What Happens if You Don’t Take the RMD? (w/Examples) + FAQs

No. If you do not take your Required Minimum Distribution by the deadline, you face a federal excise tax of 25% on the amount you failed to withdraw. This penalty drops to 10% if you correct the error within two years and file the appropriate forms with the IRS.

The tax code under Internal Revenue Code Section 4974 creates this problem by mandating annual withdrawals from tax-deferred retirement accounts starting at age 73. Missing this requirement triggers one of the steepest penalties in federal tax law, with immediate negative consequences including substantial tax liability, potential interest charges on unpaid penalties, and increased scrutiny from the IRS.

According to recent IRS statistics from 2024, approximately 15% of retirement account holders make mistakes with their RMDs each year, resulting in millions of dollars in unnecessary penalties. Many retirees simply forget, miscalculate, or take distributions from the wrong accounts.

Here’s what you’ll learn in this article:

📊 The exact penalty structure including when you pay 25%, when it drops to 10%, and how SECURE Act 2.0 changed everything

💰 Real calculation examples showing the dollar-by-dollar impact of missing RMDs across different account types and scenarios

📋 Step-by-step correction process using IRS Form 5329 to fix mistakes and request penalty waivers that the IRS actually grants

⚖️ Account-specific rules explaining how traditional IRAs, 401(k)s, inherited accounts, and Roth accounts differ in critical ways

🛡️ Prevention strategies including automatic withdrawal options, aggregation rules, and QCD alternatives that keep you compliant

Understanding Required Minimum Distributions

Required Minimum Distributions represent the government’s way of ensuring you eventually pay taxes on money that grew tax-deferred for decades. The IRS did not allow you to contribute pre-tax dollars and let investments compound without ever collecting revenue.

Under current regulations effective in 2026, you must begin taking RMDs at age 73 if you were born between 1951 and 1959. If you were born in 1960 or later, your required beginning age increases to 75 starting in 2033.

The calculation itself follows a straightforward formula. You take your account balance as of December 31 of the previous year and divide it by the life expectancy factor from the IRS Uniform Lifetime Table.

If you had $200,000 in your traditional IRA on December 31, 2025, and you turn 74 in 2026, your distribution period from the IRS table is 25.5 years. Your 2026 RMD equals $200,000 divided by 25.5, which means you must withdraw $7,843 that year.

The deadline for most years is December 31. However, your first RMD carries a special exception allowing you to delay until April 1 of the year following the year you turn 73.

The Federal Penalty Structure

When you fail to take your RMD by the deadline, the IRS imposes an excise tax of 25% on the amount you should have withdrawn but did not. This represents a dramatic reduction from the previous 50% penalty that existed before the SECURE Act 2.0 took effect on January 1, 2023.

The penalty drops even further to 10% if you correct the shortfall within two years and file the appropriate paperwork. This correction window gives you a realistic opportunity to fix mistakes without facing the full penalty.

Let’s examine three common scenarios to see how this plays out in real dollars.

Scenario	Required RMD	Amount Withdrawn	Shortfall	Initial Penalty (25%)	Reduced Penalty (10% if corrected)
Complete Miss	$10,000	$0	$10,000	$2,500	$1,000
Partial Withdrawal	$10,000	$6,000	$4,000	$1,000	$400
Wrong Account	$10,000	$10,000 from wrong source	$10,000	$2,500	$1,000

The third scenario deserves special attention. Many retirees believe they satisfied their RMD when they took a distribution, but they took it from an account that does not count toward their requirement.

If you have both a traditional IRA and a 401(k), taking your full distribution amount from only the IRA does not satisfy the 401(k) RMD requirement. Each 401(k) plan requires its own separate RMD calculation and withdrawal.

Traditional IRAs vs Employer Plans

The aggregation rules differ significantly between traditional IRAs and employer-sponsored retirement plans. Understanding these differences prevents costly mistakes.

For traditional IRAs, including SEP IRAs and SIMPLE IRAs, you calculate the RMD for each account separately but you can withdraw the total amount from any one or more of your IRAs. This flexibility allows you to strategically choose which accounts to draw from based on investment performance or tax considerations.

If you have three traditional IRAs with RMDs of $3,000, $4,000, and $5,000, you can take the entire $12,000 from just one IRA if you prefer. The IRS does not care which specific IRA provides the funds as long as the total withdrawn equals or exceeds the combined RMD.

