Missed RMD Penalty: What It Costs and How to Fix It 

If you just realized you missed an RMD, take a breath. This is one of the most common retirement-account mistakes, and the rules are more forgiving than most people expect.

Quick Answer

If you miss all or part of a required minimum distribution (RMD), the IRS can charge 25% of the amount you should have withdrawn. The rate drops to 10% if you correct it in time. The IRS may waive part or all of the tax for reasonable error. The fix: withdraw the missing amount now, file Form 5329, and attach a short explanation.

The Retired.com View

RMDs used to mean one account and one number. Today many retirees hold a traditional IRA, an old 401(k), an inherited IRA, and a self-directed IRA with gold, silver or real estate. Each can follow different rules. A missed RMD is increasingly a complexity problem, not just a memory problem. This guide covers the penalty first, then the situations that make mistakes more likely.  

How Much Is the Penalty for Missing an RMD?

The penalty is an excise tax on the shortfall, not on your whole account. The shortfall is the difference between what you were required to take and what you actually took. The rate is 25%, or 10% if corrected in time. Traditional IRA RMDs are generally taxed as ordinary income, subject to any basis you have and other exceptions. The penalty is a separate charge on top of that. 

You may still see 50% quoted on older websites. That was the rate before 2023. SECURE 2.0 cut it to 25%, so check the date on anything you read. 

How Do You Get the Penalty Down to 10%?

You must do two things inside a “correction window.” First, withdraw the shortfall. Second, submit a return that reports the additional tax. The window closes on the earliest of three dates: the IRS mails a deficiency notice, the IRS assesses the tax, or the last day of the second tax year that starts after the year the tax applies. 

Here is what that means in practice. Say you miss your 2026 RMD, which was due December 31, 2026. If you file on a calendar year, your window runs through December 31, 2028, unless the IRS acts sooner.

Illustration for a missed 2026 RMD, calendar-year taxpayer. The window ends sooner if the IRS mails a deficiency notice or assesses the tax. 

Watch out: a late fix does not count toward this year 

IRS proposed rules say that if you correct a missed RMD in a later year, that later year’s RMD must be taken in addition to the corrective withdrawal. Take two distributions, not one. 

Steps You Can Take If You Missed an RMD

The IRS describes the process below for correcting a missed required minimum distribution. This is general information, not tax advice. A tax advisor can explain how it applies to a specific situation.  

1. Withdrawing the missing amount. The IRS generally expects the shortfall to be distributed. People commonly confer with a tax advisor before taking the withdrawal. 

2. Where the forms are located. The excise tax is reported on Form 5329 for the tax year in which the RMD was missed, not the current year’s form. The Instructions for Form 5329 explain Part IX, lines 52 through 55, and how the form is filed with that year’s return. 

3. What the form requires. To request a waiver for reasonable error, the form instructions call for “RC” (reasonable cause) and the amount to be waived in parentheses next to line 54. The waived amount is subtracted from the shortfall, and the result is entered on line 54. 

4. What the IRS requires for a waiver. According to the IRS RMD FAQs, a waiver request includes a statement explaining the reason for the shortfall and the steps taken to correct it. 

5. What happens next. The IRS decides waiver requests, and the outcome is not guaranteed. If a waiver is granted, no tax is owed on the waived amount. Otherwise, the IRS generally sends a notice stating the amount due. 

Will the IRS Waive the Penalty?

It can, but it is not automatic. The IRS may waive the tax if you show the shortfall came from reasonable error and you are taking reasonable steps to fix it. The IRS reviews your explanation and decides. No one can promise the outcome. 

Automatic relief is narrow. The IRS waived the penalty for certain beneficiaries subject to the 10-year rule for 2021 through 2024, not for all inherited-IRA heirs. 

What If You Missed More Than One Year?

Each missed year carries its own tax, because the tax is figured for the year the RMD was due. That means a separate Form 5329 for each year, using that year’s version of the form, and each year’s shortfall must be calculated separately. Start with the earliest year. For older years the 10% window may be closed, so 25% applies unless waived. Consider a CPA. 

Why Having Multiple Retirement Accounts Can Increase Your RMD Risk

Picture a 75-year-old with four accounts: a traditional IRA, a self-directed IRA holding precious metals, a former employer’s 401(k), and an inherited IRA. Each account’s RMD is figured on its own balance. But the IRS lets you combine only certain accounts when you take the money.

Illustration only. Balances and divisor are examples; the inherited IRA’s requirement depends on its own rules. 

Here is how it goes wrong. She withdraws $31,000 from the traditional IRA and assumes she is done, because her IRA and 401(k) RMDs add up to $30,488. But the two IRAs together required only $20,325, the extra IRA money does not carry over, and 401(k) plans cannot be aggregated with IRAs. Her 401(k) is short by $10,163, a potential penalty of about $2,541 at 25%. The inherited IRA has its own requirement too. 

