Rethinking When to Take Your RMDs: A Practical Guide

By Chad Chase, JD, CTFA

Required minimum distributions (RMDs) are a reality for retirees with tax-deferred retirement accounts. They’re not optional; miss one and you could face a penalty of up to 25% of the amount you should have withdrawn.

While the rules dictate that you take them, they don’t dictate when during the year you must do so. That flexibility means you can match the timing of your RMD to your personal cash flow needs, preferences, and—occasionally—changes in the law.

Start With Your Cash Flow

The first question to ask: Do you need your RMD to cover living expenses?

• If you do, taking monthly or quarterly withdrawals can provide a steady income stream and help with budgeting.
• If you don’t, you have more flexibility. You might choose a single annual withdrawal at a set time of year (many clients prefer spring or late fall) simply to satisfy the requirement.

For the majority of our clients who don’t rely on their RMD to live, the withdrawal is often more of an administrative step than an income source.

Why Waiting Can Sometimes Help

In recent years, lawmakers have occasionally made mid-year changes to RMD rules—sometimes even waiving them. If you don’t need the funds right away, waiting until later in the year can give you the chance to respond to any rule changes before taking the distribution.

For example, in certain years Congress has altered rules for inherited IRAs partway through the year. Clients who had delayed their RMD avoided taking an unnecessary withdrawal.

Using RMDs for Tax Withholding

For higher-net-worth retirees with other income sources—like pensions and taxable investments—RMDs can be a convenient way to handle annual tax withholding. In some cases, we help clients withhold a large percentage of their RMD for federal and state taxes so they can avoid making quarterly estimated tax payments.

Because the IRS considers withholding as if it were paid evenly throughout the year, it doesn’t matter whether you take the RMD in January or December for this purpose.

Qualified Charitable Distributions (QCDs)

If you’re 70½ or older and charitably inclined, you can direct up to $108,000 per year from your IRA to a qualified charity via a QCD. This amount counts toward your RMD but is excluded from your taxable income.

Some clients choose to make QCDs quarterly to match their giving pattern, while others do it in a single transfer. The key is making sure it’s processed directly from the IRA to the charity to preserve the tax benefits. For those subject to RMDs (age 73 and older), designating some or all of your RMD as a QCD can be an effective tax-saving technique if you don't need the income.

Less Common: Monthly or Quarterly Withdrawals

A small percentage of clients prefer regular withdrawals, either for ongoing charitable giving or for predictable cash flow. While this works well for those who need it, it does require more administrative updates; RMD amounts change each year based on your December 31 account balance. For many retirees, a single annual withdrawal is simpler.

Don’t Forget State Taxes

While federal income tax is the primary concern with RMDs, it’s worth looking at state and local income taxes too. Each state has its own rules, brackets, and exemptions, which means the amount and timing of your withdrawal could affect your overall state tax liability. Being aware of how your RMD interacts with your state tax situation can help you avoid surprises.

The Bottom Line

The best time to take your RMD depends less on tax timing and more on your personal situation:

• Do you need the funds for living expenses?
• Do you want to wait in case of rule changes?
• Could your RMD serve another purpose, such as funding your tax withholding or charitable giving?

At CGN Advisors, we walk through these questions with clients each year to match the RMD process to their broader retirement plan.

Let’s talk about how you can take a more thoughtful, strategic approach to RMDs. To schedule a meeting with a team member, call our Manhattan, KS, office at (785) 340-3434 or our Rogers, AR, office at (479) 335-1034.

Most Frequently Asked Questions Regarding Timing RMDs

When do RMDs start, and what happens if I miss the deadline?

For most traditional IRAs and employer retirement plans, the first required minimum distribution must be taken by April 1 of the year after you turn age 73 (per SECURE 2.0 and increasing to 75 in 2033). Each year after that, the deadline is December 31. Missing a required amount triggers an excise tax of 25% on the shortfall (reduced to 10% if corrected promptly), so staying on schedule is important to avoid extra tax. Unless there are special circumstances, we don't recommend deferring your first RMD until the first months of the next year, though. If you do, you still must also take the following-year RMD and that must be done by December 31st, so you'd end up with two RMDs in the same tax year, potentially increasing your taxable income in that year and subjecting yourself to a higher tax bracket.

Can I take my RMD monthly, quarterly, or all at once?

The IRS only cares that the full annual amount is withdrawn by year-end, but breaking the distribution into regular monthly or quarterly payments can spread the added income across the calendar year. This approach may help keep your marginal tax bracket steadier, improve cash-flow predictability, and reduce the chance that a large December lump sum unexpectedly pushes other income (such as Social Security) into a higher taxable range.

Can donating my RMD to charity really lower the tax burden?

Yes. If you’re age 70½ or older, you can direct up to $108,000 per year from an IRA to a qualified charity using a qualified charitable distribution (QCD). A QCD counts toward your RMD but is excluded from adjusted gross income (AGI), which can help limit overall taxable income, Medicare premium surcharges, and the taxation of Social Security benefits.

About Chad 

Chad Chase, JD, CTFA is a Managing Principal - Senior Financial Advisor at CGN Advisors, a Fee-Only, financial advisory firm based in Manhattan, Kansas. CGN’s team of financial advisors is made up of native Midwesterners who are passionate about helping clients plan for the future. While prioritizing personal relationships with clients, Chad has a passion for financial education, helping them better understand their situation and why certain recommendations are made. He enjoys getting to know clients and their families and seeing how their partnership helps them realize their goals. To some extent, he’s also a nerd who really enjoys numbers and problem-solving.

Chad obtained an associate’s degree from Butler Community College, a finance degree from Kansas State University, and a Juris Doctor from University of Nebraska College of Law. He is also a graduate of the American Bankers Association Graduate Trust School and has obtained the Certified Trust & Financial Advisor certification from the Institute of Certified Bankers. Prior to entering the wealth management industry, Chad worked in commercial banking for four years in Kansas City and Derby, Kansas, and practiced law in Manhattan. Before co-founding CGN Advisors with his business partners, he served as Vice President & Trust Officer at The Trust Company of Manhattan, Kansas, providing his clients with financial advice, investment management, and trust administration services. 

Chad grew up on a 100-year old ranch in Butler County, KS, which he still helps manage and operate. His wife, Segen, is a Manhattan native, a fellow KSU graduate, and a local physician practicing in internal medicine. They have two children, Solveig and Gantt. Both Chad and Segen are accomplished musicians and very active in the local music and art scene. In addition to music, he enjoys golf, basketball, KSU athletics, and traveling. To learn more about Chad, connect with him on LinkedIn.

Investment advisory services are offered through CGN Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. 

Investing involves substantial risk and has the potential for partial or complete loss of funds invested. Investments mentioned may not be suitable for all investors. Before investing in any investment product, potential investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

The opinions expressed herein are those of certain CGN Advisors, LLC personnel and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to revision due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.