What to do if you can’t make a required minimum distribution at Vanguard

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Vanguard investors have been grappling with partial website outages over the past several days that have blocked some customers from trade confirmations, certain statements and forms.

These interruptions may cause problems for those making year-end transactions, such as required minimum distributions, as there’s a 50% penalty for missing the deadline

“People are frustrated,” said Dan Wiener, co-editor of The Independent Adviser for Vanguard Investors. “When you go to look for information, it’s unavailable.”

This Friday, Dec. 31, marks the 2021 deadline for many moves, such as RMDs, some retirement plan contributions, tax-loss harvesting and more.

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However, as customers log in to make year-end transactions or check mutual fund payouts, many are missing information and struggling to reach phone support.

“This has to be the worst week of the year for this to happen,” Wiener added.

“Vanguard has been made aware of a service interruption involving a third-party mailing and check processing vendor,” a company spokesperson said in a statement, explaining clients may experience delayed mailings or be unable to access certain statements, confirmations and forms. 

“Our teams have been working on this issue around the clock, and our client service representatives are available to help clients who require immediate assistance,” the company said. 

There have been dozens of reported Vanguard outages over the past 24 hours, according to Downdetector, a website tracking real-time service issues.

“There’s nothing you can do at this point except wait on the phone,” said Wiener.

What happens if you miss the deadline for RMDs

It may be nerve-wracking to miss the year-end deadline for RMDs. However, it may still be possible to avoid the 50% penalty by fixing the mistake and applying for a penalty waiver, according to the IRS.

The first step is taking the correct RMD as soon as possible from each account. Then you can file Form 5329 to ask for penalty relief.

You can follow line-by-line instructions for Form 5329 here, or work with a tax professional to avoid mistakes.

The IRS also suggests including a brief letter of explanation, covering your “reasonable error” and steps taken to “remedy the shortfall.”


Jinggo B Danuarta

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