Your RMD Deadline Is Coming. Here’s How to Decide Which ETF to Take It From

With less than two months left in 2026, many traditional IRA owners still have a familiar task ahead: taking their required minimum distribution, or RMD. That’s the amount the IRS makes you withdraw from a retirement account each year once you reach a certain age. Most people treat it as a chore. They sell something, take the cash, and move on.

Getting it wrong costs money. If you take too little, you could owe an excise tax of 25% on the amount you didn’t withdraw, according to IRS Publication 17. A formula sets the amount, but you get to choose which investments it comes from. Here’s how to make that choice, using three ETFs common in retirement accounts as examples.

Rules That Set Your RMD Deadline

According to IRS Publication 17 (2025), traditional IRA owners must generally begin RMDs by April 1 of the year after they reach age 73. That date is called the required beginning date. You must receive at least a minimum amount for each year, starting with the year you turn 73.

If you skip the withdrawal in your first year, you can take it by April 1 of the next year. You still owe next year’s RMD, though, so waiting means two taxable withdrawals in a single year (we walked through how to defuse that kind of first-year tax hit, years before it lands, in a free guide).

Deadlines depend on your situation, so check your paperwork. According to IRS Publication 590-B, the firm holding your IRA (your custodian) must either report your RMD or offer to calculate it by January 31. That report must include the date by which the money has to come out. The Treasury regulation on IRA distributions, 26 CFR 1.408-8, sets a minimum “for each calendar year” based on your account balance as of December 31 of the prior year.

On taxes, Publication 17 says traditional IRA distributions are generally taxable, except for the part that represents nondeductible contributions (money you put in without taking a tax deduction). Roth IRAs follow a different rule. The same regulation says no minimum distributions are required from a Roth IRA while the owner is alive (26 CFR 1.408-8(b)(1)(ii)).

One IRS Rule Lets You Pick Which Fund to Sell

If you own more than one traditional IRA, you calculate the required amount separately for each one. Publication 590-B then lets you total those amounts and withdraw the sum from one IRA or from more than one IRA.

The Treasury regulation adds that all amounts distributed from an IRA count toward the requirement, regardless of whether they’re included in income (26 CFR 1.408-8(g)(1)). An example is a qualified charitable distribution, or QCD, which sends money straight from your IRA to an eligible charity. The exceptions it lists include returned contributions and corrective distributions.

Put together, these rules mean the IRS tracks how much leaves your IRAs. Where the money comes from is up to you.

Stock, Bond or Dividend ETF: Where to Draw From

Vanguard S&P 500 ETF (NYSEARCA:VOO) tracks the S&P 500 and often serves as the core U.S. stock holding in a retirement portfolio. Reducing it after strong stock gains moves you back toward your target mix. The cost is less growth exposure going forward.

Vanguard Total Bond Market ETF (NASDAQ:BND) holds a broad mix of U.S. investment-grade bonds. If you take your RMD from the bond fund, more of your money stays in stocks. That can leave your portfolio riskier than you intended.

iShares Core High Dividend ETF (NYSEARCA:HDV) focuses on high-dividend U.S. stocks and is popular with retirees who want income. Selling it cuts into a steady source of income inside the IRA. Dividends paid inside the account can also pile up as cash, though, and that cash can help cover the RMD without selling any shares.

The idea that ties these together is rebalancing, which means bringing your mix of stocks and bonds back to the target you chose. Decide what your mix should be, then take the RMD from whatever has grown past its share.

Your Year-End RMD Checklist Before Time Runs Out

1. Find your custodian’s RMD statement and the deadline it lists.
2. Add up the RMDs across all your traditional IRAs.
3. Figure out which holding is overweight compared with your target mix.
4. If you give to charity, look into a qualified charitable distribution.
5. Leave yourself time, since trades and transfers can take days to settle.

The IRS sets how much you have to take out. You decide where it comes from, and every year that choice gives you a chance to rebalance at no extra cost.

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