Tracking required minimum distributions across clients: an operations routine for small RIAs
Required minimum distributions (RMDs) are the minimum amounts that must be withdrawn each year from traditional IRAs and many retirement plans once the owner reaches the required age, generally 73 under current IRS guidance. The first RMD is due by 1 April of the year after the owner reaches that age, and later ones by 31 December each year. A small RIA can avoid missed RMDs with a client list, a yearly calendar, and a record of each distribution, while leaving the tax calculations and decisions to the client's tax professional.
December is when RMDs get urgent. A client who turned 73 last year is due a second distribution, another moved an old 401(k) into an IRA and now has one more account to cover, and a third prefers to take everything in one go just before the deadline. Missing one can be expensive for the client. A simple yearly routine keeps every one of them visible.
What are the IRS basics?
| Point | What the IRS says |
|---|---|
| Starting age | Generally age 73 for traditional, SEP and SIMPLE IRAs and retirement plan accounts, with some exceptions |
| First RMD | Due by 1 April of the year after reaching the required age |
| Later RMDs | Due by 31 December each year |
| Roth IRAs | Not required during the owner's life; beneficiaries are subject to RMD rules |
| Missed RMD | The amount not withdrawn may be subject to a 25% excise tax, or 10% if timely corrected within two years |
Source: IRS, Retirement plan and IRA required minimum distributions FAQs, checked 18 October 2026. Rules change; check the current page and the client's tax professional.
Note the first-year detail: a client who delays the first RMD to 1 April will take two in that calendar year.
What does a yearly RMD routine look like?
| When | What to do |
|---|---|
| January | List every client with an RMD this year, by account; note first-year clients |
| February to March | Confirm each client's preference (timing, frequency, withholding) and confirm amounts with the custodian or tax professional |
| By 1 April | First-year RMDs for clients who delayed, if applicable |
| Mid-year | Check progress for clients taking scheduled distributions |
| October | Chase anything not yet taken; flag accounts that moved during the year |
| By 31 December | Confirm every RMD is complete and recorded |
What should you record for each client?
- Each account subject to an RMD, and the owner.
- The amount (from the custodian or tax professional) and the source.
- The client's instructions: timing, frequency, where the money goes, withholding.
- Each distribution taken, with the date.
- Confirmation the year's RMD is complete.
A worked example
Take a hypothetical two-person RIA with 22 clients due RMDs this year, three of them for the first time. In January it builds the list from its client records, flags the three first-year clients, and confirms each client's preference by the end of February. Two first-year clients choose to take their first RMD by 31 December rather than delay; one delays to 1 April and is reminded that two distributions will fall in that year. In October, the firm finds one client whose old 401(k) rolled into a new IRA mid-year and confirms the RMD position with the client's tax professional.
Common gaps
- A rollover adds an account mid-year and nobody updates the RMD list.
- First-year clients who delay, then miss that two distributions fall in one year.
- Instructions agreed on a call but never written down.
When is this overkill?
A firm with few retirement-age clients can keep a short list in the compliance calendar. The January list and the October check are the two steps not to skip.
How Advorra fits
Advorra keeps clients and households with their accounts and communications in one place, and follow-ups can become tasks on the client record, so RMD instructions and reminders sit with the client they belong to. RMD calculations stay with the custodian and the client's tax professional. See the product page, or read the year-end checklist and client meeting notes.
One thing to do this week: list every client with an RMD still outstanding this year, and confirm each one's plan before December.
An operations routine, not tax advice. IRS rules are summarised from the IRS page linked above as of 18 October 2026; tax questions belong with the client's tax professional.
Questions advisors ask
At what age do RMDs start?
The IRS says you generally must start taking withdrawals from traditional, SEP and SIMPLE IRAs and retirement plan accounts when you reach age 73. There are exceptions, such as some workplace plan participants still working. Confirm each client's situation with their tax professional.
Do Roth IRAs have RMDs?
According to the IRS, withdrawals from Roth IRAs and designated Roth accounts aren't required until after the owner's death, though beneficiaries are subject to RMD rules.
What happens if an RMD is missed?
The IRS says the amount not withdrawn may be subject to a 25% excise tax, or 10% if timely corrected within two years. This is a reason to track RMDs carefully, and a matter for the client's tax professional.
Who calculates the RMD amount?
Often the custodian provides it, and the client's tax professional confirms it. Your role is usually to make sure it's planned, taken and recorded.
Is this tax advice?
No. It is an operations routine. Tax questions belong with the client's tax professional.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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