Take Action Now to Avoid Year-End RMD Stress

Plan now. Relax later.

As we approach the end of 2025, those who need to take required minimum distributions (RMDs) from their IRAs should prepare. With holidays, travel, and year-end to-dos, it’s easy to overlook a December deadline. Avoid last-minute stress by taking action early—plan now while it’s top of mind.

A little foresight goes a long way in keeping your year-end smooth, especially for investors holding alternative assets that take longer to sell or transfer. By preparing now, you’ll have one less task and one less worry when the year wraps up.

RMD fundamentals

Once you reach age 73, the IRS requires you to begin taking RMDs from your Traditional IRA. RMDs do not apply to Roth IRAs during the owner’s lifetime. Under previous rules established by the SECURE Act of 2019 and the SECURE 2.0 Act of 2022, RMDs began earlier, first at age 70½, then at age 72. Beginning in 2033, the starting age will increase again to 75.

For most accountholders, RMDs must be completed by December 31 each year. In order for STRATA to process the RMD request by the IRS deadline, all distribution requests must be received by December 1st in good order. If you’re taking your first RMD, you have until April 1 of the following year to complete it, but delaying means you’ll also need to take your next RMD by December 31 of that same year, resulting in two taxable distributions. To avoid that, many investors choose to take their first RMD in the year they turn 73.

Three Tips to Simplify Your RMD Planning

Taking your RMD doesn’t have to be stressful. A few smart steps can make the process much easier.

1. Keep enough liquid assets.
If your self-directed IRA includes alternative assets, they may be difficult to divide or sell quickly. Maintain sufficient liquid assets, such as cash or easily sold securities, so you can meet your RMD without having to sell investments under pressure.

2. Use RMD aggregation if you have multiple IRAs.
If you own more than one Traditional IRA (including SEP or SIMPLE IRAs), you can take your total RMD from just one account. This flexibility, called RMD aggregation, can help preserve less liquid investments in your self-directed IRA.

Example: Albert has two IRAs, one self-directed IRA invested in real estate and another that holds cash deposits. Each account has an RMD of $10,000. Instead of taking $10,000 from both, Albert can take the full $20,000 from his cash account, leaving his self-directed investments untouched.
 

3. Consider a Qualified Charitable Distribution.
If you’re 70½ or older, you can donate up to $108,000 (for 2025) directly from your IRA to a qualified charity. This Qualified Charitable Distribution (QCD) counts toward your RMD and can be excluded from taxable income, even if you don’t itemize deductions. It’s a tax-efficient way to fulfill your RMD while supporting causes you care about. Consult a tax professional before initiating a QCD to ensure compliance with IRS rules.

Frequently Asked Questions

How much must I take?

The RMD formula is straightforward: simply divide your IRA’s previous year-end fair market value (FMV) by your life expectancy, as determined under the IRS’s Uniform Lifetime Table. This table couples the life expectancies of the IRA owner and a hypothetical beneficiary who is exactly 10 years younger. Because joint life expectancy is longer than single life expectancy, it results in a smaller RMD. 

Example: Joyce attains the age of 73 this year. Her life expectancy, according to the Uniform Lifetime Table, is 26.5 years. Joyce's Traditional IRA has a fair market value (FMV) of $100,000 as of December 31, 2024. 

$100,000 ÷ 26.5 = $3,773.58

If your spouse is more than 10 years younger than you are and is your sole primary beneficiary for the entire year, you can use the IRS’s Joint and Last Survivor Table, which allows you to use a longer life expectancy in your calculation.

Who calculates my RMD?

The IRS requires IRA custodians to use one of two methods when informing IRA owners of their RMDs. One method requires only that the custodian inform the client that an RMD applies for the year and that the custodian will calculate the RMD amount upon request. The second method involves the custodian actually calculating the RMD based on the Uniform Lifetime Table. Both methods require that the IRA owner receive the RMD notice by January 31st of each year in which an RMD is due. STRATA uses the second method, so you will know your exact RMD amount when we send this notice each January.

Keep in mind that IRA beneficiaries are not required to receive this notice, even if RMDs must be taken from an inherited IRA. Beneficiaries should confer with a competent professional to determine their withdrawal requirements.

What if I miss an RMD?

Through the 2022 tax year, missing an RMD resulted in a 50% penalty. Fortunately, starting in 2023, the SECURE 2.0 Act lowered this penalty to 25 and to just 10% if corrective action is taken within two years. Even with the lower penalty, nobody wants to pay the IRS more than necessary. Penalties are easy to avoid, especially with some proactive planning.

STRATA knows RMDs

The RMD rules are not unduly complicated, but they are also not intuitive. When it comes to beneficiaries’ options and their RMDs, certain scenarios can be more involved. While STRATA IRA experts cannot give tax, legal, or accounting advice, we can walk you through the IRS rules. Get in touch with us to take the stress out of your year-end RMD planning. Learn more about RMDs and other IRS reporting requirements on STRATA's Self-Directed IRA Knowledge Center.