Why Taking Your RMD Immediately Beats Waiting Until the Deadline: The Smart Investor’s Move

RMD Deadline Looming? Why Early Action Trumps Last-Minute Scrambling.

Forget the procrastinator's playbook. The calendar flips, and Required Minimum Distributions (RMDs) become a non-negotiable line item for retirement accounts. Conventional wisdom often treats the December 31st deadline as a target, not a trigger. But that strategy might just be leaving money—and flexibility—on the table.

The Hidden Cost of Waiting

Delaying your RMD until the final weeks of the year surrenders control to the market's whims. A sudden downturn in Q4 could force you to sell assets at a loss simply to meet the IRS mandate. Taking the distribution early in the year sidesteps that volatility trap. It converts a paper value into settled cash, insulating that portion of your nest egg from the year's potential rollercoaster.

Cash Flow Clarity & Strategic Reinvestment

An early RMD transforms an obligation into an opportunity. That capital hits your account by mid-year, providing crystal-clear visibility into your annual cash flow. No more year-end guesswork. This creates a runway to strategically redeploy funds—whether into a taxable brokerage account, paying down debt, or funding major expenses without tapping other reserves. It's proactive capital management versus reactive compliance.

Bypassing the Year-End Logjam

Financial advisors and custodians face a tidal wave of requests every December. Processing delays, administrative errors, and rushed decisions become real risks. By acting early, you bypass the institutional traffic jam, ensuring smooth execution and giving yourself the luxury of time to plan the distribution's aftermath. After all, in finance, the only thing more predictable than a tax bill is the annual December rush to meet one.

Securing peace of mind months in advance often beats optimizing for a few extra basis points of hypothetical growth. In a system built on complex rules, sometimes the smartest move is the simplest one: take the money off the table, and get back to investing on your own terms.

Key Takeaways

• If you plan to stash your RMD funds in savings, withdrawing now—instead of by Dec. 31—may let you lock in a high yield before it’s gone.
• Moving your RMD money to one of today’s top CDs lets you guarantee a safe 4%-plus return for months or years down the road.
• But don’t delay, as the Fed is widely expected to cut interest rates next week, which will push savings and CD returns lower.
  

You Have Until Dec. 31 To Take Your 2025 RMD—But Waiting Could Cost You

If you’re subject to a required minimum distribution (RMD) this year, you must withdraw it by Dec. 31 to avoid steep IRS penalties. You can take it all at once or in smaller payments, but the full amount has to be out of your account by year-end.

Many retirees who don’t urgently need their RMD funds wait until December so the money can stay invested and keep growing tax-deferred as long as possible. That strategy often makes sense—but not always.

Because the Federal Reserve is expected to cut rates next week, delaying your RMD even briefly could mean missing today’s stronger yields, including top-paying certificates of deposit (CDs). Taking your RMD as soon as possible gives you the chance to secure a better return before rates fall.

Why This Matters for You

If you don’t need your RMD soon, taking it early lets you MOVE that cash to a CD that locks in one of today’s high yields—before a Fed cut pushes rates lower. With inflation still a concern, earning a solid return helps your savings keep its purchasing power.

Taking Your RMD Now Could Help You Secure a Better Return Going Forward

A guaranteed return is appealing when interest rates are shifting—and that’s exactly what a CD offers. Once you lock in a CD rate, it won’t change, no matter how soon or how much the Federal Reserve lowers its benchmark rate. Right now, the best-paying CDs offer returns in the low- to mid-4% range.

If you won’t need your RMD funds for a while, locking in one of these rates soon is smart, given the Fed is overwhelmingly expected to cut interest rates on Dec. 10. This is likely to trigger a wave of CD rate reductions across banks and credit unions, meaning what you’ll be able to lock in later this month may be quite a bit less than what you can secure today.

Also keep in mind that any given CD can evaporate overnight, even before the Fed officially announces a rate move. So if you see a CD offer that aligns with your financial timeline and offers a top-ranked rate, it’s wise to grab it while you can.

Important

Keep in mind that locking in a CD rate means committing your funds for the full term. Cashing out before maturity can trigger an early withdrawal penalty that varies by institution—from a modest charge to a much steeper hit. So choose your term carefully, and review the bank’s penalty rules before you lock in.

Related Education

Want Flexibility Instead? Here’s How To Keep Your RMD Cash Earning a Top Yield

If you’d rather not lock all of your RMD funds into a CD, you still have ways to earn a solid return. Many top high-yield savings accounts are paying rates in the mid-4% range, with some reaching 5.00%. And with these liquid accounts, you can access your money whenever you need it.

To compare today’s top offers, see our daily ranking of the best high-yield savings accounts, which currently features 17 options paying 4.15% or higher.

A high-yield money market account could also make sense. While their returns often trail the best savings accounts—the current nationwide leader offers 4.50% APY—they add flexibility by allowing paper check writing.

Keep in mind that, unlike a locked-in CD rate, savings and money market accounts pay variable yields—meaning those APYs can drift lower once the Fed begins cutting its benchmark rate.

Bottom Line

Even if you don’t need your RMD funds right away, withdrawing soon could help you secure a higher yield for your cash while those returns are still available. If rates drop in the NEAR future, you’ll be glad you locked in one of today’s higher APYs while you had the chance.