Stocks Just Had Their Worst Week Since April. Here’s Warren Buffett’s Rule for a 74-Year-Old Who Must Withdraw $39,216 by Dec. 31.

Stocks just had their worst week since April 2025. The S&P 500 index fund fell 2.7% from last Friday’s close to this one, and it now sits 5.6% below its October 6 high. For most investors, the right move in a week like this is to do nothing.

One group of investors doesn’t get that choice. If you are 73 or older and have a traditional IRA, the IRS requires you to take money out by December 31, and that deadline is 55 days away. If your withdrawal comes from selling stock this month, you are selling after the drop.

Warren Buffett’s rule for weeks like this one is famous: “Be fearful when others are greedy, and be greedy when others are fearful.” He wrote it in The New York Times in October 2008, in the middle of a far worse selloff. The rule doesn’t say to sell good assets because prices fell. A retiree with a required withdrawal can follow it, and the tax code gives them a simple way to do it.

The retiree and the withdrawal

Take a 74-year-old who had $1,000,000 in a traditional IRA on December 31, 2025. They kept 60% in an S&P 500 index fund, $600,000, and 40% in bonds and cash, $400,000. They also collect Social Security.

The required minimum distribution for 2026 is based on that December 31 balance. At 74, the IRS life expectancy table uses a divisor of 25.5, so the withdrawal is:

• 2026 required withdrawal: $1,000,000 divided by 25.5, or $39,216
• Monthly equivalent: about $3,268

Even after this week, the stock fund is up 7.8% for the year. The $600,000 is now worth about $646,959, and the whole IRA about $1,046,959. That number doesn’t change the required amount. It is still $39,216, due by December 31.

What selling now costs

If the retiree sells index fund shares to raise the $39,216, they need about 53.3 shares at Friday’s close. At the October 6 high they would have needed about 50.3. Selling into the drop means parting with about 3 more shares, worth about $2,200 today.

That is not a disaster on a $1 million account. It is still money given up for no reason, because the IRS rule never required them to sell stock in the first place.

Option one: take it from the bond side

The simplest fix is to raise the whole $39,216 from the $400,000 in bonds and cash. Nothing in the stock fund gets sold at a low price.

• Bonds and cash after the withdrawal: about $360,784
• Stock share of the IRA afterward: about 64%, up from the 60% target

That shift is the cost of this option. The account leans further into stocks, which is fine if the retiree planned to rebalance anyway, and something to fix later in calmer markets if not.

Option two: take the shares themselves

The second option is less well known. The IRS lets you take a required distribution in kind. Instead of selling fund shares and withdrawing cash, you move about 53.3 shares, worth $39,216 on the day of the transfer, from the IRA into a regular taxable brokerage account.

• The tax is the same. The $39,216 counts as ordinary income for 2026 either way, exactly as if you had taken cash.
• The shares stay invested. If the fund recovers 10%, those shares are worth about $43,137, a gain of $3,922 that would have been lost by selling.
• The cost basis resets. In the taxable account, the shares carry a basis of $39,216, so only gains above that are taxed later, and at long-term capital gains rates if held more than a year.

The catch: the tax bill still comes due in cash. A retiree who takes the whole withdrawal as shares needs money from somewhere else to pay the income tax in April, or must withhold from another source.

Option three: split it

Many retirees will do a little of each. Take enough cash from the bond side to cover the tax and the living expenses the withdrawal was meant to pay, and move the rest as shares. If the retiree spends about $20,000 of the withdrawal, that comes from bonds and cash, and the other $19,216 moves as shares and stays invested.

What Buffett’s rule does not mean

Buffett’s line is about not running from good assets when prices fall. It makes no promise that this week was the bottom. Stocks can fall further, and a retiree who moves shares in kind takes that risk in a taxable account instead of inside the IRA.

The rule also doesn’t override the deadline. Missing a required withdrawal costs a 25% excise tax on the amount not taken, cut to 10% if it is corrected within two years. Whatever the market does, the $39,216 has to leave the IRA by December 31.

The bottom line

Stocks just had their worst week since April 2025, and a 74-year-old with a $1 million IRA still owes a $39,216 withdrawal by December 31. Selling stock to raise it would mean selling into the drop. Taking it from the $400,000 in bonds and cash, or moving about 53 fund shares out of the IRA in kind, satisfies the IRS on time without selling a good asset at a low price, which is exactly what Buffett’s rule asks.

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