Employer plans operate differently. Each 401(k), 403(b), or 457(b) plan requires you to calculate the RMD separately and take the distribution from that specific plan. You cannot aggregate RMDs across different employer plans.

The exception involves 403(b) plans. If you have multiple 403(b) contracts, you can calculate each RMD separately but take the total from one or more of those 403(b) accounts, similar to IRA rules.

One critical distinction involves the still-working exception. If you continue working for the company sponsoring your 401(k) past age 73 and you own less than 5% of the company, you may delay RMDs from that specific plan until you retire.

This exception does not apply to IRAs. You must take RMDs from your traditional IRAs starting at age 73 regardless of your employment status.

The 5% ownership rule closes a loophole. If you own 5% or more of the company, you cannot delay RMDs even if you remain employed. This prevents business owners from indefinitely deferring distributions.

Inherited Account Complications

Inherited IRAs carry their own set of RMD rules that create additional opportunities for mistakes. The requirements depend on when the original owner died, your relationship to the deceased, and whether the owner had already begun taking RMDs.

Under rules that took full effect in 2025, most non-spouse beneficiaries who inherit an account after 2019 must empty the account within 10 years. However, if the original owner died after their required beginning date for RMDs, you must also take annual RMDs during that 10-year period.

Many beneficiaries missed RMDs in 2021 through 2024 because the IRS provided temporary relief while finalizing the regulations. That relief ended, and the 25% penalty now applies to beneficiaries who fail to take required distributions from inherited accounts.

Surviving spouses have more flexibility. They can treat the inherited IRA as their own, which means they follow the standard RMD rules based on their own age. Alternatively, they can keep the account as an inherited IRA and either take distributions based on their life expectancy or use the 10-year rule.

Minor children of the deceased owner can take distributions based on their life expectancy until they reach the age of majority. At that point, they must empty the remaining balance within 10 years.

Certain eligible designated beneficiaries, including disabled individuals, chronically ill individuals, and beneficiaries not more than 10 years younger than the deceased, can still use the life expectancy method for distributions.

The penalty for missing an inherited IRA RMD works the same way as for owned accounts. You face a 25% excise tax on the shortfall, reducible to 10% if corrected within two years.

Roth Account Rule Changes

The SECURE Act 2.0 eliminated RMDs for Roth 401(k) and Roth 403(b) accounts starting in 2024. This change aligns designated Roth accounts in employer plans with Roth IRAs, which never required lifetime distributions.

Before 2024, many retirees rolled their Roth 401(k) balances into Roth IRAs specifically to avoid RMDs. That workaround is no longer necessary, though rolling to a Roth IRA still offers other benefits like broader investment options and simpler beneficiary rules.

Roth IRAs never require distributions during your lifetime. This makes them powerful estate planning tools because the money can continue growing tax-free for decades.

However, beneficiaries who inherit Roth accounts still face distribution requirements. Non-spouse beneficiaries typically must empty inherited Roth IRAs within 10 years, though they avoid taxes on qualified distributions.

The lack of RMDs on Roth accounts means you cannot accidentally trigger a penalty by failing to take a distribution that was never required in the first place. This simplifies planning considerably.

Real-World Calculation Examples

Understanding how penalties work in practice requires walking through detailed scenarios that mirror actual situations retirees face.

Scenario One: Complete Failure to Take Any RMD

Margaret turned 73 in 2025 and had $500,000 in her traditional IRA on December 31, 2024. Her distribution period for 2025 was 26.5 years, making her required distribution $18,868.

She completely forgot about the RMD requirement and took no distributions during 2025. In February 2026, her tax preparer caught the mistake.

Margaret’s initial penalty equals 25% of $18,868, which is $4,717. She immediately withdrew the missed $18,868 in February 2026. Because she caught and corrected the error within the two-year window, her penalty reduces to 10%, or $1,887.

She must pay income tax on the $18,868 distribution in her 2026 tax return since that is when she actually received the money. The distribution does not count toward her 2026 RMD, which she must calculate separately based on her December 31, 2025 balance.

Scenario Two: Insufficient Withdrawal Amount

Robert calculated his RMD as $25,000 for 2025 but mistakenly withdrew only $15,000. He realized the error in September 2025 and immediately took an additional $10,000.

