The penalty for missing a required minimum distribution (RMD) is 25% of the amount you failed to withdraw. If you correct the mistake quickly — taking the missed RMD and filing Form 5329 within the IRS correction window — the penalty drops to 10%. If the IRS grants a full waiver for reasonable error, you owe $0 in excise tax. SECURE 2.0 (effective 2023) cut the prior 50% rate in half, but the penalty still represents a significant cost for an avoidable mistake.
Quick numbers: Your RMD was $20,000. You forgot to take it.
| Scenario | Excise Tax | Income Tax Owed |
|---|---|---|
| Never corrected | $5,000 (25%) | $20,000 taxable when eventually taken |
| Corrected within window | $2,000 (10%) | $20,000 taxable when taken |
| IRS waiver granted | $0 | $20,000 taxable when taken |
The income tax on the RMD itself is unavoidable in all cases — you always owe ordinary income tax when you take the distribution.
What Is an RMD — Quick Refresher
A required minimum distribution is the minimum amount the IRS requires you to withdraw annually from tax-deferred retirement accounts once you reach your required beginning date (RBD). The rules:
| Rule | Detail |
|---|---|
| RMD start age (2026) | Age 73 (SECURE 2.0; was 72 before 2023) |
| First RMD deadline | April 1 of the year after you turn 73 |
| Subsequent RMDs | December 31 each year |
| Accounts subject to RMDs | Traditional IRA, SEP IRA, SIMPLE IRA, 401(k), 403(b), 457(b) |
| Roth IRA | Exempt from RMDs during owner’s lifetime |
| Inherited IRAs | Subject to separate rules (see below) |
For how to calculate your annual RMD amount, see the RMD calculator and how to calculate your RMD.
The RMD Penalty Explained: 25% and 10% Rates
When the 25% Penalty Applies
The 25% excise tax applies to any RMD shortfall that is not corrected within the IRS correction window. The penalty is calculated on the amount not taken, not your full account balance.
When the Penalty Drops to 10%
SECURE 2.0 created a reduced 10% penalty if you take the missed RMD during the correction window:
- Correction window: The period beginning on the date the excise tax applies and ending on the earlier of:
- The date the IRS mails a notice of deficiency, OR
- The date the IRS assesses the tax
In practical terms, for most taxpayers this means correcting the missed RMD and filing Form 5329 within 2 years of the missed RMD year — typically by the tax filing deadline (plus extensions) for the second year after the miss.
| Missed RMD Year | Correction Deadline (Typical) | Penalty if Corrected |
|---|---|---|
| 2024 | By October 15, 2026 (with extension) | 10% |
| 2025 | By October 15, 2027 (with extension) | 10% |
| 2026 | By October 15, 2028 (with extension) | 10% |
Penalty Calculation Example
Scenario: Your 2026 RMD was $22,000. You withdrew $0.
| Penalty Scenario | Calculation | Amount Owed |
|---|---|---|
| 25% (no correction) | 25% × $22,000 | $5,500 |
| 10% (corrected in time) | 10% × $22,000 | $2,200 |
| Partial miss ($8,000 short) at 25% | 25% × $8,000 | $2,000 |
| Partial miss ($8,000 short) at 10% | 10% × $8,000 | $800 |
The excise tax is paid in addition to ordinary income tax on the RMD itself.
How to Fix a Missed RMD — Step by Step
Step 1: Take the Missed Distribution Immediately
Withdraw the full RMD shortfall as soon as you realize the error. You owe income tax on this withdrawal in the year you actually take it — not the year it was originally due.
Step 2: Continue Normal Distributions
If you also have an RMD due for the current year, make sure to take that separately. Correcting a prior-year miss does not satisfy the current-year requirement.
Step 3: File Form 5329 for the Missed Year
You must file Form 5329 for each tax year in which an RMD was missed, even if that year’s regular tax return has already been filed.
- If you filed your return and did not include Form 5329, you must file an amended return (Form 1040-X) for that year, or file a standalone Form 5329
- If the return is not yet filed, include Form 5329 with the current-year return
Step 4: Request a Penalty Waiver on Form 5329
In Part IX of Form 5329:
| Line | What to Enter | Notes |
|---|---|---|
| Line 52 | RMD shortfall amount | Amount you failed to take |
| Line 53 | Same shortfall amount | Claimed as “RC” (reasonable cause) |
| Line 54 | $0 | Do not calculate a tax; request waiver |
| Attachment | Written statement | Explain the error and confirm correction |
Your statement should include:
- The reason for the missed RMD (misunderstanding, medical issue, reliance on incorrect custodian information, etc.)
