If you’ve dutifully contributed to your 401(k) or IRA over the years, the time will eventually come when you must start withdrawing from the account. When you turn 59½, you gain access to your retirement accounts, which you can draw down as you please—just keeping in mind you’ll owe ordinary income tax on anything taken out (unless it’s a Roth account).
But once you turn 73, the IRS says you have to start taking withdrawals, even if you don’t necessarily need them to cover your expenses in retirement.
Taking RMDs early versus later in the year doesn’t change how much you’re required to withdraw—but it can affect important parts of your financial plan, including your cash flow and year-long tax planning.
While there’s no universally “correct” answer to when you should take your RMDs, there are reasons some retirees prefer to withdraw earlier, and reasons others intentionally wait.
Called required minimum distributions (RMDs), these are mandatory withdrawals from certain tax-deferred retirement accounts, namely traditional IRAs and 401(k)s.
For most people today, RMDs obligations begin at age 73 (for those born between 1951 and 1959), but the RMD age is set to increase to 75 by 2033.1 Once RMDs begin, the IRS requires you to withdraw at least a minimum amount each year based on the ending in each impacted account on December 31 the year prior, as well as your life expectancy factor (as determined by the IRS).2
What the rules don’t tell you is when during the year you should take that distribution. Early January? Late December? Somewhere in between? From the IRS’s perspective, the answer is simple: as long as you take your full RMD by the deadline, they’re happy. (That’s typically December 31, with a special exception for your first RMD.)
But from your own financial perspective, timing can matter quite a bit.
“Just getting it over with” isn’t the most elegant financial strategy. But for many retirees, there are solid, practical reasons to take RMDs earlier rather than later.
Here are four reasons why someone might choose to withdraw closer to the beginning of the year:
If you rely on your RMDs to help cover everyday living expenses, taking them at the start of the year may be a necessary and convenient move. Moving the funds from the 401(k) or IRA to a more accessible money market or high-yield savings account can help you better address your day-to-day living expenses—especially if you don’t have access to fixed income (like a pension plan or annuity).
While you’ll likely be receiving Social Security benefits by the time you’re required to withdraw from your retirement accounts, the monthly benefits likely won’t be enough to cover all your expenses. In 2026, for example, the average monthly Social Security payout is $2,071.3
RMDs are taxable income, which means they can influence everything from estimated tax payments to Medicare premiums.
Taking your distribution earlier in the year can make it easier to:
In other words, you’re less likely to scramble in December trying to figure out how much tax you owe—or whether you’ve underpaid throughout the year.
If you pass away during the year before taking your RMDs, the person who inherits the account (your beneficiary) may be required to take it on your behalf, depending on how they’re designated.
During a difficult time, your account inheritor may need to act relatively quickly to establish an inherited account, process the required withdrawal, and potentially make estimated tax payments—leaving them especially vulnerable to missed deadlines or tax penalties.
In a year when you must take RMDs, withdrawing earlier in the year could help eliminate this potential burden for your family members. Doing so can spare your beneficiaries from having to manage complex financial requirements at a moment when they’re least prepared to do so.
Having some easily accessible liquid assets (like your cashed out RMDs) can help you act quickly and nimbly in the event of an unexpected financial need. Say your car breaks down, the dishwasher stops running, or you incur a large hospital bill. Withdrawing earlier in the year provides you the flexibility and accessibility to address concerns sooner than later. Otherwise, you may need to delay repairs or purchases as you rush to take a distribution from your retirement accounts—or other non-retirement accounts.
Being prepared for unexpected expenses ahead of time can help keep your financial moves strategic and methodical.
In some instances, you may find it more beneficial to keep your funds tucked away in your retirement account until later in the year. Here are a few reasons why it may be worth waiting:
Maybe you don’t like the idea of receiving a large lump sum all at once. Instead, you might prefer to spread your distributions across the year in monthly or quarterly increments—making them feel more like a steady paycheck.
This approach can make budgeting easier and may help avoid the temptation to overspend early in the year.
The longer your money stays invested, the more opportunity it has to grow.
If markets perform well, waiting to take your RMD allows those assets to potentially compound longer. Of course, the opposite is also true, as markets could decline throughout the year. But if you follow a long-term investment strategy, staying invested as long as possible may feel more aligned with your philosophy.
The end of year is when many people really hone in on their charitable giving goals. Waiting to do something with your RMDs until the end of the year might help you better align your actions across your financial goals.
For example, if you have an IRA, you may find it beneficial to use qualified charitable distributions (QCDs) as a way to hit two birds with one stone—satisfy a portion (or all) of your RMDs and make a charitable contribution. With a QCD, funds are donated directly from your IRA to a qualifying charity. Keep in mind, this is only available for IRAs, not 401(k)s.
Another important consideration: You should only make QCDs if you do not need your RMDs to cover your financial obligations in retirement. For some people with other robust sources of income, RMDs may feel like more of a tax hindrance than a necessary component of their cash flow strategy.
As you continue weighing your RMD timing, keep in mind the simple fact that taking them earlier in the year limits your chances of forgetting or neglecting to take them later on. Imagine settling into the start of the holiday season only to realize you still have an important end-of-year task on your to-do list.
Trying to squeeze RMDs in as an afterthought may lead to hasty decision-making and poor tax planning, depending on the rest of your financial picture. At whatever point in the year you choose to take them, your decision should feel intentional and aligned with the other aspects of your tax and financial picture.
Remember, you’re not bound to one strategy year after year. Try timing your RMDs one year, see how it feels, and don’t be afraid to switch things around next year if it doesn’t fit your needs. If you’re unsure what may work best for your unique situation, a financial advisor can help you weigh the trade-offs and coordinate your RMD strategy with taxes, charitable goals, and long-term planning.