What Happens If I Miss Or Miscalculate My RMD

You face a penalty of up to 25% of the amount you failed to withdraw, though the IRS often waives this if you correct the error quickly and file Form 5329 with a reasonable cause explanation.

The missed RMD penalty and how it's calculated

The excise tax for a missed or short RMD is 25% of the amount you failed to withdraw. SECURE 2.0 reduced that to 10% if you correct the error within two years of the original due date. This replaced the old 50% charge that applied before 2023. That was a severe shock for retirees who made honest math errors. For example, if your RMD is $50,000 and you only withdrew $40,000, the shortfall is $10,000. The excise tax is $2,500 at the 25% rate. It drops to $1,000 at the 10% rate if corrected within two years. The IRS calculates this on Form 5329, Part IX. You owe the tax even if you later withdraw the missing amount. The charge is separate from the distribution itself. Note that the 25% applies to the shortfall, not the total RMD. A small miscalculation on a large account can still hurt. The old 50% rate still appears in some outdated articles. The IRS has updated all guidance. If you see a reference to 50%, you are reading pre-2023 material. The two-year window for the reduced rate is strict. It starts on the original due date, not the date you find the error. If you missed 2023 and it is now 2026, you are stuck with the full 25% unless you have a strong reasonable cause argument.

How to fix the mistake and request a waiver

Correcting a missed or short RMD requires three steps. Do them in order. First, withdraw the missing amount immediately, even if it is now after the deadline. This shows good faith and stops the excise tax from growing. The tax is calculated on the shortfall as of the original due date. Second, file Form 5329 for the year of the missed RMD. Attach a statement that explains the correction and the amount you withdrew late. Third, write a separate letter, not on the form, explaining your reasonable cause. Examples include a recent hospitalization, a death in the family, or a clerical error by your custodian. Request a waiver of the full charge. The IRS will not accept a simple phone call. You must mail this package to the address listed in the Form 5329 instructions. Keep a copy of everything. If you qualify for the reduced 10% rate because you corrected within two years, you still file Form 5329. Write “SECURE 2.0” at the top to claim the lower tax. The IRS typically processes these requests in 8-12 weeks. You will receive a letter either granting the waiver or asking for more documentation. Do not wait for the IRS to contact you first. Proactive correction is the single strongest factor in getting a waiver approved.

When the IRS will not waive the penalty

The IRS denies waiver requests when the reason does not meet the “reasonable cause” standard. The most common failure is claiming ignorance of the rules. Saying “I did not know I had an RMD” or “my brother never took one” will not work. The IRS assumes you read your custodian’s annual notice and Form 5498. Similarly, blaming your financial advisor is not enough unless you can prove you exercised ordinary care. The IRS expects you to review account statements and confirm your distributions. A “my advisor said it was fine” excuse fails if you never checked the math. Repeated mistakes are another red flag. If you missed an RMD two years in a row, the IRS will likely reject the waiver. It will argue that you had prior notice and failed to implement a system. Finally, the IRS will not waive the charge if you took the money but underpaid by a tiny amount due to rounding errors. The law requires exact compliance. A shortfall of roughly the cost of a coffee is still a violation. The resulting excise tax, a quarter of that amount, is still owed. The IRS will not waive it unless you can show the error was due to a custodian’s incorrect calculation. In those cases, your only recourse is to pay the amount and file a claim for refund. This is rarely successful. Double-check your RMD amount using the worksheet in IRS Publication 590-B before December 31.

Frequently Asked Questions

Can I use a qualified charitable distribution (QCD) to satisfy my RMD after the deadline?

Yes, but only if you make the QCD by December 31 of the year the RMD is due. The charity must receive it directly from your IRA custodian. If you already missed the deadline, you cannot retroactively count a QCD for that year. You can still make one for the current year’s RMD.

What if my custodian gave me the wrong RMD amount on Form 5498?

You can use the custodian’s amount as a defense, but only if you can prove you relied on it in writing. The IRS will still assess the excise tax. You can request a waiver by attaching the incorrect Form 5498 and your account statement showing the error.

Does the penalty apply to inherited IRAs or only my own retirement accounts?

It applies to both your own RMDs and inherited IRA required distributions. The rules differ for beneficiaries. For inherited IRAs, the excise tax is the same 25%. The SECURE 2.0 reduction to 10% also applies if you correct within two years. The reasonable cause standard is stricter because beneficiaries are expected to know the 10-year rule.

Can I pay the penalty from the IRA itself without taking a distribution?

No. The excise tax is paid from your taxable income, not from the IRA. Doing so would be considered an additional distribution subject to income tax. You must write a separate check to the IRS or pay electronically when you file Form 5329.

Will the IRS automatically waive the penalty if I correct the error before filing my tax return?

No. Automatic waivers do not exist. You must proactively file Form 5329 and request the waiver in writing. The IRS will not forgive the charge just because you caught the error early, even if you correct it within the same tax year.

You must proactively request a waiver in writing; the IRS never forgives an RMD shortfall automatically, even if you correct it yourself before they notice.

This is the core rule that separates a costly surprise from a resolved mistake. Every other article explains the percentages. This page tells you the IRS will not lift a finger to help unless you file the paperwork first. That is why understanding retirement withdrawal strategies matters before you miss or miscalculate my RMD. The excise tax starts at 25% of the shortfall, as set by Congress under the SECURE 2.0 Act. The IRS publishes the current rates and correction procedures in the instructions for Form 5329, available at IRS.gov. Always confirm the latest figures there before filing.