ARTICLE TAKEAWAYS
Automating your client’s RMDs can provide many benefits. These include:
The IRS assesses a 50% tax penalty on any required distribution amounts that aren’t withdrawn by the December 31 deadline. By automating the transaction, you and your client will not miss the deadline and incur a penalty.
Example: Your client’s RMD is $3,000, and only $2,000 was withdrawn. The IRS assesses a tax penalty of $500 (50% of the $1,000 not withdrawn).
If you check the Calculation by CB&T box (Box 2-A) on the Required Minimum Distribution (RMD) Request, CB&T will calculate your client's RMD each year in accordance with IRS guidelines, and the distribution will be taken proportionately from the funds in your client’s account.
CB&T offers a variety of options to meet your client’s needs. Distributions can be sent via Automated Clearing House (ACH), or you can keep your client’s money working by reinvesting it into an American Funds nonretirement account. Choose between annual, semiannual, monthly or quarterly distributions.
If your client wants to take an RMD earlier than scheduled or from a different IRA, contact us. The distribution can be processed immediately, and the automatic payment is deferred until the following year, so there will be no interruptions to the payment schedule going forward.
Neither you nor your client will need to request distributions annually. Also, clients won’t have to wait for a check to arrive in the mail or go to the bank. Distributions can be sent via ACH and are deposited into the client’s bank account within one to three business days.
If your client’s bank information is already on file, automated RMDs can be set up by contacting us. For accounts that do not have a bank account on file, or to send distributions via another method, complete the Required Minimum Distribution (RMD) Request.
For additional information on RMDs, visit the Required Minimum Distribution (RMD) guide.
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The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.
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