You Turn 73 and the IRS Makes You Take the Money. These 3 ETFs Turn Forced RMDs Into a Paycheck

You just turned 73, and the IRS has news: it wants its cut of the tax-deferred nest egg you spent decades building. Required Minimum Distributions are mandatory now, whether you need the cash or not. The trick is turning that forced withdrawal into something that feels less like a tax bill and more like a paycheck. Three ETFs do that job cleanly: the JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI), the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD), and the iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV). Together they cover monthly cash flow, dividend growth, and the safe parking spot where your RMD actually lives before it hits your checking account.

The RMD Problem, Simplified

At 73, the IRS forces you to withdraw a percentage of your traditional IRA every year. If you reinvest sloppily, you pay tax on income you did not want. If you leave it in cash earning nothing, inflation quietly eats it. The solution is a small sleeve of your portfolio engineered specifically to spit out predictable income, so the RMD becomes the byproduct of a working machine rather than a tax event you dread.

JEPI: The Monthly Income Engine

JEPI blends large-cap U.S. stocks with equity-linked notes that sell call options, converting stock market volatility into monthly cash. The fund charges 0.35% a year, meaning you keep about $9,965 of every $10,000 working for you. Over the past twelve months it paid out $4.5713 per share across 12 monthly distributions, with recent checks landing in the $0.35 to $0.45 range on a share price around $56.42. Top holdings read like a defensive tech-and-industrial mix: Broadcom at 1.8%, Ross Stores, Amazon, and Apple each at 1.7%, with nothing dominating. That diversification is why JEPI is up 6.87% over the past year while still writing you 12 checks.

SCHD: The Dividend-Growth Backbone

If JEPI is the paycheck, SCHD is the raise. The fund tracks the Dow Jones U.S. Dividend 100 Index, screening for quality companies with sustainable and growing payouts. The expense ratio is a rounding error at 0.06%, which leaves roughly $9,994 of every $10,000 compounding for you. Assets under management sit at $71.6 billion, and the top holdings are the kind of names retirees recognize: Bristol-Myers Squibb at 4.26%, Merck at 4.14%, ConocoPhillips at 4.10%, Lockheed Martin at 4.07%, and Chevron at 4.04%. Distributions come quarterly, with a trailing twelve-month payout of $1.048 per share. SCHD is also carrying the growth: it is up 21.54% year to date and 24.17% over the past year, giving your principal a chance to keep pace with a portfolio you plan to draw on for another two decades.

SGOV: The Safe Landing Pad

Here is where the actual RMD lives once it lands. SGOV holds ultra-short U.S. Treasury bills with 0 to 3 month maturities, so its price barely moves, up 2% year to date with a share price parked near $100.61. With the Fed funds rate at 3.75% and the 3-month T-bill yielding 3.89%, SGOV is currently paying real money on cash you would have otherwise left idle. Its expense ratio is 0.09%, distributions arrive monthly, and the trailing twelve-month payout was $3.82 per share. This is the account you tap for the actual IRS-mandated withdrawal, so market swings do not force you to sell JEPI or SCHD at the wrong moment.

The Trade-Offs

None of this is free. JEPI’s covered-call overlay caps upside in roaring bull markets, which is why its 2.74% year-to-date return trails SCHD’s by a wide margin. SCHD’s dividend fluctuates: the most recent quarterly payment of $0.2525 came in below the $0.2569 paid the prior quarter, and share prices still fall in bear markets. SGOV’s yield floats with rates; the same fund paid roughly $0.44 monthly in mid-2024 and now pays closer to $0.30, so if the Fed cuts, your paycheck shrinks with it.

Used together, though, these three funds solve the RMD puzzle from three angles at once. JEPI writes the monthly check, SCHD grows the check over time, and SGOV holds the check safely until the IRS wants its share. That is what turning 73 should feel like: your portfolio doing the work while you cash the paycheck.

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