Don’t Miss Your Year-End RMDs: What You Need to Know Before December 31st

As we approach year-end, it’s time to make sure your Required Minimum Distributions (RMDs) are on track. For many investors, RMDs are one of those annual to-dos that can easily slip through the cracks—but missing them can be costly. Here’s what you should know (and do) before December 31.

What Is an RMD?

An RMD is the minimum amount you must withdraw each year from certain retirement accounts once you reach a specific age. Under current rules, RMDs begin at age 73 (or 75 if you were born in 1960 or later), thanks to the SECURE 2.0 Act.

These required withdrawals apply to:

• Traditional IRAs

• SEP and SIMPLE IRAs

• 401(k), 403(b), and other employer-sponsored retirement plans (if you’re no longer working for that employer)

Roth IRAs are the exception—no RMDs are required during the original owner’s lifetime.

Why Timing Matters

If you miss your RMD deadline, the IRS can impose a 25% penalty on the amount you should have withdrawn (though it may be reduced to 10% if corrected quickly). That’s a steep price for missing a calendar reminder.

Most RMDs must be taken by December 31 each year.
The only exception: your first RMD can be delayed until April 1 of the year after you turn 73—but doing so means you’ll have to take two RMDs that year, which could increase your taxable income.

Smart Strategies for RMD Season

There’s more to RMDs than just taking the right amount. Here are a few strategies we often discuss with Pathworks clients:

1. Coordinate With Your Tax Plan
   RMDs are taxable income, so timing matters. We often review whether it makes sense to take your distribution early or late in the year, depending on your broader tax picture.

2. Consider a Qualified Charitable Distribution (QCD)
   If you’re 70½ or older, you can donate up to $100,000 directly from your IRA to qualified charities. This counts toward your RMD and is excluded from taxable income—a win-win for both you and the charity.

3. Consolidate Accounts for Simplicity
   If you have multiple IRAs, you can take your total RMD from just one account. However, 401(k)s and similar plans each require their own separate withdrawal.

4. Use RMDs for Cash Flow
   For retirees who rely on portfolio withdrawals, RMDs can be integrated into your annual income strategy rather than treated as a separate obligation.

How Pathworks Can Help

At Pathworks Financial, we proactively track and project each client’s RMD requirements well before year-end. Our planning tools help ensure:

• Each distribution is accurate and timely

• Tax impacts are coordinated with your CPA

• Opportunities for QCDs or strategic timing are identified early

If you haven’t yet confirmed your 2025 RMD, now’s the time. We’ll help you ensure everything is processed before the December 31 deadline—and make sure your RMDs work as efficiently as possible within your broader financial plan.

Let’s get ahead of year-end together.
If you’d like to review your RMD strategy or discuss charitable giving options, contact the Pathworks Financial team today.