Missed Your RMD Deadline? Here's the Fix
The penalty, the correction window, Form 5329, and exactly what to do — whether you missed by three days or missed three years.
The penalty is a 25% excise tax on the amount you failed to withdraw. If you correct the miss within the correction window — generally two years — the rate drops to 10%. You withdraw the missing amount as soon as you notice, then report the penalty on IRS Form 5329.
What the penalty looks like in dollars
Your 2025 RMD was $10,000 but you only withdrew $6,000 by December 31:
| Amount |
|---|
| Shortfall (what you should have taken) | $4,000 |
| Penalty if you correct within two years (10%) | $400 |
| Penalty if you don't (25%) | $1,000 |
| Plus ordinary income tax on the $4,000 when you finally take it | varies |
Each missed year is a separate penalty. Missed 2023 and 2024? That's two shortfalls, two excise taxes, and two Form 5329 entries — the clock on each runs separately.
How to fix a missed RMD, step by step
- Figure the exact shortfall. Divide your prior December 31 balance by the life-expectancy divisor for your age (IRS Uniform Lifetime Table, Pub 590-B), subtract what you actually withdrew. Your custodian can usually reprint the required amount.
- Withdraw the shortfall now. The penalty is on the shortfall; taking it immediately stops the 25% clock and starts the 10% self-correction window.
- File Form 5329. You'll report the excess accumulation and the penalty. If you're within the two-year correction window, the 10% rate applies. Form 5329 can be filed standalone (with a cover letter) if you already filed that year's 1040.
- Keep the paper trail. Custodian statements showing the RMD amount, the withdrawal date, and your 5329. If the miss came from a custodian error, ask them for a letter saying so — brokers do occasionally waive fees, but the IRS excise tax stands unless you qualify for reasonable-cause relief on older (pre-2025) years.
Details that trip people up
- You still owe income tax on the corrected withdrawal. The 10%/25% excise is on top of ordinary income tax — it's not a substitute for it.
- The rule applies per account owner, not per deadline. Taking 90% of your RMD is still a miss on the missing 10%. There is no grace period for being "close."
- Inherited IRAs are included. Beneficiaries under the 10-year rule who skip required annual distributions face the same 25%/10% structure. See the inherited IRA rules.
- Still working? If you're past RMD age but still employed by the plan sponsor (and own ≤5%), the 401(k) RMD may not be due yet — but the IRA RMD always is. Check before assuming you missed nothing.
- Roth IRAs: no lifetime RMDs, so nothing to miss there — a common source of false alarms.
How to never think about this again
- Automate. Every major custodian (Fidelity, Schwab, Vanguard, ETrade…) will auto-distribute your RMD on a schedule — monthly, quarterly, or a single December pull.
- Set your own deadline to December 1. A one-month personal buffer absorbs custodian processing delays and December market moves.
- If you don't need the money, remember the QCD: from age 70½, directing up to $108,000 (2025, indexed) from your IRA straight to charity counts toward the RMD and stays off your tax return — do it before taking any cash out.