One Smart Reason To Take Your RMD Now—Rather Than Wait Until December

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.

With the Federal Reserve likely to cut interest rates in December or January, delaying your RMD withdrawal could mean missing a chance to move that money where you can lock in today’s high yields—such as today’s top-paying CDs. Acting sooner lets you secure a stronger return before rates begin to slip.

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 certificate of deposit (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, many top CDs are paying returns in the low- to mid-4% range.

Locking in one of these rates soon could be smart, given the possibility of a Fed rate cut in December or January. As of this writing, CME FedWatch data put the probability of a quarter-point cut at about 45% in December and roughly two-thirds by late January.

Even if the central bank holds rates steady next month, CD yields could start slipping if expectations of a January cut grow. That’s because banks and credit unions often begin trimming deposit rates in anticipation of the Fed’s next move.

The takeaway: There’s no guarantee today’s best CD rates will stick around until your RMD is due Dec. 31. So if you plan to save rather than spend those funds, this could be the moment to lock in a high guaranteed return while it’s still available.

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.

Want Flexibility? 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 they let you 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 16 options paying 4.20% 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 it’s still available. If rates drop next month, you’ll be glad you locked in one of today’s stronger returns while you had the chance.

How We Find the Best Savings and CD Rates

Investopedia tracks rates from more than 200 banks and credit unions nationwide to identify the highest-paying accounts each business day. All institutions are federally insured, and only accounts open to customers nationwide with reasonable deposit minimums qualify. Read our full methodology here.