Your 2027 RMD Is Locked In by Your Account Balance on December 31, 2026. If the Market Falls 15% in January You Still Owe the Larger Number, and Retirees Who Expect a Drop Take the Withdrawal in Shares Instead of Cash
Quick Read
Your IRA balance on December 31 permanently locks in next year’s RMD, so even a January 15% drop still leaves you owing the larger amount.
A $1 million IRA at 75 forces a $40,650 RMD even after a drop to $850,000, costing an extra $1,341 in federal taxes.
Taking RMDs in shares instead of cash keeps investments in the market and can generate a capital loss to offset the forced extra income.
Every December 31, your traditional IRA locks in a record of its value. Whatever the account is worth at the close of business that day sets the size of next year’s required minimum distribution (RMD), and nothing the market does afterward changes that figure.
MAFPHOTOART8 / Shutterstock.com
That rule can turn a January selloff into a tax problem. If stocks fall 15% in the first weeks of 2027, you still owe an RMD based on your larger 2026 balance. Retirees who see that risk coming have a better option than selling into the drop: they take the withdrawal in shares.
December 31 Sets Your 2027 RMD Even If the Market Crashes
The rule comes from Treasury regulations. The RMD is based on the IRA balance “as of December 31 of the calendar year preceding the calendar year for which distributions are required,” and “no adjustments are made” for what happens later, per 26 CFR 1.408-8(b)(2). The worksheet in IRS Publication 590-B gives the same formula: take the value of the IRA at the close of business on December 31 and divide it by your applicable denominator.
That denominator comes from the Uniform Lifetime Table: 26.5 at age 73, 25.5 at 74 and 24.6 at 75. Under SECURE 2.0, RMDs start at age 73 for anyone born on or after January 1, 1951, and a later provision moves the start to age 75 for younger retirees.
——
Learn 13 Major Retirement Mistakes and Ways To Avoid Them
One investment mistake could create big risks for your retirement. Many investors make the same critical errors: being too conservative, making big bets on “sure things,” or paying excessive fees. Any of those blunders can endanger your hard-earned savings.
How a 15% January Drop Costs a $1 Million IRA Owner an Extra $6,098 in Taxable Income
Consider an hypothetical 75-year-old who is single, or married to a spouse no more than 10 years younger. On December 31, 2026, the traditional IRA holds $1 million.
In a normal year, the RMD takes about 4.07% of the account. After the drop, that same $40,650 eats up 4.78% of what’s left. If the retiree is in the 22% bracket, the extra $6,098 adds about $1,341 in federal tax. For reference, the 2026 brackets apply 22% to taxable income over $50,400 for single filers and $100,800 for married couples filing jointly.
Skipping the withdrawal costs far more. Under 26 U.S.C. § 4974(a), the excise tax is 25% of the shortfall, about $10,163 if the entire RMD is missed. That rate drops to 10% if you fix the miss within the correction window in § 4974(e).
Why Taking the RMD in Shares Beats Selling Into a Slump
Most custodians will meet an RMD by moving shares from the IRA into a taxable brokerage account, a process called an in-kind distribution. The shares mattered at their fair market value on the transfer date, and that value is taxed as ordinary income, just like cash. Your cost basis in the moved shares equals that same value.
Two advantages follow. First, you never sell at the bottom. The shares stay invested in your taxable account and capture any rebound.
Second, the timing can create a loss you can use. Say the retiree moves $40,650 of an index fund in the first trading days of January, and the fund then falls 15%. The shares are now worth $34,553, a $6,098 capital loss available to claim. Net capital losses offset up to $3,000 of ordinary income a year, and the rest carries forward. That loss about matches the extra income the December 31 record forced.
Taking cash in early January also avoids the drop, but it leaves the money out of the market for the recovery. Watch the wash-sale rule, too: if you sell shares at a loss in a taxable account and an IRA purchases substantially identical shares within 30 days before or after the sale, the loss is disallowed and can’t be added to the IRA’s basis.
