L3 Ch2 closed Q4 Roth conversion season. L3 Ch3 opens with the December companion motion: RMD season. For every client over age 73 (the current SECURE 2.0 threshold, stepping to 75 in 2033) and every inherited IRA holder under the 10-year rule, the practice produces the calculated required minimum distribution under IRC §401(a)(9), confirms the deadline (December 31 for ongoing RMDs; April 1 of the year after age 73 for the first RMD if elected), names the source account and destination, and cross-checks against the custodian's RMD-tracker data. AI-integrated workflows compress the population-level calendar from 40-80 hours of paraplanner work to 4-8 hours of senior-advisor judgment time, while improving the accuracy and the Reg BI documentation discipline. Miss an RMD and the IRS excise tax under §4974 is 25% (reduced from 50% by SECURE 2.0, and further reduced to 10% if corrected within the correction window). The calendar exists because the cost of error is enormous and the calculation is mechanical enough that AI excels at it.

The RMD Population at L3 Scale

A 200-household practice typically has 60-90 clients in RMD-bearing status: clients age 73+ (subject to the SECURE 2.0 §401(a)(9) RMD trigger), clients with inherited IRAs under the 10-year rule (post-SECURE non-eligible designated beneficiaries with annual-RMD-during-window requirements where applicable), clients with inherited IRAs under pre-SECURE rules (still on life-expectancy schedules), and clients with §403(b) and §457 plans subject to RMD. The L3 Ch3 L1 workflow identifies the population by querying Wealthbox for age + account type and cross-referencing custodian feeds for inherited-account flags.

The population eligibility filter: (a) age 73+ as of Dec 31 of the RMD year — for 2026 calendar, clients born on or before Dec 31, 1953; (b) inherited IRA holders subject to the 10-year rule (those who inherited after 1/1/2020 with non-EDB classification under SECURE 2.0); (c) inherited IRA holders under pre-2020 rules using stretch life-expectancy; (d) clients still working and over 73 whose §401(k) RMDs may be deferred under the still-working exception (RMD still required from former-employer 401(k)s and from IRAs); (e) clients with inherited Roth IRAs (10-year rule applies; no annual RMDs during the 10 years for Roths). The eligibility filter typically surfaces 60-90 households for the 200-household practice.

The RMD Calculation

The RMD formula is mechanical: prior-year-end (Dec 31 of the year before the RMD year) account balance divided by the applicable IRS table life-expectancy factor. The Uniform Lifetime Table applies to most IRA owners taking their own RMDs. The Single Life Table applies to inherited IRA beneficiaries with life-expectancy schedules. The Joint Life Table applies when the sole beneficiary is a spouse more than 10 years younger.

Uniform Lifetime Table Mechanics

For client age 73 in 2026, the Uniform Lifetime Table factor is approximately 26.5 (the post-2022 updated table). Prior-year-end IRA balance $1.2M / 26.5 = $45,283 RMD due by Dec 31, 2026. For client age 80, factor approximately 20.2; $1.2M / 20.2 = $59,406 RMD. For client age 95, factor approximately 8.9; $400K / 8.9 = $44,944 RMD. The factor decreases each year (life expectancy shrinks), increasing the RMD percentage of the remaining balance each year as the client ages.

Single Life Table for Inherited IRAs

For an inherited IRA where the beneficiary is on a life-expectancy schedule (typically inherited before 2020 under the old stretch rules, or a post-2020 inherited IRA held by an eligible designated beneficiary — surviving spouse who elected to remain as beneficiary, minor child of decedent until age of majority, disabled or chronically ill, or any individual not more than 10 years younger than decedent), the Single Life Table applies. Factor for age 60 ~ 27.1; for age 70 ~ 18.8; for age 80 ~ 11.2. Once the beneficiary's life-expectancy clock starts, the factor decreases by 1 each subsequent year (not by table-step lookup).

