Can a 74-Year-Old Use Costco’s $30 Special Dividend to Meet a $40,000 RMD?

Costco Wholesale (NASDAQ:COST | COST Price Prediction) just declared a year-end cash payment for shareholders, and for retirees facing a December 31 deadline the timing matters. Costco Wholesale Corporation declared a $30 per share special cash dividend on November 10, 2026, payable December 4, 2026, to holders of record on November 24, 2026, per its announcement. If a 74-year-old holds Costco inside a traditional IRA, that cash can pay part of a 2026 RMD. It only counts for the portion that actually leaves the IRA by year-end.

Sample Position: 300 Costco Shares in a $1,020,000 IRA

The position below is a hypothetical example. Plug in your own share count and balance. Our sample retiree is 74 and held an IRA worth $1,020,000 on the prior December 31. Inside it sit 300 Costco shares. At the current price of $1,089.76, that stake is worth $326,928. The stock is up 27.11% year to date.

The payout comes from a cash-rich business. Costco’s fiscal 2026 revenue reached $303.154 billion, up 10.14%, with a worldwide renewal rate of 89.8%. The company also has a history of special payouts, including $15 paid in January 2024 and $10 in December 2020.

Working Out the 2026 RMD at Age 74

The IRS Uniform Lifetime Table (Table III in Publication 590-B) gives a distribution period of 25.5 at age 74. Treasury lays out the same table in 26 CFR 1.401(a)(9)-9(c). Divide the $1,020,000 prior-year balance by 25.5 and you get a 2026 RMD of $40,000.

The special dividend lands after that balance date, so it leaves the 2026 RMD unchanged. Any of it still in the IRA on December 31, 2026 will be part of the balance that sets the 2027 RMD.

How Far Costco’s $30 Dividend Gets You

On 300 shares, the payout comes to $9,000 in cash inside the IRA. That money cuts the RMD only once it is withdrawn by December 31. If it is, it covers $9,000 of the $40,000. The remaining $31,000 has to come from other cash in the IRA or from selling holdings.

Costco shares held in a regular taxable brokerage account follow different rules. The dividend arrives there as taxable 2026 dividend income and does nothing toward the RMD, because the RMD must be withdrawn from the tax-deferred account itself. The IRA version has a practical advantage. The retiree can withdraw cash without selling shares in the middle of a strong run. That makes things easier but leaves the tax bill the same, since every dollar withdrawn is taxed the same way.

Aggregation rules expand the options. An account holder “must calculate the RMD separately for each IRA they own but can withdraw the total amount from one or more of the IRAs.” So Costco cash in one IRA can cover the RMD owed on another IRA. 401(k) and 457(b) RMDs “must be taken separately from each of those plan accounts.”

Four Ways to Fill the $31,000 Gap

1. Cash plus sales. Withdraw the dividend, then cover the rest with money-market cash or trades inside the IRA.
2. In-kind distribution. Move Costco shares from the IRA to a taxable account. They count toward the RMD at their value on the distribution day, and nothing has to be sold (per standard IRA distribution treatment). That value is taxed as ordinary income just as cash would be.
3. Qualified charitable distribution (QCD). A QCD goes straight from the IRA trustee to a qualified charity, and the account holder must be at least age 70½. It “will count towards your required minimum distribution” and stays out of gross income. The 2026 limit is $111,000 under IRS Notice 2025-67.
4. Withholding. The retiree can have federal tax withheld from the distribution. The withheld amount still goes toward the RMD total.

Each approach fits different goals for cash flow, charity and the portfolio. Charitable retirees save most through a QCD.

What a $40,000 RMD Costs in 2026 Federal Tax

RMDs are taxed as ordinary income. For tax year 2026, the 22% bracket starts above $50,400 of taxable income for single filers ($100,800 joint). The 24% bracket starts above $105,700 ($211,400 joint). For 2026, the standard deduction runs $16,100 single and $32,200 joint. A 74-year-old also gets the additional standard deduction for those 65 and older ($2,050 single, $1,650 per spouse for 2026) and, for tax years 2025 through 2028, a separate $6,000 senior deduction ($12,000 for a couple who both qualify) that phases out above $75,000 of modified adjusted gross income for single filers ($150,000 joint). Those deductions lower taxable income but leave the rate on each RMD dollar unchanged. If the full RMD falls in the 22% bracket, 2026 federal tax on it is $8,800. At 24%, it is $9,600.

IRMAA and Social Security Taxes Track the Same Number

Medicare’s income-related surcharge (IRMAA) adds a second cost. In 2026, the base Part B premium is $202.90 a month. Once income passes $109,000 single or $218,000 joint, it rises to $284.10, and Part D adds $14.50. Social Security uses the tax return from two years earlier, so 2026 premiums are based on 2024 income and the 2026 RMD will show up in 2028 premiums. For a retiree near a threshold, every RMD dollar transferred into a QCD keeps income lower.

The same income figure drives how much of Social Security is taxed. Under 26 U.S.C. § 86(c), the base amount is $25,000 single and $32,000 joint, and the second threshold is $34,000 and $44,000. A taxable $40,000 RMD on its own moves most single retirees past both thresholds.

December Timing Risk and the Missed-RMD Penalty

The dividend is paid December 4, which leaves less than a month before the deadline. Year-end requests pile up at brokerages, and holiday closings slow processing, so retirees should confirm their custodian’s cutoff date ahead of time. Missing the deadline costs 25% of the shortfall under 26 U.S.C. § 4974(a). On a missed $31,000, that is $7,750. If the shortfall is corrected within the window in § 4974(e), the rate falls to 10%, or $3,100.

Reducing Future RMDs Before They Start

Roth IRAs have no RMDs while the owner is alive: “The RMD rules do not apply to Roth IRAs or Designated Roth accounts while the owner is alive.” That is why Roth conversions done before RMDs begin are the main way to reduce them later (the first-year tax hit from a large pre-tax balance is exactly what our free RMD guide walks through handling years ahead). A 74-year-old can still convert, but RMD amounts “aren’t eligible for rollover treatment,” so the 2026 RMD must be taken out first. Our Roth Conversion Playbook covers how conversions work.

Next, the dates. With T+1 settlement, the ex-dividend date is also November 24, so new buyers need to purchase shares by November 23 to collect the payout; existing holders are already covered. The cash should post December 4. Before the custodian’s cutoff, the retiree needs to decide how the other $31,000 will come out. The special dividend helps by providing cash while the tax owed stays the same. Tax savings come from QCDs and from planning the distribution well before December.

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