Should You Take Your RMD Earlier in the Year?

Required Minimum Distributions (RMDs) can feel like one more box to check in retirement, but understanding when and how to take them can make a big difference in your tax bill and cash flow. Here’s what you need to know, plus a strategy that can help you give back at the same time.

Let’s Break it Down

An RMD is the minimum amount you must withdraw each year from certain retirement accounts once you reach a specific age. Current rules require:

  • Age requirement: RMDs begin at age 73

  • Accounts affected: Traditional IRAs, 401(k)s, 403(b)s, and SEP IRAs.

  • Why they exist: RMDs ensure the IRS eventually collects taxes on pre-tax contributions and investment growth.

Missing your RMD or taking too little can lead to a significant penalty of the amount you should have withdrawn.

The Case for Taking RMDs Early

Although you have until December 31 each year to take your RMD, starting earlier can have advantages:

  • Avoiding the year-end rush when custodians are busy processing withdrawals.

  • Reducing the risk of selling investments at a loss if markets dip late in the year.

  • Giving you more flexibility for tax planning and cash flow.

Many retirees spread their withdrawals over the year or take them early to keep things simple and predictable.

How QCDs Can Help

A Qualified Charitable Distribution (QCD) is a direct transfer from your IRA to a qualified charity. Here’s why they’re worth considering:

  • Age requirement: You can start making QCDs at age 70½—before RMDs even begin.

  • Annual limit: Up to $105,000 per year (2024 limit) can be sent directly to one or more charities.

  • Tax advantage: QCDs count toward your RMD for the year but are excluded from your taxable income.

If you’re already charitably inclined, this can be a tax-efficient way to meet your RMD and make a positive impact.

The Bottom Line

RMDs are a fact of retirement, but the timing is in your control. Taking them earlier in the year can reduce stress, improve planning flexibility, and—if combined with a QCD—help you support causes you care about while lowering your taxable income.

If you’d like help deciding when and how to take your RMD this year, contact us to create a strategy that works for your financial goals.

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Advisory services provided by NewEdge Advisors, LLC doing business as Middlebrook Wealth, as a registered investment adviser. Securities offered through NewEdge Securities, LLC, Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC. are wholly owned subsidiaries of NewEdge Capital Group, LLC.

The information in this material is not intended as tax or legal advice. Please consult your legal or tax professionals for specific information regarding your individual situation. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.