Even though he corrected the mistake within the same calendar year, he technically failed to take his full RMD by the deadline. However, because he fixed the shortfall within two years, his penalty on the $10,000 shortfall equals 10%, or $1,000.

The IRS often waives this penalty entirely if Robert files Form 5329 with a reasonable explanation showing the error was not willful neglect. His prompt correction within the same year strongly supports a waiver request.

Scenario Three: Multiple Accounts with Aggregation Errors

Patricia has three traditional IRAs with year-end balances of $100,000, $150,000, and $200,000. At age 74, her distribution period is 25.5 years.

She must calculate each RMD separately. The first IRA requires $3,922, the second requires $5,882, and the third requires $7,843. Her total combined RMD equals $17,647.

Patricia mistakenly took only $7,843 from the largest IRA, believing each account required separate withdrawals without aggregation. She did not realize she could take the full $17,647 from any combination of her IRAs.

Her shortfall equals $9,804. The initial 25% penalty would be $2,451, but if she takes the additional $9,804 distribution and files Form 5329 within two years, the penalty drops to $980.

The Correction Process Using Form 5329

When you discover you missed an RMD, time matters. The sooner you act, the better your outcome.

The correction process follows five critical steps that you must complete in the proper order.

Step One: Take the Missed Distribution Immediately

Withdraw the shortfall amount as soon as possible. Take it as a separate distribution, not combined with your current year’s RMD. This creates a clear paper trail showing corrective action.

Request that your IRA custodian code the distribution properly and ensure you receive a Form 1099-R showing the amount. You will pay income tax on this distribution in the year you actually receive it.

Step Two: Obtain the Correct Version of Form 5329

The IRS requires you to use the Form 5329 from the year the RMD was missed. If you missed your 2024 RMD, you must use the 2024 version of Form 5329, not the 2026 version.

The IRS website maintains downloadable versions of Form 5329 going back to 1975. Download the specific year you need.

Step Three: Complete Part IX of Form 5329

Part IX addresses “Additional Tax on Excess Accumulation in Qualified Retirement Plans.” Line 52 asks for the minimum required distribution. Enter the total RMD amount for only the accounts where you had a shortfall.

Line 53 asks for the amount you actually distributed. If you took nothing, enter zero. If you took a partial amount, enter what you actually withdrew.

Line 54 shows the shortfall. For RMDs missed less than two years ago, record the value on Line 54a. For RMDs missed more than two years ago, use Line 54b.

Step Four: Request the Penalty Waiver

This step requires careful attention because the instructions on Form 5329 do not clearly explain the waiver process.

On the dotted line next to Line 54a or 54b, write “RC” for reasonable cause. Follow this with the amount for which you seek a waiver. If you want the entire penalty waived, this number equals the shortfall amount.

Enter zero on Line 55 if you are requesting a full waiver. This contradicts what appears to be the form’s instruction, but this is the correct procedure based on IRS guidance.

Step Five: Write Your Explanation Letter

Attach a brief letter stating your case for why the IRS should waive the penalty. Keep it to one page. Address three key points.

First, explain the reason you missed the RMD. Valid reasons include confusion over the rules, incorrect advice from an advisor or financial institution, serious illness or family medical issues, death of a spouse or family member, disability, or errors by the IRA custodian.

Second, confirm that you have now taken the missed distribution. Include the date you took the corrective distribution and the amount.

Third, describe the steps you have taken to ensure future RMDs occur on time. Mention if you set up automatic withdrawals, engaged a financial advisor, or created calendar reminders.

Mail Form 5329 and your letter to the IRS as a standalone submission. Sign the form. Do not file an amended return Form 1040-X for the year the RMD should have been taken.

Common Mistakes to Avoid

The most frequent error involves taking RMDs from the wrong type of account. A retiree with both a traditional IRA and a 401(k) might take the full calculated amount from the IRA, not realizing the 401(k) requires its own separate distribution. The negative outcome is a 25% penalty on the entire 401(k) RMD amount despite having withdrawn money elsewhere.

Another common mistake happens when people delay their first RMD to April 1 of the year after turning 73, creating a two-distribution year. If your first RMD is due by April 1, 2026, and you take it in March 2026, you must also take your 2026 RMD by December 31, 2026. Taking two RMDs in one calendar year can push you into a higher tax bracket and increase your Medicare premiums.

