What Happens If You Miss Your RMD Deadline — Penalties and How to Fix It
What are the consequences of missing the RMD deadline and how do I fix it?
Missing your RMD deadline is a serious error, but it is correctable. The SECURE 2.0 Act significantly reduced the penalty — from 50% to 25% of the shortfall — and created a Correction Window where the penalty drops further to 10% if you fix the mistake quickly.
The IRS also has a history of waiving first-time RMD penalties when you demonstrate reasonable cause. Acting promptly is the most important step.
Key RMD Rules
- 1The penalty for a missed RMD is 25% of the amount that should have been withdrawn but was not.
- 2Correction Window: the penalty is reduced to 10% if the missed RMD is taken by the earlier of: (a) the date the IRS issues a deficiency notice, or (b) the end of the second taxable year following the missed RMD year.
- 3To request a penalty waiver: take the missed RMD, file Form 5329 with a written explanation of reasonable cause, and request a waiver.
- 4Attach a letter explaining the reason — first-time errors often result in full or partial waiver.
- 5The corrective RMD is taxable in the year it is actually distributed, not in the year it should have been taken.
- 6File an amended return if needed for the year the RMD should have been taken.
How to File Form 5329 for a Missed RMD
Step 1: Take the missed RMD as soon as possible — deposit it into your taxable account or use it as planned. Step 2: Complete Form 5329, Part IX. Enter the total RMD that should have been taken on Line 52. Enter any amount actually distributed on Line 53. The shortfall is the difference (Line 54). Step 3: Attach a letter explaining the reasonable cause (illness, misunderstanding, reliance on incorrect advice). Step 4: Write "RC" and the amount on Line 55 to request a waiver. Step 5: File Form 5329 with your tax return (or as a standalone filing). If approved, no penalty is assessed.
What Counts as "Reasonable Cause"?
The IRS evaluates waiver requests case by case. Commonly accepted reasons include: serious illness or hospitalization near the deadline, death of a spouse, reliance on incorrect advice from a financial institution or tax professional, and first-time error with prompt correction. Simply forgetting or not knowing about RMDs is generally not sufficient — demonstrate you acted in good faith and corrected the error as soon as you became aware.
Common RMD Mistakes to Avoid
- ⚠Not taking the corrective distribution promptly — every month of delay is another month the penalty accrues (though it is a flat percentage of the shortfall, not ongoing interest).
- ⚠Not filing Form 5329 — simply taking the late distribution without the form does not protect you from the penalty.
- ⚠Waiting for the IRS to contact you — proactive correction before IRS notice is always better and more likely to result in a waiver.
Related RMD Tools & Guides
Frequently Asked Questions
Disclaimer: This content is for informational purposes only and does not constitute tax or financial advice. RMD rules are based on IRS Publication 590-B and SECURE 2.0 Act provisions. Always consult a qualified tax professional or financial advisor for guidance specific to your situation. IRS rules may change; verify current requirements at irs.gov.