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2024 RMD withdrawals expected by December 31, but you can still save money

If you have a retirement account that states required minimum distributions (RMDs) after a certain age, these withdrawals must take place each year before December 31 to avoid significant penalties. You can withdraw the required amount (or more) at any time of the year and by making as many withdrawals as you wish. But to let your money grow tax-free for as long as possible in your retirement accountyou can choose to wait until the end of the year to make a lump sum withdrawal of the required RMD amount.

This is especially true if you don’t need the money right now. But where should you put the unnecessary funds you withdraw? If you’re sure you won’t need the money for long, you might consider reinvesting it in a taxable investment. brokerage account. But this comes with risks, as investments can lose money.

If, on the other hand, you want to protect your cash from any loss while watching it grow, you’re in luck in 2024. Indeed, savings accounts and certificates of deposit (CDs) are currently paying historically high rates. By shopping for an optimal savings or CD rate (we’ve got dozens of great options below), your funds can grow 4-5% or more and be safe from any risk.

Why CDs are so smart right now for your savings

Thanks to The Federal Reserve historic rate hike campaign between 2022 and 2023, aimed at taming post-pandemic inflation, CD rates jumped to their highest level in 20 years last fall, exceeding 6%. Now that inflation has calmed, the Fed has moved into a phase of cutting rates. As a result, CD prices have fallen, with the best national rate recently slipped to 5.50%.

Unfortunately for savers, the Fed is expected to follow through on the September and November interest rate cuts. federal funds rate with further cuts – perhaps in December, but almost certainly in 2025. The central bank could even continue cutting rates until 2026.

This potentially long decline in rates is precisely why today’s best CDs, especially multi-year certificates, are such a smart move right now. By locking in one of the current rates, your return on these funds will be protected from any actions taken by the Fed over the next two years.

While it’s true that top CD rates nationwide have softened from their 2023 peak, they continue to yield historically high returns. Just compare today’s rates below to the rates for a CD opened in early 2022, when the highest rates in the country ranged from just 0.50% to 1.50% APY.

These Top-Paying CDs Offer a Smart, Safe Place for Your RMD Funds

OUR daily ranking of the best CD prices always provides you with a list of the highest paying jobs available nationwide. Currently, the highest yields are offered on short-term CDs, while longer-term CDs pay slightly lower rates but extend their rate guarantee much further into the future.

Here’s a look at some of today’s hottest deals for periods that extend almost to 2030. For more details on any of these CDs, click the link to our list of best deals for this period.

To maintain access to some cash, consider these high-yield savings accounts

If you can’t commit all of your RMD funds to a CD, your best option is to place the money in one of the best high yield savings account. Although these rates are expected to fall as the Fed implements future rate cuts, for now you have several choices to earn at least 5.00%.

You can find details on these options, and more, in our daily roundup of the best high-yield savings rates today.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks rate data from more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines the daily rankings of the highest-paying accounts. To be eligible for our lists, the establishment must be federally insured (FDIC for banks, NCUA for credit unions), and the minimum initial account deposit must not exceed $25,000. It also cannot specify a maximum deposit amount less than $5,000.

Banks must be available in at least 40 states to be considered nationally available. And while some credit unions require you to make a donation to a specific charity or association to become a member if you don’t meet other eligibility criteria (for example, you don’t live within a certain region or do not work a certain type of job), we exclude credit unions with a required donation of $40 or more. To learn more about how we choose the best rates, read our full methodology.