- That you have now taken the corrected distribution
- Steps you have taken to prevent a future miss (e.g., set up automatic distributions)
Step 5: Wait for IRS Response
The IRS will either accept your waiver request (most common outcome for first-time errors with prompt correction) or assess the excise tax. If assessed, you can appeal or pay.
IRS Waiver: Will You Qualify?
The IRS has broad discretion to waive the RMD excise tax under IRC §4974(d) for “reasonable error.” The bar is not high — the IRS routinely approves waivers for:
| Reason | Waiver Likelihood |
|---|---|
| First-time miss, corrected promptly | Very high |
| Misunderstanding of new SECURE 2.0 age rules | Very high |
| Relying on incorrect information from financial institution | High |
| Medical emergency or incapacity | High |
| Confusion about multiple accounts / aggregation rules | High |
| Repeated misses without correction | Low |
| Intentional non-compliance | None |
Key rule: If you qualify for the 10% reduced rate (corrected within the correction window), you may not need a full waiver — you just pay 10% and file Form 5329.
Inherited IRA RMD Penalty Rules
Beneficiaries of inherited IRAs face the same 25%/10% excise tax structure, but the distribution rules are more complex:
| Beneficiary Type | RMD Rule | Penalty Risk |
|---|---|---|
| Eligible Designated Beneficiary (spouse, minor child, disabled person) | Life expectancy rule — annual RMDs | Miss any annual RMD → penalty |
| Non-EDB (most adult children/siblings/trusts) | 10-year rule — full balance by Dec 31 of year 10 | Miss year 10 deadline → 25% of entire remaining balance |
| Successor beneficiary | 10-year rule from original beneficiary’s death | Same |
The 10-year rule trap: Many non-EDB beneficiaries assumed no annual distributions were required under the 10-year rule. The IRS has clarified that if the original owner had already begun RMDs, annual distributions are required during the 10-year period. Missed annual distributions trigger the penalty.
The IRS issued transition relief waiving penalties for inherited IRA beneficiaries who missed 2021–2024 annual distributions due to confusion over SECURE 2.0 rules. Full penalties resumed from 2025.
See the full inherited IRA RMD rules guide for details.
What Happens If You Never Fix a Missed RMD
If you ignore a missed RMD entirely:
- The 25% excise tax continues to apply to the shortfall amount
- The IRS can assess the penalty during a tax audit — there is no statute of limitations on the RMD excise tax if the relevant Form 5329 was never filed
- Interest accrues on unpaid penalties from the original due date
- Successor issues: An unfixed RMD miss can complicate account transfers to heirs, as the missed amount and associated tax liability may pass to the estate
The longer you wait, the fewer options you have. A corrected, waiver-requested miss from 2024 is almost always resolved with $0 penalty. A miss discovered during a 2030 audit may not be.
RMD Aggregation Mistakes That Trigger Penalties
RMD rules allow you to aggregate distributions across multiple accounts of the same type — but the rules differ by account type:
| Account Type | Aggregation Allowed? | Risk |
|---|---|---|
| Traditional IRAs | Yes — take total RMD from any one or combination | Must calculate each account’s RMD, then can take combined amount from any IRA |
| 403(b) accounts | Yes — same rule as IRAs for 403(b)s | Cannot use 403(b) to satisfy IRA RMD or vice versa |
| 401(k) accounts | No — must take RMD from each 401(k) separately | Common miss: assuming aggregation applies |
| Multiple IRAs + 401(k) | No cross-type aggregation | IRA RMD from IRA; 401(k) RMD from that 401(k) |
Example: You have two 401(k)s and one IRA. Your combined RMD is $24,000. You cannot take all $24,000 from the IRA and call it done — each 401(k) must have its own RMD satisfied separately.
Protect Yourself Going Forward
| Action | Benefit |
|---|---|
| Enroll in automatic RMD at your custodian | Eliminates the risk of forgetting |
| Set a December 1 calendar reminder | 30-day buffer before Dec 31 deadline |
| Use the RMD calculator each January | Know your exact amount before year-end |
| Check the RMD age chart if your age is near 73 | Confirm your required beginning date |
| If you have multiple accounts, list each with its RMD amount | Track separately by account type |
Most major custodians — Fidelity, Schwab, Vanguard, and others — offer free automatic RMD enrollment. Once enrolled, the custodian calculates and distributes the required amount without any action from you. This single step eliminates nearly all RMD penalty risk.
If you forgot to take an RMD this year, see the step-by-step guide on what to do if you forgot your RMD.
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