What Happens to a 75 Year Old With a $500,000 IRA Who Takes the RMD in January vs December vs Monthly

On the April 21, 2026 episode of Ask An Advisor With Wes Moss, a listener named Scott asked whether RMD withdrawals should come out monthly, in a lump sum at year-end, or left in the market as long as possible. Moss, the certified financial planner and host who co-anchors the segment on Clark Howard’s show, gave a market-history answer first: “Market history would say leave the money in the market as long as you can before you are forced to take it, because 71% of years are positive in the stock market. So technically, if you’re looking at market history, you would lean towards saying just take your RMD at the end of the year. That way the whole amount gets to also have market growth January through November and then you take it in December.”

If you are subject to required minimum distributions, the timing question matters more than most retirees realize. Under SECURE 2.0, the RMD start age is 73 for those born between 1951 and 1959, and 75 for those born in 1960 or later. Either way, pulling $20,000 in January versus December changes how much of your IRA stays invested for 11 extra months, and over a 20-year retirement, that difference compounds into real money.

The verdict: the statistic is right, the strategy is incomplete

Moss’s 71% figure is consistent with various measures of long-run S&P 500 history, and his own conclusion in the same segment is the one worth anchoring to. After laying out the December case, he immediately walked it back: “However, those are just averages. And you can easily end up in a situation where the markets are not good and at the end of the year the market is down 10 or 15%. Then you have to take your RMD and what you’re doing is you’re pulling money out of the market when it’s down.”

His preferred answer was monthly RMDs. “That spreads out the withdrawal, it takes away that timing of the market and it also doubles as a paycheck.” That framing is correct, and the math backs it up.

Run the numbers on a $500,000 IRA

Take a 75-year-old with a $500,000 traditional IRA. Using the IRS Uniform Lifetime Table, the divisor at age 75 is 24.6, which produces a required withdrawal of roughly $20,325 for the year. Consider three timing choices in a year where the S&P 500 returns 8%:

1. January lump sum. You pull $20,325 on day one. The remaining $479,675 compounds at 8% for the full year, ending near $518,000. You captured no market growth on the withdrawn dollars.
2. December lump sum. The full $500,000 compounds for roughly 11 months, then you withdraw. You end with about $519,700 before the distribution. This is the Moss “market history” scenario, and in a positive year it wins.
3. Monthly RMD of about $1,694. Roughly half the RMD is invested for the full year, and the other half is spread across the calendar. You land between the other two outcomes, closer to the December result than the January one.

Now flip the scenario. Assume the S&P 500 finishes down 15%, the bad-year case Moss flagged. The December strategy forces you to sell $20,325 at the worst prices of the year. The January strategy locked in a higher exit price. The monthly strategy spread sales across both the highs and lows of the year, smoothing the damage.

With the 10-year Treasury currently yielding around 4.6% to 4.7%, the cash you pull out early can sit in a money market fund or short-duration Treasury and earn a meaningful return while you decide what to do with it. The opportunity cost of pulling early is real, but it is not catastrophic at those rates.

The variable that decides it: your cash needs

Whether the December play helps or hurts depends almost entirely on whether you need the RMD cash to cover living expenses. If your distribution funds groceries and property taxes, you cannot afford to be a forced seller into a December drawdown. Monthly distributions function as a paycheck replacement and eliminate the timing decision entirely.

If you do not need the RMD to live on, the calculus shifts. You are simply moving money from a tax-deferred bucket to a taxable brokerage account. In that case, December timing in a positive year keeps more capital working, and a down year becomes a manageable headache you can absorb by reinvesting the after-tax proceeds.

What to do this year

1. Log into your IRA custodian and check whether they offer automated monthly RMD distributions. Schwab’s auto-RMD feature recalculates the monthly figure annually, which removes the math from your plate.
2. Calculate your RMD using the IRS Uniform Lifetime Table and your December 31 prior-year balance. The formula is straightforward: divide the balance by the divisor for your age. At 75, that divisor is 24.6.
3. Consider a qualified charitable distribution (QCD) if you donate to charity. In 2026, the QCD limit is $111,000 per person. A QCD counts toward your RMD while being excluded from your adjusted gross income, which can reduce your Medicare premium surcharges and the taxable portion of Social Security.
4. Decide whether you actually need the cash. If yes, set up monthly distributions. If no, December timing is defensible and you can reinvest the after-tax proceeds in a brokerage account.
5. Withhold federal tax directly from the RMD rather than paying estimated quarterly taxes. That simplifies meeting the 110% safe harbor heading into next April.

Moss’s 71% statistic is accurate, and it argues for staying invested as long as possible. But his follow-up answer is the one worth acting on: a monthly RMD captures most of the upside, eliminates the December timing risk, and pays you like a regular paycheck. For most retirees who depend on their distribution to cover expenses, that is the right trade.

Editor’s note: This update clarifies that the RMD start age is 75 for those born in 1960 or later under SECURE 2.0 (not 73 for all retirees), updates the 10-year Treasury yield reference to the current 4.6% to 4.7% range as of late July 2026, and adds the 2026 qualified charitable distribution limit of $111,000 per person as a relevant planning strategy.

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