When Should You Take Your Minimum Required Distribution? January Might Not Be the Right Time

Understanding Your RMD Obligations in 2026

If you’re turning 73 this year or are already beyond that age, you’re likely facing a familiar annual task: withdrawing your minimum required distribution from your retirement accounts. The IRS mandates these withdrawals from traditional IRAs, 401(k)s, 403(b) accounts, and similar qualified plans—though Roth IRAs remain exempt from this requirement.

The rules are fairly straightforward. Once you reach 73, you must complete your annual withdrawal before December 31st. The only exception? Your first required minimum distribution can be delayed until April 1st of the following year, though doing so triggers two taxable distributions in a single tax year—generally not advisable.

The amount you’re required to withdraw increases with age. At 73, you’ll need to take roughly 3.8% of your prior year’s ending balance. Jump to 85 and that percentage climbs to 6.25%. By age 100, you’re looking at approximately 15.6% of your accounts. Your custodian can provide year-end account values, but you’ll calculate the exact minimum required distribution using IRS worksheets.

Why Your Timing Decision Matters

Here’s where strategy enters the picture. While the IRS doesn’t care when you take the money—only that you meet the year-end deadline—the timing of your withdrawal significantly impacts your portfolio.

The S&P 500 has rallied approximately 40% since April, reaching record territories. This positions early January as potentially favorable for those needing to liquidate holdings. The logic is straightforward: selling near market peaks leaves more assets in tax-advantaged accounts to compound over time.

However, this isn’t about trying to perfectly time the market. Instead, it’s a risk-management approach. Markets naturally trend upward, meaning you could wait weeks or months and face higher prices. Conversely, you could face a pullback you didn’t anticipate.

Your Options Beyond Taking It Now

You have flexibility beyond simply selling in January. If you hold multiple traditional IRAs, you can aggregate their year-end values and take your entire required minimum distribution from a single account. The same applies to multiple 403(b) accounts, though you cannot commingle traditional IRA and 403(b) calculations.

401(k) accounts operate differently—each requires its own separate minimum required distribution calculation. However, if you’re still employed and actively contributing to your current employer’s 401(k), you can defer distributions from that specific plan while withdrawing from previous employers’ 401(k)s.

An additional option: in-kind transfers. Rather than selling securities and taking cash, you can transfer existing holdings directly to a taxable brokerage account. Your custodian informs you of the exact taxable RMD amount at transfer completion.

A Staggered Approach Might Serve You Better

If January feels rushed, consider spreading your withdrawals throughout 2026. Monthly or quarterly distributions effectively average your exits around the S&P 500’s midpoint for the year. This approach hedges against both opportunistically high prices and unforeseen downturns.

The real danger lies in procrastination. You have over 350 days remaining, but market windows narrow constantly. Waiting too long hoping for the “perfect” exit point often results in missing viable opportunities entirely and scrambling before the December deadline.

The Bottom Line

Taking your minimum required distribution in January presents neither advantage nor disadvantage in isolation. However, given current market valuations near record levels following a substantial 40% advance, it warrants serious consideration as part of your broader retirement income strategy. The key is thinking strategically about your specific circumstances rather than reacting emotionally to market headlines.