: one distribution, one withholding election, and potentially most or all of your federal tax-payment requirement handled at once.

If You’re Converting or Giving

Lastly, if Roth conversions or charitable gifts are part of the plan, the order matters more than the month. In general, make the charitable gift first, then satisfy the rest of the RMD, and only then process a Roth conversion. The key is giving yourself enough time to coordinate all three, which usually means starting well before the end of the year.

Bottom Line

At the end of the day, the timing of your required distribution is a small planning decision, but it’s still one worth making on purpose rather than by default. The amount is already determined, and so is the tax year. What you’re really deciding is how to make that required withdrawal fit more cleanly into the rest of your plan. 

So consider asking yourself a few important questions: Do I actually need this money to live on this year? Am I planning a Roth conversion or a charitable gift from my IRA? How am I paying the tax on the distribution, and could the RMD itself make that easier? And will my chosen plan leave me enough time to make sure the full distribution is completed before the deadline?

Your answers probably won’t dramatically change your retirement outcome. But they can help you avoid mistakes, simplify your tax planning, and make a forced distribution a little more useful. And that’s really the goal. If the IRS is going to require the money to come out anyway, you might as well make the timing work for you and your unique retirement needs and goals. 

Thank you, as always, for listening, and to view the research and resources referenced in today’s episode, head over to youstaywealthy.com/302.

Disclaimer

This podcast is for informational and entertainment purposes only, and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.