The IRS Penalty for Missing an RMD
Missing an RMD — or taking less than the required amount — triggers an IRS excise tax under IRC §4974. Under the SECURE 2.0 Act of 2022, the penalty was reduced from the prior 50% rate to 25% of the shortfall (the amount you should have taken but did not).
The shortfall is the difference between what you were required to take and what you actually took. If your RMD was $15,000 and you took nothing, your shortfall is $15,000 and your penalty is $3,750 (25% × $15,000).
If you took a partial distribution, only the untaken portion is subject to the penalty. For example, if your RMD was $15,000 and you took $10,000, your shortfall is $5,000 and the penalty is $1,250.
The excise tax is in addition to ordinary income tax on the distribution when you eventually take it. Missing an RMD does not eliminate the tax obligation — it just delays it while adding a penalty on top.
How to Reduce the Penalty to 10%
SECURE 2.0 also created a correction mechanism: the 25% penalty is reduced to 10% if you take the missed distribution and file a correction within the correction window.
The correction window generally runs from the date the shortfall occurred to the earlier of:
- The date the IRS mails you a deficiency notice, or
- The last day of the second taxable year following the year of the shortfall
In plain terms: if you missed your 2024 RMD, you generally have until December 31, 2026 to take the missed distribution at the reduced 10% penalty rate. After that, the full 25% applies.
Standard penalty: 25% of the shortfall
With timely correction: 10% of the shortfall
With IRS waiver for reasonable cause: Potentially 0%
Filing Form 5329
To report and pay the excise tax, you must file IRS Form 5329 — "Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts" — with your federal income tax return for the year the shortfall occurred.
Part IX of Form 5329 covers the RMD excise tax specifically. You report the amount that should have been distributed, the amount actually distributed, and calculate the 25% (or 10%) tax on the shortfall.
If you are filing Form 5329 for a prior year, you may need to file an amended return (Form 1040-X) for that year, or file a standalone Form 5329 if you did not previously file one.
Requesting a Penalty Waiver for Reasonable Cause
The IRS has the authority to waive the excise tax if the shortfall was due to reasonable cause and the deficiency is made up promptly. The IRS has historically been willing to grant waivers for first-time errors, particularly those caused by:
- Reliance on incorrect information from a financial institution or tax professional
- Serious illness or incapacitation
- Death of a spouse or co-trustee
- Natural disaster or other extraordinary circumstance
- Reasonable misunderstanding of complex rules (particularly for inherited IRAs)
To request a waiver, you attach a written explanation to Form 5329 explaining the cause of the shortfall and the steps taken to correct it. You also write "RC" (Reasonable Cause) and the amount of the waiver request on the appropriate line of the form. The IRS reviews the request and either grants or denies the waiver.
Waiver requests are reviewed case-by-case and are not automatic. Do not rely on receiving a waiver. Always take corrective action promptly and consult a tax professional when requesting penalty abatement.
Special Rules for Inherited IRAs — The 2020–2024 Confusion
Inherited IRA beneficiaries subject to the 10-year rule faced particular confusion about whether annual RMDs were required. The IRS issued penalty waivers for 2021, 2022, 2023, and 2024 for certain inherited IRA beneficiaries while it worked through rulemaking.
Those waivers have expired. Starting in 2025, beneficiaries who inherited from owners who died after their Required Beginning Date must take annual minimum distributions or face the 25% excise tax. If you received an inheritance in 2020–2022 and did not take distributions in prior years, you may wish to consult a tax professional about your options.
How to Prevent Missing an RMD
The most reliable way to avoid missing an RMD is to set up automatic distributions with your financial institution. Most custodians offer the ability to schedule annual RMD withdrawals automatically, either as a lump sum in December or spread across the year in monthly installments.
Other preventive strategies include:
- Calendar reminders — set annual alerts for October to review your RMD calculation before the December 31 deadline
- Aggregate across IRAs strategically — if you have multiple IRAs, you can take the combined RMD from one account, which simplifies tracking
- Work with a financial advisor or CPA — particularly important for inherited IRAs where the rules are more complex
- Use this calculator annually — your RMD changes each year as your balance and age change
Calculate This Year's RMD
Make sure you take the right amount. Our calculator covers original owner accounts, inherited IRAs, and all SECURE Act rule eras — with exact decimal amounts, no rounding.
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