Missed Your RMD? The Penalty and How to Fix It in 2026

If you missed a required minimum distribution, the penalty is 25% of the amount you should have withdrawn but did not. SECURE 2.0 reduced this from the former 50% rate and added a further reduction to 10% if you correct the shortfall within two years. You can also request a full waiver from the IRS by showing reasonable cause on Form 5329. Here is how the penalty works and the steps to fix a missed RMD.

The penalty rate: 25% (or 10%)

The excise tax on insufficient retirement plan distributions applies to the shortfall, which is the difference between what you were required to withdraw and what you actually withdrew. If you took no distribution at all, the shortfall equals the full RMD amount.

For example, if your RMD for 2026 is $16,260 (based on a $400,000 balance at age 75 with a distribution period of 24.6) and you withdraw nothing:

If you withdrew some but not all of the required amount, the penalty applies only to the difference. Taking $10,000 out of a $16,260 requirement would produce a shortfall of $6,260 and a penalty of $1,565.

How SECURE 2.0 reduced the penalty

Before SECURE 2.0 (Pub. L. 117-328, Section 302), the excise tax rate for missed RMDs was 50% of the shortfall. SECURE 2.0 made two changes, effective for tax years beginning after December 29, 2022:

• Standard rate reduced to 25%: The base penalty dropped from 50% to 25% of the shortfall.
• Corrected-within-two-years rate of 10%: If you take the missed distribution and file a corrected tax return within two years of the end of the year the penalty was imposed, the rate drops further to 10%.

The two-year correction window is automatic. You do not need to request it. If you take the missed RMD and file the corrected Form 5329 within the window, the 10% rate applies by operation of law.

Correcting a missed RMD

The correction process involves three steps:

1. Take the missed distribution immediately: Contact your IRA custodian or plan administrator and withdraw at least the shortfall amount. There is no deadline for when you must do this, but the sooner you act, the stronger your case for a penalty waiver.
2. File Form 5329: This form reports the excise tax on the shortfall. If you are requesting a waiver (see below), you file the form with $0 in penalty and attach a letter of explanation.
3. Pay or request waiver of the penalty: You can pay the penalty and move on, or you can request a reasonable-cause waiver (the more common approach for first-time or inadvertent failures).

If you missed RMDs for multiple years, you need to file a separate Form 5329 for each year. Take all missed distributions as soon as possible before filing.

Form 5329 and the reasonable-cause waiver

The IRS has the authority to waive the excise tax entirely if you can demonstrate that the shortfall was due to "reasonable cause" and that you have taken (or are taking) steps to remedy the situation. Common reasonable-cause arguments include:

• Illness or incapacity that prevented you from managing your finances
• An error by your financial institution (e.g., they failed to process an automatic distribution)
• Misunderstanding of the first-year deadline or the still-working exception
• Death of a spouse who handled financial matters
• A good-faith mistake, such as miscalculating the RMD amount

To request the waiver, file Form 5329 with the shortfall amount reported on the applicable line, enter $0 as the penalty amount, and attach a written explanation. Include documentation of the reasonable cause and evidence that you have corrected the shortfall by taking the distribution.

The IRS has historically been generous with reasonable-cause waivers, particularly for first-time errors, elderly taxpayers, and situations where the taxpayer voluntarily corrected the mistake before the IRS discovered it.

Common scenarios that lead to missed RMDs

Understanding why RMDs are missed can help you avoid the problem:

• First-year confusion: The April 1 extended deadline for the first RMD creates confusion. Some taxpayers think they have an extra year entirely, not realizing they still owe a second RMD by December 31 of the same year.
• Multiple accounts: If you have several IRAs at different institutions, you must calculate the RMD for each account based on its December 31 balance. You can take the total from any combination of IRAs, but you must include every account in the calculation.
• Inherited accounts: Inherited IRA rules differ from owner-IRA rules. Beneficiaries subject to the 10-year rule may not realize they also have annual distribution requirements if the original owner had already begun RMDs.
• Year-end timing: Requesting a distribution in late December does not guarantee it will be processed before year-end. Plan ahead: most advisors recommend completing RMD withdrawals by early December to allow processing time.

Use the RMD calculator to verify your required distribution amount for 2026. If you believe you may have missed a prior-year RMD, consult a tax professional who can help you file the corrected forms and request a waiver.