Missed Your RMD in December? Here's What to Do.

Required minimum distributions (RMDs) from traditional IRAs and 401(k)s are generally due by Dec. 31 each year (first RMD may be deferred to April 1 after turning 73); failing to take an RMD can incur a 25% excise tax on the missed amount. Taxpayers who missed a 2026 RMD can file Form 5329 to report the shortfall and request penalty abatement by demonstrating reasonable error and corrective action, and advisers should consider automatic withdrawals to avoid repeat penalties.

Analysis

Market structure: Annual RMD rules (Dec. 31 deadline; first-RMD defer to Apr. 1) create predictable, concentrated liquidity events that favor custodians, tax-software and retirement-platform vendors (custody, automated withdrawals, Roth-conversion tooling). Winners: SCHW, SSNC/FISV, BLK, INTU — firms that can capture flows into cash-sweep or advisory fees; losers: tax-inefficient active small-cap funds and advisors without automated RMD workflows who face client churn and penalty risk (25% penalty amplifies urgency).

Risk assessment: Tail risks include legislative changes to RMD ages/penalties, large-scale IRS guidance shifts, or operational failures at major custodians causing mass Form 5329 filings. Time horizons: immediate (Dec–Jan, Apr) for flow-induced price moves, short-term (weeks–months) for revenue bumps to fintech/tax vendors, long-term (years) for demographic-driven recurring RMD volume. Hidden dependency: equity sell pressure correlates with market drawdowns—RMD selling amplifies downside in stressed markets.

Trade implications: Favor platform and tax-tech equities for 6–12 month total-return trades; use short-dated puts on small-cap ETFs (IWM) around Dec–Jan and late-March to hedge anticipated selling spikes. Relative-value: long large-cap asset managers/ETF issuers (BLK, IVV/VOO exposure) vs short small-cap index to capture rotation into cash or broad-market ETFs during RMD windows.

Contrarian angles: Market underestimates that automation is low-margin but sticky—vendor revenue is gradual, not immediate windfall; tax complexity (Form 5329, waiver requests) favors Intuit/paid-advisor channels more than robo platforms. If Roth-conversion advisory accelerates, custodial fee pools may shrink long-term, capping multi-year upside for pure- custody plays.

Key Decisions for Investors

• Establish a 2–3% long position in SCHW (Charles Schwab) within 30 days to capture higher cash-sweep balances and fee retention from RMD automation; target +12% in 12 months, stop-loss -12%.
• Initiate a 1–2% long in INTU (Intuit) over the next 45 days to monetize increased tax-prep/Form 5329 and Roth-conversion demand; target +15% in 9–12 months, trim if quarterly tax-season revenue gains are <5% vs. consensus.
• Buy a defined-risk put spread on IWM for March expiry as tactical hedge: buy 2% OTM puts and sell 6% OTM puts (size 0.5–1% portfolio) to protect against Dec–Jan/Apr RMD-driven small-cap selling.
• Pair trade: long BLK (1–2%) vs short IWM (1–2%) for 3–6 months to exploit rotation into large-cap ETFs/managed funds during RMD windows; close if BLK underperforms peer median by >6% over 60 days.
• Add a 0.5–1% tactical long in SSNC or FISV for 6–12 months to play custody/automation software demand; exit if implementation contract wins do not materialize within 9 months.