Advisors should handle RMD follow-up as a midyear service workflow, not a December scramble. Build the eligible-client list, confirm account data, document client instructions, coordinate tax questions, and track every open item in the CRM before deadline pressure turns a routine distribution into a client-risk event.
Required minimum distributions look simple until the advisor is chasing missing instructions, inherited-account questions, custodian forms, tax concerns, and year-end cash availability at the same time. The client sees one deadline. The firm has to manage a chain of operational details before that deadline becomes stressful.
That is why RMD follow-up belongs in the advisor's recurring service calendar. It is a client-retention touch, a compliance-adjacent workflow, and a practical way to show older households that the firm is watching the details before the client has to ask.
The IRS says missed or short RMD amounts may face a 25% excise tax.
The IRS says that tax may drop to 10% if the shortfall is corrected within the allowed window.
Fidelity notes RMDs generally start the year a client turns 73, with annual deadlines after that.
Start with the household list, not the deadline
The first question is not, "Who still needs to take money out?" The first question is, "Which households could be affected this year, and what information is missing?" That includes traditional IRA owners, inherited IRA beneficiaries, qualified-plan participants, clients turning RMD age, clients who delayed a first RMD, and households with multiple custodians.
The IRS RMD FAQ makes the deadline risk concrete: if the full RMD is not withdrawn by the due date, the shortfall may be subject to a 25% excise tax, reduced to 10% if corrected in time. That is not the kind of issue a client wants to discover through a rushed year-end call.
Separate calculation, instruction, and execution
RMD work breaks when firms treat it as one task. Calculation, client instruction, and execution are three different steps. The custodian may calculate an amount for eligible accounts, but the advisor still needs to know whether the client has outside IRAs, whether the distribution will be aggregated, whether withholding needs to be discussed, and whether the client wants monthly, quarterly, or annual timing.
A clean tracker should show each account, the calculated amount where available, the planned distribution source, cash status, client instruction status, withholding note, custodian action status, and final confirmation. That tracker does not replace tax advice. It keeps the service workflow visible enough that tax questions can be routed to the right professional early.
Example: a retired client has two traditional IRAs at one custodian and an old 401(k) at another. The household may assume one automatic IRA distribution handles everything. The advisor's job is to notice the extra account, document the question, and coordinate the next step before the client is trying to fix it after December 31.
Use RMD follow-up as a service moment
An RMD reminder can sound transactional, or it can show the client that the advisor is paying attention. "You need to take your RMD" is a reminder. "We reviewed your eligible accounts, saw your prior-year balance, confirmed the custodian amount for this account, and need your decision on timing and withholding" is service.
Fidelity's RMD education notes that the first RMD is generally due by April 1 of the year after a client turns 73, while later annual RMDs are due by December 31. That first-year exception can create a hidden planning issue because delaying the first distribution can mean two taxable distributions in the following year.
Build the midyear, fall, and December rhythm
A strong RMD workflow has three passes. The midyear pass builds the eligible-client list and identifies missing information. The fall pass confirms instructions, cash, withholding questions, and tax-professional coordination. The December pass becomes a short exception report instead of a long panic list.
For a small advisory firm, the key is to make each pass narrow. Midyear is not the time to solve every distribution. It is the time to make sure the firm knows who belongs on the list. Fall is not the time to discover outside accounts. It is the time to move decisions into action. December is not the time to start client education. It is the time to verify completion.
- Midyear: identify eligible households, inherited accounts, and missing account data.
- August to September: draft client reminders and confirm tax-professional involvement when needed.
- October to November: collect instructions, check cash, and queue custodian actions.
- December: run an exception report for incomplete distributions and unconfirmed clients.
- After completion: save confirmation and service notes in the CRM.
Make custodian tools part of the workflow
Many custodians already provide RMD tools, but tools do not create accountability by themselves. Schwab Advisor Services says its redesigned RMD tab helps firms track client accounts, customize and export RMD data, and sort by age to see which clients need action. That kind of data is useful only when it lands in a firm-owned follow-up process.
The advisor should decide what happens after the export. Who reviews the list? Who compares it with the CRM? Who drafts the first client note? Who checks whether a client has outside assets? Who marks the final distribution complete? Without those owners, the tool is just another screen.
Plan for missed or uncertain RMDs without improvising
When a missed RMD surfaces, the advisor should slow the process down enough to protect the client. The IRS retirement topic page says missed or insufficient RMDs may require Form 5329 and references the 25% excise tax, with a potential reduction to 10% if corrected within two years. That is a tax and documentation issue, not merely an operations clean-up item.
The firm should have a written internal path: identify the shortfall, help the client gather account details, coordinate with the tax professional, document what was corrected, and record the advisor's role clearly. The advisor should not promise penalty treatment. The advisor should help the client get the facts organized quickly.
This is also where inherited accounts need extra care. Beneficiary rules can vary by relationship, account type, timing, and whether annual distributions are required during a 10-year period. If a client says, "I thought I had ten years," the workflow should route the question before the firm assumes the answer.
Where a Bloomie helps without replacing advisor judgment
A Bloomie can maintain the RMD tracker, pull custodian exports into a clean status list, draft client reminder emails, prepare call sheets, flag missing instructions, update CRM tasks, summarize weekly exceptions, and create a completion report after distributions are confirmed. That is exactly the repeatable work that tends to consume advisor attention late in the year.
For companies trying to hire a reliable AI employee without managing another disconnected software tool, Bloomie Staffing functions more like an AI staffing agency than a chatbot subscription. In this workflow, the Bloomie keeps RMD follow-up moving while the advisor keeps planning judgment, tax boundaries, and the relationship conversation.
Questions Advisors Ask
When should advisors start RMD follow-up?
Advisors should start RMD follow-up well before year-end, usually by midyear for older clients and inherited-account households. The practical workflow is to identify eligible accounts, confirm the calculated amount, check cash availability, document client instructions, and schedule follow-up before December pressure arrives.
What happens if a client misses an RMD?
The IRS says a missed or short RMD may be subject to a 25% excise tax on the amount not withdrawn, reduced to 10% if corrected within the allowed window. The client may also need Form 5329, so advisors should involve the client tax professional instead of treating the fix as a simple service ticket.
Can an AI employee help with RMD follow-up?
Yes. A Bloomie can maintain the RMD tracker, pull account lists, prepare client reminder drafts, update CRM tasks, flag missing instructions, and summarize weekly status. The advisor still confirms planning judgment, tax boundaries, client consent, and final recommendations.
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Bloomie Staffing helps financial advisors hire reliable AI employees for RMD trackers, client reminders, CRM updates, custodian-status reports, tax-question routing, and recurring service follow-up workflows.