A 73-Year-Old’s RMD Is Locked to Last Year’s Balance.
When the Market Drops, He’s Forced to Sell Stocks at the Bottom
Quick Read – RMDs are fixed to the prior December 31 balance, so a 20% market drop forces retirees to sell more shares at lower prices to meet the same dollar obligation. – Forced IRA withdrawals count as ordinary income, potentially making up to 85% of Social Security benefits taxable and compounding losses in a down market year. – Keeping one to two years of RMDs in cash or short-term bonds inside the IRA eliminates the need to sell stocks during market downturns. – Picture a 73-year-old retiree watching his brokerage statement in spring 2026. His traditional IRA is mostly in stocks, and the market has just dropped sharply. Market volatility has been severe, pushing the VIX index above 30 recently, a level that signals meaningful investor anxiety, the kind of fear reading that usually accompanies headlines he would rather not read.
He knows he must pull money from that IRA this year. What he may not have fully absorbed is that his required minimum distribution (RMD) was set months ago, before any of this volatility began. That is the trap.