RMD mistakes advisors should watch for with clients.

Required minimum distributions look like a solved problem. Take the prior year-end balance, divide by a life expectancy factor, distribute the result. In practice, RMD mistakes are among the most common and most expensive errors in a retirement book, and almost none of them involve getting the division wrong. They involve which accounts can be combined, which cannot, what happens in the first year, and what happens when an account is inherited.

The penalty for a missed distribution is a percentage of the shortfall, reduced if corrected promptly within the correction window. It is avoidable in essentially every case, which is exactly why a missed RMD damages a client relationship out of proportion to the dollars involved.

Mistake one: aggregating accounts that cannot be aggregated

The aggregation rules are the most frequent source of trouble. Traditional IRAs can be aggregated: calculate the required amount for each IRA, total them, and take the full sum from any one or any combination of those IRAs. That flexibility is useful and clients like it.

Employer plans do not work that way. Each 401(k), 403(b) with certain exceptions, and similar qualified plan generally requires its own distribution from that specific plan. A client with two old 401(k) accounts and an IRA cannot satisfy all three from the IRA. Producers who consolidate the calculation without consolidating the accounts create a shortfall that nobody notices until the following year.

• Traditional IRAs: calculate separately, distribute in aggregate.
• Inherited IRAs: calculate separately, distribute separately, and never aggregate with the client's own IRAs.
• Inherited IRAs from different decedents: never aggregate with each other.
• Employer plans: calculate and distribute plan by plan.

Run each account through the RMD calculator individually rather than modeling a single combined balance. It takes marginally longer and it prevents the error category entirely.

Mistake two: mishandling the first distribution year

The first required distribution can be deferred to April 1 of the following year. Clients hear deferral and take it. What they do not hear is that the second distribution is still due by December 31 of that same following year, which means two distributions land in one tax year.

Doubling up income in a single year can push the client into a higher bracket, increase the taxable portion of Social Security, and cross an IRMAA threshold that affects Medicare premiums two years out. Check the stacked figure against the IRMAA Cliff Checker before recommending the deferral. In a majority of cases, taking the first distribution in the first year is the cheaper answer, and the deferral is only worth it when the client has a genuine income gap in year one.

Deferring the first distribution is not free. It is a decision to concentrate two years of income into one tax year, and it should be priced accordingly.

Mistake three: applying the wrong life expectancy table

Most clients use the Uniform Lifetime Table. Two exceptions matter. A client whose sole beneficiary is a spouse more than ten years younger uses the Joint and Last Survivor Table, which produces a smaller required distribution. Beneficiaries of inherited accounts use the Single Life Table, and the mechanics differ depending on when the account was inherited and whether the original owner had already begun distributions.

Table selection errors run in both directions. Using the Uniform table for a much-younger-spouse case overdistributes and creates unnecessary tax. Using it for an inherited account underdistributes and creates a penalty.

Mistake four: treating the ten-year rule as a ten-year deferral

For most non-spouse beneficiaries inheriting after 2019, the account must be emptied within ten years. Where the original owner had already reached their required beginning date, annual distributions are also required during years one through nine, with the balance emptied in year ten. Many beneficiaries and a fair number of advisors read the ten-year rule as permission to do nothing for nine years and liquidate at the end.

That reading is wrong on the annual requirement and it is expensive even where it is technically permitted. A single year ten liquidation of a large balance drops the entire account into one tax year at the beneficiary's marginal rate, which is frequently the highest rate the money will ever face. Level distributions across ten years usually cost less. Model both patterns with the inherited IRA RMD calculator and show the beneficiary the difference in total tax, not just the annual figure.

Mistake five: assuming a Roth account has no requirement

A Roth IRA has no lifetime required distributions for the original owner. An inherited Roth IRA is subject to the ten-year emptying rule for most non-spouse beneficiaries, even though the distributions are generally not taxable. Missing that requirement produces a penalty on money that would have come out tax-free, which is a difficult conversation to have.

Mistake six: no verification before year end

Distributions initiated in late December fail more often than producers expect. Custodian processing backlogs, in-kind transfer delays, address verification holds, and unfunded cash positions all cause a distribution requested on December 28 to settle in January. The requirement is measured by the distribution date, not the request date.

The fix is procedural rather than analytical:

1. 01Calculate every client's required amount in the first quarter using the prior December 31 balances.
2. 02Set an internal completion deadline of November 15, not December 31.
3. 03Verify actual distributions against the calculated figure account by account in early December.
4. 04Document the verification, because the burden of proof sits with the client.

Making the review repeatable

The pattern across all six mistakes is the same. None require sophisticated analysis. They require someone checking every account, every year, against the right rule for that account type. That is exactly the kind of review that gets compressed when a practice is busy, and it is where a book quietly accumulates risk.

Producers using Ace run the account-by-account calculation conversationally, get the aggregation rules applied by account type, and have a client-ready distribution summary drafted in the same pass. The calculations themselves stay deterministic. What changes is that the annual review actually happens for every household rather than the ones that came up in conversation.

If you want the full distribution toolset and case-design support behind it, start a conversation.

Written for licensed life and annuity producers. This article is educational and is not financial, tax, or legal advice. Confirm current figures and client-specific outcomes with a qualified tax professional.