Penalties & Relief

Missed RMD Penalty Waiver: How to Fix a Missed Required Minimum Distribution (2025)

By Angeline Balsitis, EA · Reviewed by Melissa Ly, Chief Tax Officer · Updated October 21, 2025 · Editorial Standards

What an RMD is — and why missing one triggers a penalty

A required minimum distribution is the amount the IRS makes you withdraw from most retirement accounts each year once you reach RMD age (now 73 under current law). The rule applies to traditional IRAs, 401(k)s, 403(b)s, and most inherited accounts. Roth IRAs you own are not subject to RMDs during your lifetime.

The government gave you a tax break when that money went in. The RMD rule is how it eventually collects tax on the way out. If you don't take the full RMD by the deadline (usually December 31, or April 1 of the next year for your very first RMD), the law imposes an excise tax on the amount you failed to withdraw. That's the penalty people are scrambling to fix.

The good news: Congress built in forgiveness. The penalty was lowered, and the IRS has a long history of waiving it when you act in good faith. You can read the official rules on the IRS required minimum distributions FAQs.

How big is the missed RMD penalty?

Here's the math, with a worked example. Say your RMD for the year was $20,000 and you withdrew nothing:

• Old rule (before 2023): 50% excise tax = $10,000.
• Current rule (SECURE 2.0): 25% excise tax = $5,000.
• Corrected within the two-year window: 10% excise tax = $2,000.
• Waiver granted for reasonable cause: $0.

That's why the steps below matter so much. The difference between doing nothing and acting correctly can be thousands of dollars on a single missed distribution.

What happens if you ignore it

An unaddressed missed RMD doesn't quietly disappear. The IRS receives reports from your account custodian, and the system is automated and patient. Left alone, here's how it tends to escalate:

1. The shortfall sits unreported. Without a Form 5329 on file, the IRS may not start the clock — but the missed distribution and potential penalty remain on the table for years.
2. The IRS assesses the excise tax. Once it does, the favorable 10% reduced rate is no longer available, and interest can be added on top.
3. A balance-due notice arrives. This moves into normal collections — the same CP14 and reminder notices used for any unpaid tax.
4. Standard collection enforcement. If the balance stays unpaid, it can eventually lead to liens and levies, just like any other tax debt.

The fix is far simpler than the fallout. Filing on your own terms, with a clean explanation, is what keeps a missed RMD a paperwork problem instead of a collection problem.

How to request a missed RMD penalty waiver, step by step

1. Take the missed distribution now. Call your IRA or plan custodian and withdraw the full amount you should have taken. Do this before you file anything — the IRS wants to see that the shortfall is already cured.
2. Figure out the exact shortfall. This is the RMD you owed minus anything you actually withdrew for that year. If you missed more than one year, you'll handle each year separately.
3. Get the right year's Form 5329. You file Form 5329 for the year you missed the RMD — not the year you're filing in. The penalty lives in Part IX (additional tax on excess accumulations in qualified retirement plans).
4. Report the shortfall and request the waiver. Follow the form instructions to enter the amount you should have taken, then write "RC" (for reasonable cause) and the dollar amount you want waived on the dotted line next to the additional-tax line. Enter the result the instructions tell you to — when you're requesting a full waiver, you generally don't pay the tax while the IRS reviews.
5. Attach a short reasonable-cause statement. One page is plenty. Explain what happened, why it was an honest mistake, and the date you took the corrective distribution. Calm and specific beats long and emotional.
6. Keep proof. Save the custodian's confirmation of the make-up withdrawal, your statement, and a copy of the filed Form 5329. If the IRS later questions it, this is your evidence.

If you already filed your return for that year without the form, you can usually file Form 5329 by itself. The same reasonable-cause approach used for a reasonable-cause penalty abatement applies here — your explanation is the heart of the request.

What makes a strong reasonable-cause statement

The IRS isn't looking for a perfect excuse — it's looking for honesty and a prompt fix. Reasons that commonly work include:

• Serious illness, hospitalization, or a disability that interrupted your finances.
• A death in the family, especially when you inherited an account and didn't know the RMD rules applied.
• Incorrect or missing information from your custodian or advisor.
• A clerical or processing error — a withdrawal request that never went through.
• Genuine confusion after rules changed or after a move between accounts.

What ties them together: the mistake was honest, and you corrected it as soon as you reasonably could. If you also need to remove or recover penalties on related tax, the Form 843 process is a separate tool worth knowing about. And if the IRS won't budge on a fair request, the Taxpayer Advocate Service can help when normal channels stall.

A quick word on the people promising "guaranteed" fixes

Anyone who guarantees the IRS will waive your penalty before reviewing your facts is overselling. The waiver is discretionary — it depends on your situation, your timing, and your explanation. The honest truth is that most well-documented, quickly corrected misses go smoothly. But "may qualify" is the right phrase, not "guaranteed."

Missed RMD penalty waiver: your questions, answered

This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.

Related: Reasonable-cause penalty abatement · Form 843 walkthrough · When and how to use the Taxpayer Advocate Service · or browse all guides.