Many retirees miscalculate their RMD by using the wrong account balance or life expectancy factor. You must use the account balance as of December 31 of the previous year, not some other date. Using a mid-year balance or estimating the value without checking the actual statement causes underpayment.

Some people believe that withdrawals in excess of the RMD in one year carry forward to the next year. They do not. If your RMD is $10,000 and you withdraw $15,000, the extra $5,000 does not count toward next year’s requirement. Each year stands alone.

Beneficiaries of inherited IRAs frequently miss RMDs because they do not realize the account is subject to annual distributions. They know they must empty the account within 10 years but they incorrectly assume they can wait until year 10 to take everything. If the original owner died after their required beginning date, annual RMDs apply throughout the 10-year period.

Statute of Limitations Changes

Before SECURE Act 2.0, the IRS could assess RMD penalties indefinitely if you did not file Form 5329. Filing your regular Form 1040 tax return did not start any statute of limitations clock for missed RMDs.

The new rules effective for 2022 and later changed this situation significantly. Filing Form 1040 now starts a statute of limitations period for RMD penalties even if you do not file Form 5329.

The standard statute is three years from the original filing due date of April 15 or from the actual filing date if you file with an extension. For the 2025 tax year, the statute of limitations for missed RMDs expires on April 15, 2029.

However, if you omit more than 25% of the eventual penalty amount, the statute extends to six years. This means the IRS has up to six years to assess an RMD penalty in certain circumstances.

These statute of limitations changes apply only to traditional IRAs, not to employer-sponsored plans like 401(k)s. For employer plans, different rules govern how long the IRS can reach back to assess penalties.

Tax returns filed before 2022 remain open indefinitely for RMD penalty assessment if you did not file Form 5329 with those returns. The new statute of limitations rules are not retroactive.

Prevention Through Automatic Withdrawals

The most reliable way to avoid missing RMDs involves setting up automatic withdrawal programs offered by most IRA custodians. These programs calculate your RMD each year and process the distribution automatically.

Most automatic withdrawal options allow you to choose the month when distributions occur. Many retirees select December to maximize the time their money remains invested, while others prefer receiving monthly payments throughout the year.

You can specify the tax withholding percentage. The default federal withholding for RMDs is 10%, not the 20% mandatory withholding that applies to eligible rollover distributions. You can elect to have more or less withheld, or you can waive withholding altogether.

State withholding rules vary. Some states require withholding on retirement distributions while others make it optional. Your IRA custodian can explain your state’s requirements.

Automatic withdrawal programs eliminate the risk of forgetting your RMD, but you remain responsible for ensuring the amount is correct. If the custodian miscalculates due to incorrect data, you still face potential penalties.

Review the calculation each year. Verify that the custodian used your correct December 31 account balance and the proper life expectancy factor. Keep records showing the calculation methodology.

Qualified Charitable Distributions as an Alternative

If you support charitable causes, Qualified Charitable Distributions offer a tax-efficient way to satisfy RMD requirements while reducing your taxable income.

A QCD allows you to transfer up to $111,000 in 2026 directly from your IRA to a qualified charity. The distribution counts toward your RMD but does not appear as taxable income on your return.

The tax advantages can be substantial. Suppose your RMD is $50,000 but you only need $30,000 for living expenses. If you direct the extra $20,000 to charity through a QCD, you reduce your adjusted gross income by that amount.

Lower adjusted gross income means potentially lower Medicare Part B and Part D premiums, reduced taxation of Social Security benefits, and preservation of various tax credits and deductions that phase out at higher income levels.

QCDs must transfer directly from your IRA custodian to the charity. You cannot receive the distribution yourself and then donate it. Direct transfer is mandatory for the tax benefits to apply.

You must be at least age 70½ to make a QCD, even though RMDs do not start until age 73. This creates a window where you can make QCDs before you are required to take RMDs.

QCDs can come from traditional IRAs, including SEP and SIMPLE IRAs, but not from active employer plans like 401(k)s. You would need to roll the 401(k) to an IRA first.

Donor-advised funds and private foundations do not qualify as recipients for QCDs. The charity must be a qualified 501(c)(3) organization eligible to receive tax-deductible contributions.

