Vanguard's $680M Mistake
A single brokerage saw 585,000 clients fail to take their RMDs, facing average penalties of over $1,160. This 'unsexy' friction point is a massive and growing problem for self-directed retirees. Here's the fix.
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⚡ The Signal
A recent report on Vanguard revealed a quiet disaster: 585,000 of its clients failed to take their Required Minimum Distributions (RMDs) last year. This isn't just a minor slip-up. The IRS penalty for this mistake is a brutal 25% of the missed amount, costing those retirees an average of $1,160 each. When a single brokerage has a multi-million dollar compliance problem affecting over half a million people, it's not a user error—it's a massive system failure. The data shows that millions of retirees are making critical financial mistakes, signaling a clear demand for better tools.
🚧 The Problem
We have an aging population that is more self-directed with their investments than ever before. But the financial infrastructure hasn't kept pace. RMDs are a perfect example of "unsexy" friction with expensive consequences. The rules are confusing, the deadlines are easy to miss, and calculations get complicated when retirees hold multiple accounts (a 401(k), a traditional IRA, an inherited IRA) at different institutions. Existing solutions are fragmented—relying on easily-ignored emails from your brokerage, expensive advice from a human financial advisor, or error-prone manual spreadsheets. The result is a compliance tax trap that punishes people for simply forgetting.
🚀 The Solution
Enter Custodia, a set-it-and-forget-it SaaS platform designed for one job: automating RMDs to ensure retirees never pay an IRS penalty again. Custodia securely connects to all of a user's retirement accounts via Plaid. It then automatically calculates the correct total RMD, sends clear reminders, and executes the withdrawals on schedule. It's the digital peace of mind that transforms a complex, anxiety-inducing annual task into a single, automated, and safe transaction.