A few habits help. Keep a one-page list of every account, its RMD, and which accounts may be combined. Ask whether moving an old 401(k) into an IRA would simplify things, remembering that the year’s RMD cannot be rolled over, so take it first.  

What If Your Retirement Account Holds Illiquid Assets?

Holding alternative assets does not eliminate the RMD. An IRA with illiquid assets still has the same requirement, so you need a plan for how the distribution will be paid. If your self-directed IRA holds physical gold or silver, real estate, or other hard-to-sell assets, the year-end scramble is a common source of shortfalls. 

These are different approaches with different tax and operational effects, so decide early. Our guide to self-directed IRA RMDs covers four ways to pay, valuation rules and a year-round calendar. 

Why Do People Miss RMDs? 

Not every shortfall is a mistake. A National Tax Journal study of about 1.8 million IRA holders from 2000 to 2013 estimated that roughly half would prefer to withdraw less than the required minimum. So misses come from three groups: people who forget, people who misunderstand the rules, and people who do not need the money. The study is older, so treat it as background, not a current missed-RMD rate. 

Most errors trace back to a handful of traps. The IRS says the account owner is ultimately responsible for the right amount, even when a custodian does the math. 

Your IRA custodian reports account information to the IRS on Form 5498, including a flag showing whether an RMD is required. Distributions are reported separately on Form 1099-R. The forms do not necessarily show whether you met your exact RMD, but the information can help identify discrepancies. Do not assume a missed distribution will go unnoticed.

What About Inherited IRAs? 

Inherited accounts follow different rules, and the answer depends on the facts. Did the original owner die before or after their required beginning date? Is the heir an eligible designated beneficiary (a surviving spouse, minor child, disabled or chronically ill person, or someone not more than 10 years younger), another individual, a trust, or an estate? Does the 10-year rule apply? 

For example, a beneficiary who is not an eligible designated beneficiary generally must take annual distributions when the owner died after their required beginning date, while also emptying the account by the end of the 10-year period. Annual RMDs are not universal. A missed inherited-IRA RMD can carry the same penalty, so confirm your category before assuming either way. 

Can a Late RMD Affect More Than Your Tax Penalty?

Yes. The penalty is only part of the cost. A corrective distribution from a traditional IRA is generally taxable income in the year you take it, subject to any basis. If you are catching up and also taking the current year’s RMD, both land in the same year. Depending on your situation, that extra income could: 

• Push part of your income into a higher tax bracket. 

• Increase the taxable share of your Social Security benefits, up to 85% depending on combined income. 

• Raise your Medicare premiums through IRMAA, two years later. 

Sources: CMS (2026 premiums) and SSA (two-year income lookback). 

Here is an illustration. A single retiree with $75,000 of other income takes a $20,000 catch-up RMD and a $20,000 current-year RMD in the same year. Income reaches $115,000, past the $109,000 line, which can add about $974 a year in Part B premiums two years later. These effects are not automatic and depend on your account and circumstances. That is why correcting promptly and consulting a qualified tax professional matters. 

New in 2027: The IRS Is Expanding Its IRA Error-Correction Program 

In October 2026, the IRS issued Revenue Procedure 2026-33, creating the IRA Compliance Resolution System (ICRS). It takes effect May 1, 2027, and missed RMDs are one of the failures it covers. 

Who qualifies. This is not blanket forgiveness. The RMD must fall short because of a failure by a “service provider,” a term that includes an IRA custodian, financial planner, adviser, CPA or attorney. That provider must have had established practices and procedures reasonably designed to promote compliance, routinely followed, and the failure must have come from an oversight or mistake in applying them. 

How it works. Under the program’s voluntary correction process, the custodian distributes the missed RMDs with earnings, for every affected year, and reports them as taxable. The submission must request an excise-tax waiver and explain what went wrong, and the IRS decides. 

If you simply forgot. Do not assume you qualify. A missed RMD caused by your own oversight is not a service-provider failure. The Form 5329 waiver route above remains your path.

How to Avoid Missing Your RMD Next Year 

• Set up automatic RMD withdrawals with each custodian. 

• Put a December 1 reminder on your calendar to confirm every account is done. 

• Estimate each account’s amount with the Retired.com RMD calculator, and learn your start date in our RMD age guide. 

Fix It Early, Then Make It Automatic 

A missed RMD is usually fixable. Withdraw the money, file Form 5329, and explain what happened. With more accounts and more kinds of assets than ever, it is also usually preventable if you build a simple system. Run your numbers in the Retired.com RMD calculator before your next deadline. This article is educational and is not tax or legal advice, please consult a professional advisor to discuss your particular circumstances. 

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