10-Year Rule Mechanics for Non-EDB Beneficiaries

Under SECURE 2.0, non-eligible designated beneficiaries (most adult children, grandchildren, friends, trusts that don't qualify for see-through status) of post-2020 decedents must withdraw the entire inherited IRA balance by December 31 of the 10th year after the decedent's death. The recently-clarified annual-RMD-during-10-year-window question (which the L3 Ch3 L2 lesson develops in depth) requires annual RMDs during years 1-9 of the window if the decedent was in pay status (had started their own RMDs before death); annual RMDs are not required in years 1-9 if decedent died before RMD age. Final-year complete-distribution required regardless. The L3 Ch3 L1 calendar surfaces these inherited-IRA households with the year of inheritance, the decedent's RMD-status-at-death, and the 10-year deadline.

Cross-Check Against Custodian RMD-Tracker

Schwab, Fidelity, Pershing, BNY Mellon, and Edward Jones all maintain RMD-tracker data for client accounts. The custodian's calculation pulls Dec 31 prior-year balance, applies the IRS table factor (Uniform Lifetime or Single Life), and produces an RMD-required-amount for the year. The cross-check is the source-system verification: the AI workflow's calculated RMD should match the custodian's RMD-tracker. Divergences trigger investigation.

The known custodian-RMD-tracker limitations: (a) inherited-IRA beneficiary classification can be wrong (custodian may default to non-EDB when the beneficiary is actually EDB; or may miss the still-working exception); (b) mid-year balance corrections, rollover-ins, or beneficiary changes can produce stale tracker data; (c) external-account balances (an IRA at a competitor custodian) need to be aggregated by the firm — the host custodian only sees its own balance; (d) the still-working exception for §401(k) (RMD deferred while still employed for non-5%-owner) requires employer confirmation that the custodian may not have; (e) §403(b) accumulations under pre-1987 grandfather provisions have special rules the custodian's automated tracker may not handle correctly. The verification protocol catches these divergences before December 31 deadline.

The RMD Calendar Output

The AI workflow produces a structured-JSON output per the firm's rmd-calendar-schema v2.0. Per-household fields: household_id, client_age_as_of_dec_31, RMD_eligibility_basis (own_age, inherited_pre_2020_stretch, inherited_post_2020_10yr_with_annual, inherited_post_2020_10yr_no_annual, inherited_roth_10yr), source_account_inventory (account_id, custodian, account_type, prior_year_end_balance), applicable_table (Uniform Lifetime / Single Life / Joint Life), table_factor, calculated_RMD, custodian_tracker_RMD, divergence_flag (Y/N + amount + reason), deadline_date (Dec 31 ongoing, April 1 first-RMD if applicable), destination_preference (cash to checking, in-kind transfer to taxable brokerage, QCD direction under §408(d)(8) for 70.5+ charitable household), prior_year_distributions_taken, remaining_due, recommended_execution_date (sufficient lead time before deadline), QCD_eligibility_flag, IRMAA_impact_year_plus_2_flag, coordination_dependency (Roth conversion timing, capital gain harvest, charitable bunching).

The output is reviewed by the senior advisor at population level: divergences flagged for investigation, QCD-eligible charitable households flagged for L2 Ch4 L1 QCD election workflow integration, IRMAA-tier-cliff households flagged for sizing review, coordination dependencies flagged for cross-workflow integration. The senior advisor authorizes per-household RMD execution; the paraplanner/CSA processes through the custodian forms with documented signoff per Reg BI Care Obligation under §240.15l-1(a)(2)(ii) for the RIA's fiduciary duty.

