Revisiting the RMD

S M Chen
6 min readNov 26, 2021

Were it springtime, and I in the springtime of life, I might be considering other matters.

Given the time of year and the season of life I find myself in, thoughts turn instead to family gatherings, holiday celebrations and the like.

And, if you are of certain age, to potentially pesky issues like RMDs.

There comes a time in everyone’s life, should you be fortunate enough to live this long, when, if you’ve funded an IRA (Individual Requirement Account), you’re required to begin drawing down that IRA.

This is in the form of an RMD, or required minimum distribution, and begins at age 72.

The amount of RMD is actuarially determined, based on an estimate of your anticipated lifespan.

As a reminder, a regular IRA is one that is funded with pre-tax dollars. Any growth is not taxed on an ongoing basis. Rather, tax is deferred and paid when the IRA is tapped, including via RMDs.

A Roth IRA is a separate entity. It is funded with after-tax dollars but any earnings then accumulate tax-free. There is no current requirement that a Roth IRA be drawn upon during the owner’s lifetime. It can be willed to beneficiaries.

Social Security distributions are also a different issue and will not be addressed in this piece.

Advice on how and when to take an RMD varies widely.

Some take it early in the calendar year, to get it out of the way and be done with it.

Others wait till near the end of the calendar year to maximize earnings.

In the past, I have taken it in a lump sum near the end of the calendar year (if not taken by December 31, a penalty of up to 50% may be imposed by the IRS. The sole exception to this penalty is the year when one turns 72; in that event one has until the following April 15 to take the RMD).

My desire is to maximize earnings. The stock market has, historically, risen at least 3 out of 4 years. I have the bulk of my nest egg in equities, a stance perhaps too aggressive for some.

It is reasonable to expect the stock market to rise throughout the year and be higher at year’s end than at year’s beginning. There are exceptions, of course, and there are no…