Inside Creative House / Getty Images
If you don’t need your RMD cash right away, taking it early could help you lock in a high yield now.
-
Consider taking your 2025 RMD soon if you’ll just stash the funds, since moving them now lets you lock in today’s high yields while they last.
-
Saving your RMD money in one of today’s top CDs can guarantee a safe and predictable return for months or years down the road.
-
With a Fed rate cut possible in December or January, CD yields could start slipping soon—making now a good time to lock in.
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.
If you don’t need your RMD soon, taking it early lets you move that cash where today’s higher yields can be locked in. With inflation still a concern, earning a solid return helps your savings keep its purchasing power.
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.
About the Author