The Handoff Diagram and Three-Tier Verification

The L3 Ch1 L2 handoff diagram for RMD calendar: trigger = annual Q4 batch run (typically October 1 to allow execution time); inputs = Wealthbox household population, custodian feeds (Schwab/Fidelity/Pershing/BNY Mellon/Edward Jones) with Dec 31 prior-year balances and RMD-tracker data, IRS table publications (current Uniform Lifetime and Single Life), inherited-IRA decedent records, prior-year 1099-R history, beneficiary classification source documents; AI mode = extract (table-factor lookup, balance pull) feeding propose (per-household RMD recommendation with destination); output = structured JSON per schema v2.0; tool stack = Wealthbox + custodian feeds + AI workflow with rmd-system-prompt v2.8 and few-shot library v1.4 + cross-check validator script; verification = three-tier per L3 Ch1 L3.

Source-system tier: prior-year-end balance from custodian feed matches AI extraction; table factor matches current published IRS table for client's age (year-of-RMD age, not current age); custodian RMD-tracker matches calculated RMD within tolerance ($50 typical); prior-year distributions from 1099-R history match Wealthbox CRM activity log. Regulatory tier: IRC §401(a)(9) SECURE 2.0 ages (73 / 75 in 2033, not 70.5 nor 72) correctly applied; inherited-IRA 10-year rule classification correct (eligible designated beneficiary vs non-EDB); QCD authorization §408(d)(8) properly applied for 70.5+ households; April 1 first-RMD-election deadline if applicable; still-working exception for §401(k) verified; pre-1987 §403(b) grandfather if applicable; §4974 excise-tax exposure quantified if RMD missed. Client-fit tier: destination preference confirmed against prior-meeting transcripts and IPS; QCD candidacy aligned with client's documented charitable orientation; IRMAA two-year-lookback impact reconciled against client's 2028 Medicare position; coordination with L3 Ch2 Roth conversion workflow if applicable; coordination with L3 Ch5 estate beneficiary review.

The Still-Working Exception and SECURE 2.0 Nuances

The still-working exception applies to §401(k) RMDs (and similar workplace plans) when the participant is still employed by the plan sponsor and is not a 5%-owner. Under the exception, the participant can defer the §401(k) RMD until the year of actual retirement. The exception does NOT apply to IRA RMDs (which always begin at age 73 regardless of employment status) or to §401(k) plans of prior employers (RMDs required from those at age 73). The L3 Ch3 L1 calendar verifies employment status from Wealthbox + prior-meeting transcripts and confirms the still-working exception applies before deferring the §401(k) RMD.

SECURE 2.0 introduced additional nuances the calendar must handle: (a) the RMD-age step-up to 75 in 2033 (clients born in 1960 or later transition); (b) the §4974 excise tax reduction from 50% to 25% (and to 10% if corrected within the correction window of approximately 2 years); (c) the elimination of the pre-death RMD for §401(k) Roth accounts effective 2024; (d) the surviving-spouse-as-sole-beneficiary election to treat the inherited IRA as the spouse's own (often preferred for delaying RMDs); (e) the SECURE 2.0 expansion of the QCD limit (indexed for inflation, $108K for 2026); (f) the one-time QCD-to-CRT election under §408(d)(8) special provision.

The QCD Coordination — IRC §408(d)(8)

For clients age 70.5+ with charitable orientation, the QCD election under §408(d)(8) directly satisfies the RMD while reducing AGI (vs taking the RMD as taxable income and donating the equivalent as itemized deduction, which doesn't reduce AGI). The QCD limit for 2026 is approximately $108,000 per individual (each spouse if separate IRAs). The QCD directly satisfies the RMD up to the QCD amount; any RMD above the QCD must be taken as taxable distribution. The L3 Ch3 L1 calendar's QCD coordination flags QCD-eligible households (70.5+, charitable orientation documented in IPS or prior meetings, Wealthbox flagged for QCD candidacy) and integrates with the L2 Ch4 L1 QCD election workflow that produces the donor-letter package and the custodian QCD election form.

The QCD's AGI-reduction benefit cascades: lower AGI = lower Medicare IRMAA tier (two years later), lower taxable-Social-Security portion (provisional income), reduced exposure to NIIT thresholds, reduced state-tax (in states that tax retirement income). The L3 Ch3 L1 calendar's IRMAA-impact-year-plus-2 flag identifies households where QCD coordination is high-leverage strategy.

