Do banks send out 70 1/2 letters every year to customers who are or at age 70 1/2?

I think we are going overboard with 70 1/2 letters here at my bank. We send them every year and require the customer to sign it as acknowledgment and return it to us. Then our Ops Manager gets all bent out of shape when she doesn't receive the acknowledgements back from the customers.

Is anyone else doing this? What's your procedures?

Yes, we do.

Our IRA summary, which we produce in lieu of a 5498, will include the RMD amount they will need to take with us during the upcoming year. In our agreement with the customer, unless we hear otherwise from the customer prior to December 1st, we will automatically send them their RMD from their smallest balance IRA with us. This gives them 11 momths to either take it themselves, direct us to take it from a different IRA account, or to let us know they are taking it from elsewhere.

With the last item, we have them also sign a hold harmless letter, and then we will not make the RMD for them again in any year until they tell us to send it automatically, they are on their own from that point on. But their annual IRA will still tell them how much they need to take based on their accounts with us. No hold harmless signed, we will still send them thier RMD.

Thanks so much for your input!

We actually defaulted everyone to take auto payments, they need to opt-out and indemnify us if they don't want the automatic payments.

Thanks DQ, that's what I would like to implement here.

As a former manager of the IRA distributions for a 3 billion dollar bank, let me point out one flaw with the auto-distribution method. Many customers take distributions periodically throughout the year for expenses and depending on your core system may or may not be able to stop automatically the required annual distribution. They also frequently have memory lapses and don't understand why you are sending them money. The letter is good customer service; however, brow beating a customer to get a piece of paper signed stating they took the distribution at another institution is never an option. The customer is always responsible for taking those distributions on-time. The bank is only responsible for reporting the RMD on their 5498 or substitute form.