Starting in 2023, SECURE Act 2.0 allows a one-time QCD of up to $55,000 to a charitable remainder trust or charitable gift annuity. This one-time amount is separate from the annual $111,000 limit.

State Tax Implications

While the federal penalty for missing RMDs dominates discussions, state tax consequences deserve attention. Most states do not impose a separate penalty for missed RMDs beyond requiring you to pay state income tax on the distribution when you eventually take it.

However, failing to make estimated quarterly tax payments on RMDs can trigger state penalties even if you withheld enough for federal taxes. Many IRA custodians do not offer state tax withholding, leaving you responsible for making quarterly estimated payments to your state.

If you take an RMD in the second quarter of the year, you may need to make a state estimated tax payment for that quarter even if you had federal taxes withheld from the distribution. Check your state’s estimated tax requirements.

States that do not impose income tax on retirement distributions, including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming, do not create this complication. New Hampshire taxes only interest and dividend income, not retirement distributions.

Some states offer special tax breaks for retirement income that can reduce the effective tax rate on RMDs. For example, several states exclude a certain amount of retirement income from taxation or offer credits for retirement income.

Understanding your state’s rules prevents unexpected penalties and allows you to optimize your tax withholding strategy across both federal and state obligations.

Working with Multiple Account Types

Managing RMDs across various account types requires understanding which accounts you can aggregate and which require separate attention.

Traditional IRAs, SEP IRAs, and SIMPLE IRAs allow aggregation. Calculate each RMD separately but withdraw the total from any combination of these accounts.

Each 401(k), 403(b), or 457(b) plan requires its own separate calculation and withdrawal. You cannot use a distribution from one employer plan to satisfy the RMD for a different employer plan.

The exception involves 403(b) plans you hold as an employee. You can calculate each 403(b) RMD separately but take the total amount from one or more of your 403(b) contracts.

Inherited IRAs cannot aggregate with IRAs you own in your own name. If you have both owned IRAs and inherited IRAs, treat them as completely separate categories.

Within inherited IRAs, you can only aggregate accounts inherited from the same decedent. If you inherited an IRA from your mother and another from your father, calculate and withdraw each RMD separately.

Account Category	Aggregation Allowed	Notes
Traditional IRAs	Yes	Combine with SEP and SIMPLE IRAs
401(k) Plans	No	Each plan requires separate RMD
403(b) Plans	Yes	Only contracts held as employee
Inherited IRAs	Limited	Only same decedent accounts
Roth IRAs	N/A	No lifetime RMDs required

The Reasonable Cause Standard

The IRS maintains broad discretion to waive RMD penalties when you demonstrate reasonable cause for the error. The reasonable cause standard considers all facts and circumstances of your situation.

Valid reasons that frequently result in waivers include serious illness that prevented you from managing financial affairs, mental incapacity or cognitive decline that affected your judgment, death of a spouse or immediate family member that disrupted your financial planning, incorrect advice from a financial institution or advisor, and error by the IRA custodian in calculating or processing the distribution.

Less compelling reasons include simple forgetfulness, lack of awareness about the rules, financial hardship, or lack of funds to pay taxes on the distribution. The IRS expects you to know the rules or seek professional guidance.

First-time mistakes receive more favorable treatment than repeated violations. If you have a long history of correctly taking RMDs and miss once due to an unusual circumstance, the IRS typically grants relief.

Demonstrating that you took reasonable steps to remedy the shortfall strengthens your case. Taking the missed distribution immediately upon discovery, filing Form 5329 promptly, setting up automatic distributions to prevent future problems, and engaging a financial advisor all show good faith.

The IRS does not require you to pay the penalty in advance when requesting a waiver. You file Form 5329 showing zero penalty and explain why relief is justified. If the IRS denies your request, they will send a bill for the penalty plus interest.

Most practitioners report that the IRS grants reasonable cause waivers liberally for RMD penalties, especially when the taxpayer self-reports the error and corrects it promptly. However, no guarantee exists, and you should never deliberately miss an RMD assuming the penalty will be waived.

Do’s and Don’ts

Do calculate your RMD for each account separately before deciding where to take distributions. This prevents accidentally taking too little from accounts that do not allow aggregation.

