If you’ve missed the deadline for your required minimum distribution (RMD), don’t panic — but don’t ignore it, either. The IRS takes RMDs seriously, and while penalties can be stiff, there are steps you can take to minimize the impact.
What is a required minimum distribution (RMD)?
A required minimum distribution is the minimum amount the IRS requires you to withdraw annually from certain retirement accounts once you reach a specific age. These accounts include traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored retirement plans like 401(k)s.
As of 2025, you must begin taking RMDs by April 1 of the year after you turn 73. Each subsequent RMD is due by December 31 of that calendar year. If you delay your first RMD until April 1, you’ll need to take two distributions in the same year: one for the year you turned 73 and another for the current year.
Why the IRS requires RMDs
The purpose of the RMD rule is to ensure that retirement accounts are eventually taxed. Your contributions come from pretax income, and these accounts generally grow tax-deferred. The government eventually wants its share. RMDs force withdrawals from these accounts, and the withdrawals then become taxable income.
Consequences of missing the required minimum distribution deadline
Missing the deadline for your required minimum distribution used to result in a steep penalty: 50% of the amount you failed to withdraw. However, thanks to the SECURE 2.0 Act, this penalty has been reduced to 25% and, in some cases, to as low as 10% if corrected quickly.
Even so, a 25% penalty on a missed $20,000 RMD means a potential $5,000 bill, not including the income tax still owed on the distribution itself. This makes swift action critical. Here are the steps to take if you’ve missed your required minimum distribution deadline.
Step 1: Contact a tax professional or financial advisor
Your first call should be to a tax accountant or financial advisor. They can help you:
- Calculate the correct RMD amount.
- Confirm whether you truly missed the deadline.
- Assess the tax and penalty implications.
- Advise you on how to fix the issue quickly.
These professionals know how to navigate the rules and can guide you through the process of requesting penalty relief.
Step 2: Take the missed distribution immediately
Even if you’re late, take the missed RMD as soon as you realize the oversight. The IRS generally looks more favorably on people who act quickly. This step won’t eliminate the penalty automatically, but it’s necessary to correct the error and proceed to the next step.
Step 3: Submit IRS Form 5329
To request a waiver of the excise tax penalty, you’ll need to file IRS Form 5329. This form is used to report additional taxes on IRAs and other tax-favored accounts, including penalties for missed RMDs.
Here are some tips for completing and filing the form:
- Download the form from the IRS website.
- Complete Part IX of the form to report the missed RMD.
- Write a letter of explanation, detailing the circumstances that caused the missed deadline and the steps you’ve taken to correct it.
- Attach both the form and the letter to your tax return for the year in which the RMD was missed.
If you’ve already filed your tax return, you can file Form 5329 separately.
Step 4: Understand what happens next
Once you’ve submitted the form, the IRS will review your request for penalty relief. The waiver is not automatic, but if your explanation is reasonable (e.g., illness, clerical error, confusion about the rules) and the missed RMD has been corrected, the IRS often grants the waiver.
There’s no official timeline for how long the IRS takes to respond, but in many cases, you won’t hear back unless the waiver is denied or further information is needed.
How much does missing the required minimum distribution deadline cost?
Let’s say your RMD for the year was $15,000, and you missed it. Here’s how the penalty could play out:
- Initial penalty (25%): $3,750.
- Reduced penalty if corrected promptly (10%): $1,500.
You still owe regular income tax on the $15,000 distribution. If you’re in a 22% tax bracket, that’s an additional $3,300. This means the full cost of missing the deadline could be anywhere from $4,800 to over $7,000.
How to avoid missing the required minimum distribution deadline next time
It’s easy to let the required minimum distribution deadline sneak past, especially if you’re juggling multiple accounts or if this is your first time taking one. Here are some strategies to help you avoid making this mistake again:
- Set calendar reminders well in advance of December 31.
- Consolidate accounts where possible to make RMD management easier.
- Work with a financial advisor who can track deadlines and required amounts.
- Automate your distributions through your account custodian.
If you’re unsure of your RMD amount, most retirement account providers offer RMD calculators or will notify you directly.
Missing the deadline for your required minimum distribution isn’t the end of the world, but it can be costly if not addressed promptly. By acting quickly, taking the missed distribution, and filing Form 5329 with a solid explanation, you can potentially avoid the bulk of the penalty. The key is to stay proactive and informed going forward to prevent it from happening again.