Three Moves to Make Before December 31, 2026
Run the RMD math for each account. You must figure the required distribution separately for each IRA, but you can take the total from one IRA or several.
Plan for withholding. Custodians generally withhold 10% from nonperiodic IRA payments unless you opt out on Form W-4R. With an in-kind transfer, cover the tax with outside cash or estimated payments so you don’t have to sell shares to pay it.
Watch the first-year double-up. Your required beginning date is April 1 of the calendar year following the year you reach the applicable age. If you turn 73 in 2026 and moves your first RMD into 2027, both RMDs mattered as 2027 income.
The record rule eventually works in your favor. If a January drop doesn’t recover by year-end, your December 31, 2027 balance will be smaller, and your 2028 RMD will shrink with it. Lining up in-kind timing, claim losses and your bracket is the kind of math worth running with a tax professional or trusted advisor before year-end (we put the fuller strategy for avoiding a big first-year RMD tax bill, years before it lands, in a free guide here).
Help Avoid These 13 Retirement Mistakes Before They Derail Your Future
One investment mistake could create big risks for your retirement. Many investors make the same critical errors: being too conservative, making big bets on “sure things,” or paying excessive fees. Any of those blunders can endanger your hard-earned savings.
Now you can learn the mistakes even experienced investors make (and ways you can sidestep them before it’s too late) with this new guide: 13 Retirement Mistakes and How to Avoid Them from Fisher Investments. (sponsor)
India’s second-richest man, Mukesh Ambani, is launching what could be the country’s biggest-ever initial public offering (IPO), despite a stock market downturn. Mumbai-based Jio Platforms, a telecoms company backed by Meta Platforms and Google, is hoping to raise up to 302bn rupees (£2.4bn) and is targeting a 10.3tn rupees valuation when it floats on the
GM (GM) posted third quarter results before the bell that topped estimates, tightened its full-year profit outlook instead of boosting it, but issued shareholders a new $20 billion share repurchase program instead. For the quarter, GM posted Q3 revenue of $50.0 billion, up 2.9% from a year ago and above the $48.52 billion Bloomberg consensus.
Netflix (NASDAQ:NFLX) has successfully disrupted the entertainment industry, but lately it looks like it’s the one getting left behind. The stock is down 26% year-to-date, even as the broad market has risen, and Netflix lost out on its planned acquisition of Warner Bros Discovery after it was outbid by Paramount Skydance, which is now Skydance.
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Cryptocurrency bettors aren’t fully bought into Amazon.com Inc. (NASDAQ:AMZN) hitting $300 or higher in October, even as the tech behemoth braces for its third-quarter financial results. Where’s Your Money on? The betting crowd on Polygon (CRYPTO: POL)-based Polymarket
Since it is election season, voters and investors who closely monitor the intersection of financial markets and politics are being inundated with political prognostications often conveyed in “leans/likely/D/R” form. Essentially, those predictions are pundits’ way of saying that a particular result is likely to occur in a specific electoral contest. Sometimes, “probably” is as good
In recent years, investors have closely followed quantum computing. If successful, the technology could increase computing speeds exponentially. The problem with this technology is the delicate nature of quantum bits (qubits) and high error rates. Such challenges mean that widespread commercial viability is likely several years away. Missed AI’s “Act 1”? Act 2 Could Be
Global food prices face pressure from repeated supply shocks, and that matters for Canadian investors. Higher grocery and transport bills quietly punish weak businesses and reward those with strong cash generation and resilient balance sheets. That creates an opening to consider robust Canadian stocks that the market currently prices too cautiously. This article walks through
