Why You Should Take Your 2025 RMD Now

Wednesday, February 05, 2025

By Sarah Brenner, JD
Director of Retirement Education

The deadline for most retirement account owners to take their 2025 required minimum distribution (RMD) is December 31, 2025. However, there are good reasons why you should take your RMD now instead of waiting.

You are doing a rollover. Maybe you are retiring this year, and you are now moving your employer plan funds to an IRA, or maybe you are tapping your IRA with the intent of doing a 60-day rollover after receiving the funds. In both of these situations, the first-money-out rule says that the first money that is distributed from your retirement account is your 2025 RMD. There is no choice in the matter. The rules also say that your RMD is not rollover eligible. You must take it prior to the rollover.

If you are in either of these situations, you must take your 2025 RMD now, before doing the rollover. You cannot wait to take your RMD later in the year.

You are doing a conversion. A Roth conversion can be a smart move. However, if you are age 73 or older this year and doing a conversion now, you will need to take your 2025 RMD from your IRA prior to the conversion. Why? The IRS says the first money out of your IRA is your RMD. A conversion is subject to the rollover rules, so your RMD cannot be converted.

Your IRAs are all seen as one IRA by the IRS. To make things even more complicated, the final RMD regulations confirm that when it comes to RMDs, your IRAs are aggregated. That means that if you have multiple IRAs (including SEP and SIMPLE IRAs), you must take your 2025 RMDs from all of them before doing any rollovers or conversions.

Avoid Last Minute Mistakes. Even if you aren’t required to take your 2025 RMD now, there are still good reasons why you should go ahead and do so. Waiting until late in the year is a recipe for trouble. The holiday season is busy and your RMD can get lost in the shuffle. Or, maybe you are charitably inclined and looking to satisfy your RMD by doing a qualified charitable distribution (QCD). This will require the custodian to send funds directly to charity and the charity must cash the check. These steps require some time and coordination. Taking care of these transactions now is a good move because you have plenty of time to check and be sure that everything is done properly.

Now Instead of Later

For many, taking an RMD is a year-end ritual. Maybe it’s time to change that mind set. The rules may require you to address your RMD sooner. Even if you can wait, it can be smart planning to take your 2025 RMD now instead of later.

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