Required Minimum Distributions - Unilaterally

Question:

Is the bank allowed to withdraw and mail required minimum IRA distributions to customers if the customrs have not come to the bank to make the distribution election?

Answer:

With the simplification of the rules for RMD calculation, there is no real election for the customer to make beyond the timing or the method of paying the RMD. Increasingly, when banks are sending the required notice that an RMD is necessary for the current year, they include default provisions saying what they will do unless the customer gives them contrary written instructions. For example, we will send you a check for your RMD, less the amount of applicable state and federal witholding, in the first week of December.

While there isn't anything from the IRS that restricts your ability to send the RMD without its being requested, I think "good manners" would require that you at least tell the customer what you were going to do far enough in advance that he could request alternative arrangements.

First published on BankersOnline.com 2/21/05