The world is holding its breath as it waits to find out whether this year’s estimated $US1tn investment in artificial intelligence is resting on a castle made of sand. Last week, the Nasdaq 100 – an index of the 100 biggest non-financial stocks on the American tech-heavy Nasdaq exchange – dropped by 5.5%, triggering the
KOSPI falls 4% as South Korea’s chip-heavy stock index slides. Photo by BeInCrypto The Korea Composite Stock Price Index (KOSPI) fell 3.5% at Tuesday’s open as a chip-led AI sell-off drags on, cutting its 2026 gain to about 31% from roughly 116% at its June record close. The index now sits about 39% below that
Time flies when you’re having fun, building drones, and waiting to hold an IPO! Barely 18 months ago, I took a look at “unicorn” company Anduril Industries, its $1 billion in 2024 sales, and its $30 private market valuation — and decided the stock was probably overvalued at 30 times sales. (Most traditional defense companies
Could Nvidia (NASDAQ: NVDA) become a $10 trillion company? That’s a reasonable question to ask. Nvidia sits at the center of the artificial intelligence boom, supplying the chips and systems that power AI data centers. As a result, its revenue and profits have grown at extraordinary rates as companies race to build AI infrastructure. Missed
A protesting student feeds a burnt barrier during a blockading action outside the secondary school Le Corbusier, in Aubervilliers, northern Paris. (Photo by LOU BENOIST / AFP via Getty Images) As my husband, a long-time media and technology expert, always remind me ‘if it bleeds, it leads.’ We have to be careful and go beyond
Twilio, JFrog, Fastly, Palantir Technologies, and Snowflake Shares Are Soaring, What You Need To Know What Happened? A number of stocks jumped in the morning session after retreating yields and dip-buying supported a relief rebound following the previous session’s sharp drawdown. The bounce follows a pullback across cloud vendors, triggered by fears that aggressive artificial
Cleveland-Cliffs Inc. Q3 2026 Earnings Call Summary – Moby Strategic Performance and Market Dynamics Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we’ll show you why it’s our #1 pick. Tap here. Management attributes the Q3 EBITDA doubling to a ‘rational’ trade environment
Ever heard of neodymium? No? How about praseodymium? Or terbium, or dysprosium? If you have heard of these — they’re the “core four” rare-earth elements, by the way — there’s a good chance you’ve come across rare-earth stocks like USA Rare Earth (NASDAQ: USAR). If you’re not familiar, just imagine a world where smartphones, laptops,
U.S. Bancorp (NYSE:USB) is becoming increasingly attractive to income-focused investors as its lending activity grows and fee revenue picks up. The key question is whether this earnings growth can support the current stock price, especially as government bonds provide a compelling alternative for those seeking steady income. The search for reliable payouts extends beyond the
Quick Read Alphabet (GOOG) trades at a trailing P/E of just 15 with a $514B Cloud backlog and 82% Cloud revenue growth, driving a $437 price target with 25% upside. Microsoft (MSFT) trades at twice Alphabet’s earnings multiple despite Azure growing at roughly half Google Cloud’s pace, making GOOG look undervalued versus peers like Meta
Last week, chip stocks helped drag Wall Street lower. Monday, they’re lifting the indexes while most stocks keep falling. A Yahoo Finance basket of 60 chip-related stocks is recovering nearly $250 billion in market value, with gains reaching across memory makers, chip designers, and equipment suppliers. Micron (MU) and Intel (INTC) are each gaining over
Last week was miserable for Micron (NASDAQ:MU) stock, with the maker of DRAM and NAND flash memory chips losing nearly 15% on worries that Chinese DRAM company ChangXin Memory Technologies was bringing to market “4F square” technology to increase DRAM storage density — and begin stealing market share from Micron. Monday morning, things are looking
Quick Read AMZN earns a BUY rating with a $332.67 price target, representing 30% upside, anchored by AWS growing 37% at its fastest pace in 18 quarters. Amazon trades at 24x forward earnings, cheaper than MSFT at 25x, with its 13.7% operating margin offering the most room to expand among peers. Amazon’s free cash flow
