Forced to Take an RMD? Where to Put It to Safely Earn As Much As 6%

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It's a Lucky Time for Those With Cash in the Bank

When inflation surged after the pandemic, the Federal Reserve implemented 11 fast-and-furious increases to the federal funds rate between March 2022 and July 2023. The historic rate hikes raised the central bank's benchmark rate to its highest level since 2000.

This is important to savers since the fed funds rate directly influences the interest rates banks and credit unions pay. As a result of the Fed's aggressive campaign, rates on savings, money market, and certificate of deposit (CD) accounts also skyrocketed to 20-year highs.

Now that the Fed has remained in a holding pattern since July, some rates have eased lower, after notching a fall peak. But what you can earn with cash in the bank is still remarkable. So if you had to take a required minimum distribution (RMD) from your retirement account, but you just have the funds sitting unused, you have an abundance of options to earn up to 6% on those funds—and with virtually no risk.

High-Yield Savings Accounts Keep Cash Accessible

One of the easiest ways to earn a great return on RMD funds you don't need right now is to dump them into one of the country's best high-yield savings accounts. We rank the best-paying options every business day, and the top rate is currently 5.55% APY. Not only is that the highest rate we've seen on a nationally available savings account, but 19 additional accounts are paying rates of 5.15% to 5.50% APY.

On the downside, savings account rates are variable, so they offer no rate guarantee for the future. There is no way to know what any given savings account will pay later this year or in 2025, as it depends on what the Fed does with its benchmark rate. But for now, high-yield savings accounts are riding a high, which could last for several more months.

Money Market Accounts Add Check-Writing

If you want to keep some of your funds accessible for easy withdrawal but want the option of writing paper checks, money market accounts are your answer. A money market account behaves just like a savings account but with the added feature of check writing. Like a savings account, many money market accounts—though not all—limit how many withdrawals you can make in a month.

Sometimes the best money market rate is higher than the best high-yield savings account rate. But lately, it more often goes the other way—such as right now, with the best money market rate topping out at 5.35%. Part of the explanation is that there are a lot more high-yield savings accounts in the marketplace—and therefore stiffer competition among them on rates. But if writing checks is a feature you value, then earning slightly less with a top money market account is still a great option.

CDs Secure One of Today's Rates for Months or Years

For savers, one of the happiest byproducts of the Fed's aggressive rate-hike campaign is that it triggered banks and credit unions to dramatically raise—and keep raising—the interest rates paid on certificates of deposit (CDs). As a result, shopping our daily ranking of the best nationwide CDs leads you to dozens of options to earn 5.00% or better in terms as long as three years.

In fact, you can even earn an eye-popping 6.00% APY right now, though the CD term on this stand-out offer from Nuvision Credit Union is a relatively short 10 months. Still, if you can afford to sock some of your RMD funds away until next Easter, this 6.00% rate is currently unbeatable.

Whatever term you choose, CDs offer an excellent hedge right now against predicted Fed rate cuts. When you open a CD, your rate is locked in until the CD's term ends. So even if the Fed starts cutting interest rates, your CD rate will be guaranteed until it matures.

With possible Fed rate cuts on the horizon for 2024 and beyond, longer-term CDs are a smart play now. You'll be sacrificing a bit on the current rate, but instead of expiring next year when rates for new CDs have fallen, your multi-year CD could keep delivering dividends until 2027 or beyond.

I Bonds Offer Inflation Protection for Up to 30 Years

I bonds get their name because they're structured to pay a rate that tracks inflation. This makes them a surefire way to ensure your cash savings always out-earns what you'll lose to inflationary price increases.

This is perhaps most true for long-term investors—such as those who are retired or are approaching retiree status and who want to keep some savings in a safe, predictable savings vehicle. I bonds can be kept for up to 30 years, with their interest rate adjusted every six months based on the most recent inflation trend.

Right now, newly issued I bonds are paying 4.28% for their first six months. Whether that rate goes up or down will depend on what inflation does in the coming months. The next rate announcement will be made Nov. 1.

A total of $10,000 in electronic I bonds can be purchased each year, per person. In addition, those owed money back on their tax return can buy up to $5,000 more in paper I bonds using their refund. Some older investors regularly buy $10,000 to $15,000 in I bonds every year, stockpiling them until they need the money—knowing that they'll always be earning an inflation-beating return.

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.