Client confusion over required minimum distributions from traditional retirement accounts can amount to wealth-busting errors.
High penalties and unnecessarily high withdrawals and taxes can be avoided if clients and advisors plan in advance and take care to remain aware — aware that the client owns an account subject to RMDs and aware of ways to follow the rules and sidestep costly mistakes.
Unfortunately, many investors don’t know the rules and sometimes don’t even know that the rules apply to accounts they own.
We asked advisors to tell us the worst client RMD errors they’ve seen and what they did to fix the problem. Check out the gallery for 12 of their stories. Some items are edited for clarity or length.
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