The Execution and Archive

Execution: paraplanner generates the custodian RMD distribution form (Schwab IRA Distribution Form, Fidelity Distribution Request, Pershing Distribution Request) with the calculated amount, source account, destination (checking account ACH or in-kind transfer or QCD direction with charity TIN), federal withholding election (often 10% default — RMD is taxable income and withholding makes Q4 tax-payment automatic; senior-advisor judgment may modify based on client's overall tax-planning posture). Senior-advisor signs per Reg BI Care Obligation (RIA fiduciary duty) and the form submits to custodian. Custodian processes typically within 5-10 business days. 1099-R issues January following year with Box 1 gross distribution, Box 2a taxable amount, Box 4 withholding, Box 7 distribution code 7 (normal distribution; not 2 for RMD since age is over 59.5).

Archive: Smarsh package per household per RMD year — RMD calendar output JSON, source-system verification log (custodian balance, table factor, tracker match), regulatory verification log (§401(a)(9), §408(d)(8) QCD if applicable, ages confirmed), client-fit verification log (destination preference, QCD candidacy, IRMAA impact), senior-advisor signoff narrative, custodian form, post-execution confirmation, 1099-R, supervisory review entry. Tagged-Markdown metadata: document_type=rmd_execution_2026, household_id, RMD_amount, deadline, destination, advisor IDs, retention_policy=rule_4511_5yr_practical.

Key Takeaways

• The RMD population at L3 scale covers clients age 73+ (SECURE 2.0 §401(a)(9), stepping to 75 in 2033), inherited IRA holders under 10-year rule, pre-2020 stretch-IRA beneficiaries, still-working exception §401(k) holders, and §403(b)/§457 plans. Typical 200-household practice surfaces 60-90 RMD-bearing households.
• The RMD calculation uses the Uniform Lifetime Table for most IRA owners, the Single Life Table for inherited beneficiaries with life-expectancy schedules, and the Joint Life Table for sole-beneficiary spouses more than 10 years younger. Factor decreases each year, increasing RMD percentage as client ages.
• Cross-check against custodian RMD-tracker catches divergences: misclassified inherited beneficiaries, stale tracker data, external-account aggregation gaps, still-working-exception status, pre-1987 §403(b) grandfather provisions.
• The structured-JSON calendar output per rmd-calendar-schema v2.0 captures eligibility basis, source accounts, table factor, calculated RMD, custodian tracker, divergence flags, deadline, destination preference, QCD eligibility, IRMAA impact, coordination dependencies.
• QCD coordination under §408(d)(8) directly satisfies RMD while reducing AGI for 70.5+ charitable households. 2026 limit approximately $108K per individual. Cascading benefits: lower IRMAA, lower Social Security taxable portion, NIIT thresholds, state tax.
• SECURE 2.0 nuances: §4974 excise tax reduced from 50% to 25% (and to 10% if corrected within correction window); §401(k) Roth pre-death RMD eliminated 2024; surviving-spouse-sole-beneficiary election to treat as own IRA; expanded QCD limit indexed for inflation.
• Three-tier verification at workflow scale: source-system (custodian balance + table factor + tracker match + 1099-R history), regulatory (§401(a)(9) ages, §408(d)(8) QCD, inherited-IRA classification, still-working exception, April 1 election), client-fit (destination, QCD candidacy, IRMAA, coordination with L3 Ch2 Roth and L3 Ch5 estate).
• Recovered hours typical 60-100 per RMD-season for 200-household practice (matching the L3 Ch1 L1 audit's 280 hours x 0.8 leverage = 224 recoverable target, with much of the remainder coming from paraplanner-side workflow). The miss-an-RMD cost under §4974 (25% excise tax, or 10% if corrected) is enormous; the calendar exists because the mechanical nature of the calculation makes AI excellent at it while the financial stakes make accuracy essential.