Is Taking Your Required Minimum Distribution (RMD) in December a Smart Move?

While there's no official "best" month to take your required minimum distribution (RMD) -- and you can make as many withdrawals as you want in a year to hit your minimum, or above that amount -- routinely making your full withdrawal in December may be a smart move

Additionally, Meanwhile, The operative words here are "may be. " Here are five good reasons to make December the month you take your required distributions, and three reasons you may want to think twice

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For some, taking RMDs in December is ideal, in light of current trends

Here's why: 1, in today's market environment

However, It maximizes tax-deferred growth As long as the market continues to vide a positive return on your investments, waiting until December to make the required withdrawal gives your money more time to grow

Vided you don't need those funds to pay bills throughout the year, you're ahead, in this volatile climate

Market analysis shows vides time to adjust you withdrawal amount By December, you've got a pretty good idea of how the market is doing and can adjust your withdrawal based on market performance (remarkable data)

Additionally, Let's say you've been planning to withdraw above and beyond your RMD to pay for a holiday trip this year

However, by October, it's the market is in free fall, and your portfolio has lost value

At the same time, Since you don't want to sell more of your assets than necessary to make your withdrawal, you decide to postpone the trip until the market imves, in this volatile climate

While you must take your RMD for the year, you're free to leave any additional funds where they are, given the current landscape

Meanwhile, It leaves room for a pre-December surprise Imagine your uncle dies and leaves you an inheritance, or you decide to sell a piece of land and find yourself with extra money

Waiting until December to make a withdrawal means you have the complete picture of how much you'll owe in taxes (this bears monitoring)

It's possible that once you include the unexpected income, you'll be close to a higher tax bracket, in light of current trends

With that knowledge, if you were planning to withdraw more than the minimum, you can decide how much to withdraw without paying a higher tax rate (noteworthy indeed)

This analysis suggests that can simplify taxes Making a withdrawal at the end of the year means dealing with the tax implications of a single distribution rather than multiple transactions throughout the year

And because you can elect to have federal (and state, depending on where you ) taxes withheld at the time of distribution, there's no need to make estimated payments to the IRS

You could pay less in transaction fees Depending on how your investment platform is structured, you could find yourself paying transaction fees on each withdrawal, ultimately costing you more throughout the year than a single December withdrawal

But most financial decisions, December RMD withdrawals are not for everyone

Here's why it may not be right for you: 1, in light of current trends

Additionally, There's greater risk of missing the deadline RMDs must be taken by Dec. 31, and waiting until the last minute increases the risk that you'll miss the deadline and get penalized

However, If you take RMD withdrawals in December, get the ball rolling early in the month, especially if you're counting on your financial institution to cess the withdrawal in time

It may mess with your cash flow Unless you have a healthy emergency fund available, you could need cash before you've begun the withdrawal cess, amid market uncertainty

Additionally, Imagine waking up after a night of hard rain to find your basement flooded

Not only do you need to buy a new sump pump, but you must pay a company to help you get the room dried out (quite telling)

On the other hand, However, In addition, you decide to have the basement waterofed before loading your possessions back in

Furthermore, In a situation this, it's possible that making withdrawals once a year -- and spending the money when you withdraw it -- would leave you with too little cash when it's most needed (an important development)

At the same time, There's less room for adjustments Another disadvantage of taking RMDs in December is that you could get out of the habit of keeping an eye on the market and adjusting your financial strategy as needed (quite telling), given the current landscape

For example, if the midyear market is shaky, you may want to move a portion of your portfolio into more conservative investments (an important development)

Nevertheless, However, if you're not aware of how the market is, you may let things ride rather than remain actively involved, given the current landscape

Furthermore, There's no one-size-fits-all answer to when you should take RMDs, given current economic conditions

Additionally, The best move for you is to look at your circumstances, ensure you have enough throughout the year to cover bills and any emergencies that may arise, and base your decision on what works best for your bank account, in today's financial world.