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. The tax hit is unavoidable. What is avoidable is the sloppiness that often surrounds it: reinvesting without a plan and paying tax on income you did not want, or leaving the proceeds in cash while inflation quietly erodes their value. The cleaner answer is a dedicated sleeve of your portfolio built specifically to generate predictable income. When that sleeve is functioning correctly, the RMD becomes the natural byproduct of an income machine running on schedule rather than a tax event you brace for every January.

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 carries a 0.35% annual expense ratio, meaning roughly $9,965 of every $10,000 stays working for you. With assets at approximately $45.8 billion, JEPI has established itself as one of the largest actively managed ETFs in the country. Over the trailing twelve months it paid out approximately $4.40 per share across 12 monthly distributions, and the fund currently yields around 7.6%. Top holdings are spread across a defensive mix, with no single position exceeding 2% of assets. That diversification is precisely why JEPI can produce that level of income while still containing the damage any one stock can inflict. The fund’s one-year total return, including dividends, has run near 10.9%.

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 companies with sustainable and growing payouts based on cash flow, return on equity, dividend yield, and five-year dividend growth rate. The expense ratio is effectively negligible at 0.06%, leaving roughly $9,994 of every $10,000 compounding for investors. Assets under management have now surged to approximately $113 billion, a figure that recently pushed SCHD past the Vanguard Dividend Appreciation ETF to become the largest dividend ETF in the country. That milestone reflects the enormous demand for quality dividend exposure as investors have rotated away from momentum-heavy growth funds.

After the most recent quarterly rebalance, Merck claimed the top spot at roughly 4.9% of the portfolio, followed closely by Amgen at around 4.8% and Abbott Laboratories at approximately 4.6%. (Note that SCHD completed a 3-for-1 share split in October 2024, so per-share figures are not directly comparable to pre-split data.) Distributions arrive quarterly, and the fund’s year-to-date total return has reached approximately 27%, well ahead of the broader market and the prior figure cited in this article. The one-year gain sits near 31%, giving your principal a genuine chance to keep pace with the decades of portfolio draws ahead.

SGOV: The Safe Landing Pad

This is where the actual RMD lives once it clears the account. SGOV holds U.S. Treasury bills with maturities of three months or less, so its share price barely moves. Its assets have now grown to nearly $100 billion, a figure that underscores just how many investors treat it as a brokerage-account cash equivalent with a government-only mandate. With the Fed funds target range sitting at 3.5% to 3.75% (confirmed at the July 2026 FOMC meeting, with no cuts made in 2026 so far), SGOV is currently yielding approximately 3.7%, generating real income on cash that would otherwise sit idle. The 0.09% expense ratio means nearly everything the T-bills earn flows directly to shareholders as monthly distributions. Critically, this is the account you tap for the IRS-mandated withdrawal, so you are never forced to sell JEPI or SCHD at the wrong moment to cover a deadline.

The Trade-Offs

None of this is free. JEPI’s covered-call overlay caps upside in strong bull markets, which is why its year-to-date price return trails SCHD’s by a wide margin. SCHD’s dividend fluctuates with its holdings, and share prices still fall in bear markets like any equity fund. SGOV’s yield floats entirely with short-term rates. The same fund paid roughly $0.44 or more monthly in mid-2024 when rates were at their peak; the most recent monthly distribution came in around $0.31, reflecting the Fed’s cumulative 100 basis points of cuts since September 2024. If the Fed resumes easing, that paycheck shrinks further.

Used together, though, these three funds address the RMD puzzle from three angles at once. JEPI writes the monthly check, SCHD grows the check over time, and SGOV holds the cash 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.

Editor’s note: This article has been updated to reflect SCHD’s current assets under management of approximately $113 billion (revised from $95.7 billion) and its new top holdings after the most recent quarterly rebalance, with Merck now the largest position at roughly 4.9%, displacing Abbott Laboratories. SCHD’s year-to-date return has been revised to approximately 27%. JEPI’s trailing twelve-month per-share dividend has been corrected to $4.40 and its yield updated to approximately 7.6%. SGOV’s AUM has been revised to nearly $100 billion and its yield updated to approximately 3.7%, reflecting current market conditions.

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