:max_bytes(150000):strip_icc()/FRI-Prostock-Studio-533d28d6cf484565b301a08d9789ab28.jpg?ssl=1 "Fed Rate Cuts Are Likely on the Way—Here’s Why to Consider Taking Your RMD Before That Happens")
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Key Takeaways
- If you must take required minimum distributions (RMDs) from a retirement account, you must withdraw your 2025 RMD by Dec. 31.
- Even if you don’t need your RMD money right now, it could be smart to withdraw soon and stash it in one of today’s top-paying CDs—before Fed rate cuts push CD returns lower.
- While the Fed is unlikely to cut rates at its July meeting, we may see one or more rate cuts in the fall.
- Top CDs today promise rates up to 4.60% on terms extending into 2027, while slightly lower APYs can be locked in even longer.
- Want to keep access to some of your RMD funds? Top high-yield savings accounts and money market accounts are offering up to 5.00% APY, though those rates will likely drop with any future Fed rate cuts.
The full article continues below these offers from our partners.
2025 RMD Withdrawals Are Due By Year-End—But Now Could Be a Smarter Time to Withdraw
If a retirement account stipulates required minimum distributions (RMDs) after a certain point, these withdrawals must occur by Dec. 31 each year to avoid significant penalties. You can withdraw the required amount—or more—at any time throughout the year, and in as many withdrawals as you like.
Many people wait until the end of the year to take their required withdrawal. But today’s high interest rate environment presents an opportunity for those who don’t need their RMD funds right now to move the money into a different savings vehicle. Today’s high interest rates are likely to fall soon, so you have options now that may not be available come December.
Why CDs Are a Wise Move Right Now for Your RMD Funds
Certificates of deposit (CDs) offer the unique benefit of locking in a fixed rate of return that’s guaranteed, regardless of what happens with financial markets. While this rate lock is less appealing when rates are expected to rise, it’s extremely beneficial when rates are expected to fall.
That’s the situation we’re in now, with the Federal Reserve likely to cut its benchmark interest rate in September and additional cuts expected by the end of the year. As soon as banks and credit unions feel confident that a Fed rate cut is coming, they’ll begin lowering the rates they offer on new CDs. This means the CD rates you can secure right now aren’t expected to last through the fall, never mind December.
Right now, you can earn 4.50% or more on CD terms stretching from 6 months to a lengthy 21 months, with a top nationwide rate of 4.60% that can be guaranteed for 19 months. Or if you’d like a longer rate lock, top rates from 4.28% to 4.40% are available on CD terms ranging from 3 to 5 years.
Just keep in mind that securing a CD’s rate requires committing your funds for the full term. If you cash out before maturity, you’ll face an early withdrawal penalty, which can vary from mild to severe among institutions. So it’s smart to choose your term wisely and then research the early withdrawal penalty of CDs you’re considering.
Options Paying Up to 5.00% for RMD Cash You Need to Keep Accessible
If you can’t commit all of your RMD funds to a CD, another great option is to stash the cash in a top-paying high-yield account. Right now, you have plenty of options to earn mid-4% returns, with some offering as much as 5.00%, while still allowing you to withdraw funds as needed.
Fortunately, we make it easy to find the best-paying flexible cash accounts from hundreds of federally insured banks, credit unions, and online banks. Our daily ranking of the best high-yield savings accounts features a top rate of 5.00% APY, with more than 15 additional options paying 4.30% or more.
Want check-writing ability for your savings? Consider a money market account. While the rates on these accounts often don’t measure up to the best high-yield savings options, you can currently earn 5.00% APY with the top-rated account in our money market account ranking.
Just keep in mind that savings and money market account rates are variable, so there’s no guarantee of future returns. The rate you earn depends on the Federal Reserve’s actions, and once it starts trimming its benchmark rate, savings and money market APYs will begin to fall as well.
This Unique Online Account Pays 5.00%
Although checking accounts aren’t typically known for earning high returns, a standout option from mph.bank is currently offering 5.00% APY on up to a $50,000 balance for any month in which at least $2,000 in direct deposits are received. If this requirement is manageable for you, consider opening the account and using it as a savings vehicle for your RMD or other funds.
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
Important
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
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