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RMD Season Is Coming: What Retirees Should Do in January

Elderly couple working on retirement planning.

For many retirees, Required Minimum Distributions (RMDs) feel like a problem to deal with later in the year. After all, the deadline isn’t until December. But waiting until fall often leads to rushed decisions, unnecessary taxes, and missed planning opportunities.

January is actually one of the best times to think about RMDs. The year is still clean, your income picture is clearer, and you have time to make thoughtful adjustments instead of reactive ones. At American Legacy Solutions, we encourage retirees to treat RMD planning as an early-year priority, not a year-end scramble.

Here’s what you should review in January so RMD season doesn’t catch you off guard.

A Quick Refresher: What are RMDs?

Required Minimum Distributions are the minimum amounts the IRS requires you to withdraw each year from certain retirement accounts, such as traditional IRAs and most employer-sponsored retirement plans.

Once you reach RMD age, these withdrawals are no longer optional. They must be taken annually and are generally taxed as ordinary income. Missing an RMD or taking too little can result in steep penalties, which is why planning ahead matters.

If you want a technical overview of the rules, the IRS RMD FAQ page provides official guidance, but the real challenge for retirees is not understanding the rules–it’s integrating RMDs into a broader income and tax strategy.

Why January is the Right Time to Plan

By January, several important pieces of information are already in place:

  • Your account balances from the end of the prior year
  • Your expected income sources for the year ahead
  • Updated tax brackets and thresholds
  • A clearer picture of healthcare and Medicare costs

Starting early gives you options. Waiting until later in the year can limit them.

1. Confirm Which Accounts are Subject to RMDs

Not all retirement accounts follow the same rules. In January, make a list of all retirement accounts and identify which ones require distributions.

Typically, RMDs apply to:

  • Traditional IRAs
  • SEP and SIMPLE IRAs
  • Most employer retirement plans

They do not apply to Roth IRAs during the original owner’s lifetime. Knowing which accounts are affected helps you plan withdrawals more strategically, rather than pulling money at random later in the year.

2. Estimate Your RMD Amount Early

While the final calculation is based on year-end balances and IRS life expectancy tables, you can estimate your RMD early in the year with reasonable accuracy.

Doing this in January allows you to:

  • See how much taxable income the RMD will add
  • Avoid surprises when quarterly tax planning begins
  • Decide whether to spread withdrawals throughout the year instead of taking one large distribution

Spreading RMDs monthly or quarterly can make budgeting easier and reduce the psychological impact of a large year-end withdrawal.

 

→ Not sure what your amount is this year? Try using this calculator to estimate your RMD.

3. Understand How RMDs Affect Your Taxes

RMDs increase taxable income, which can create ripple effects across your financial plan. A higher income level may:

  • Increase the portion of Social Security benefits that are taxable
  • Push you into a higher tax bracket
  • Trigger Medicare income-related premium adjustments
  • Affect eligibility for certain tax credits

Reviewing these interactions early gives you time to adjust other income sources if needed. January planning can help smooth out income rather than stacking it all into one part of the year.

4. Coordinate RMDs With Your Overall Income Strategy

RMDs should not exist in isolation. They need to work alongside Social Security, pensions, annuities, and other investment withdrawals.

In January, ask:

  • Should RMDs be used to cover living expenses or reinvested in a taxable account?
  • Is it better to take the RMD early or later in the year based on income timing?
  • Can other withdrawals be reduced to offset the RMD?

This coordination often leads to a more stable cash flow and fewer tax surprises.

5. Consider Charitable Giving Strategies

For retirees who give to charity, January is a good time to plan how RMDs fit into those goals. Qualified charitable distributions (QCDs) allow eligible retirees to direct RMD dollars to qualified charities, potentially reducing taxable income.

Planning this early ensures donations are intentional, documented correctly, and aligned with both personal values and tax strategy.

6. Review Estate and Long-Term Planning Implications

RMDs don’t just affect this year’s taxes. Over time, they can influence:

  • How quickly retirement accounts are depleted
  • What assets are passed on to heirs
  • The tax burden beneficiaries may face
  • How long-term care costs are funded

January is an ideal time to review how required distributions fit into your estate plan and whether adjustments are needed to protect long-term goals.

How American Legacy Solutions Helps

We don’t treat RMDs as a simple compliance task. We view them as part of a larger strategy that connects income planning, tax awareness, estate planning, and long-term care considerations.

Our team helps retirees:

  • Understand their RMD obligations
  • Build withdrawal strategies that reduce unnecessary taxes
  • Coordinate income sources smoothly
  • Align RMD decisions with legacy and care planning

Start the Year Prepared

The decisions you make now can shape your entire year. Early RMD planning in January gives you flexibility, clarity, and peace of mind.

If you want help reviewing your RMD strategy or aligning it with your broader retirement plan, American Legacy Solutions is here to guide you. The sooner the conversation starts, the more options you’ll have.

Ready to plan ahead? Contact our team to get started.