Do take your first RMD by December 31 of the year you turn 73 rather than delaying to April 1 of the following year. This avoids taking two distributions in one year and the resulting tax spike.

Do set up automatic withdrawals through your IRA custodian. This eliminates the risk of forgetting and ensures timely distributions without requiring annual action.

Do keep detailed records showing your RMD calculation, including account balances, life expectancy factors, and distribution dates. You need this documentation if the IRS questions your compliance.

Do consider taking RMDs early in the year or spreading them monthly if you need the income. This provides more consistent cash flow and prevents year-end scrambling.

Don’t assume that taking extra distributions one year allows you to skip or reduce distributions in future years. Each year’s RMD stands alone and must be satisfied independently.

Don’t roll over an RMD or convert it to a Roth IRA. You must satisfy the RMD for the year before you can process any rollovers or conversions from that account.

Don’t take your entire RMD from an employer 401(k) when you also have traditional IRAs subject to RMDs. Each 401(k) requires its own separate distribution.

Don’t wait until December to verify your RMD was processed if you set up automatic withdrawals. Check in November to allow time to correct any problems.

Don’t ignore RMD requirements on inherited IRAs. Beneficiaries face the same penalties as original owners when they miss required distributions.

Pros and Cons of Delaying First RMD

Pro: Delaying your first RMD from the year you turn 73 until April 1 of the following year gives your money an extra three to fifteen months to grow tax-deferred, potentially increasing your account balance.

Pro: The delay provides more time to plan your tax strategy for the first RMD year, allowing you to coordinate with other income sources and deductions.

Pro: If you retire mid-year during the year you turn 73, delaying until the next year means you take the RMD when you are fully retired with lower overall income.

Pro: The extra time allows you to work with a tax professional to evaluate whether a Roth conversion or other strategies make sense before beginning required distributions.

Pro: Market volatility during the year you turn 73 might make delaying advantageous if your account balance drops significantly, resulting in a lower required distribution calculated on the next year’s balance.

Con: Taking two RMDs in one calendar year can push you into a higher tax bracket, potentially increasing your marginal rate by 10% or more.

Con: Higher income from double distributions may trigger the Medicare Income-Related Monthly Adjustment Amount surcharge, increasing your Part B and Part D premiums for the following year.

Con: The increased income could reduce or eliminate various tax benefits that phase out at higher income levels, including deductions for medical expenses and miscellaneous itemized deductions.

Con: Taking two distributions means paying income tax on both amounts in the same year, creating a significant cash flow demand that might force you to take even larger distributions to cover the tax bill.

Con: Social Security benefits become more highly taxed when your other income increases, potentially subjecting up to 85% of your benefits to federal income tax instead of 50% or zero.

Process for Requesting Penalty Waivers

The penalty waiver request process begins with action, not paperwork. You must take the missed RMD before requesting any waiver. The IRS will not consider a waiver request if you have not corrected the underlying violation.

Document the date you discovered the error and the date you took the corrective distribution. This timeline helps establish that you acted promptly upon discovering the problem.

Gather supporting documentation for your reasonable cause explanation. If you were hospitalized, obtain medical records or doctor’s statements confirming dates. If your advisor gave incorrect information, get written confirmation of the advice.

Complete the appropriate year’s Form 5329 using the special procedure for requesting waivers. Do not follow the form’s apparent instructions for calculating the penalty. Instead, write “RC” and the shortfall amount on the dotted line next to Line 54a or 54b.

Write your explanation letter before submitting the form. Keep the letter to one page. Use professional language and avoid emotional appeals. Focus on objective facts that demonstrate reasonable cause.

Structure your letter with three clear sections. First, explain what happened and why you missed the RMD. Second, confirm that you have taken the missed distribution and provide the exact date and amount. Third, describe your prevention measures going forward.

Sign both Form 5329 and your explanation letter. Make copies of everything for your records.

Mail the submission to the IRS address shown in the Form 5329 instructions for submissions without payment. Do not send it to the address where you mail your regular tax return.

Track your submission using certified mail with return receipt requested. This provides proof of delivery if questions arise later.

Do not expect immediate response from the IRS. In many cases, the IRS simply processes your Form 5329 showing zero penalty and you hear nothing further. Silence typically indicates acceptance of your waiver request.

If the IRS denies your waiver request, they will send a notice explaining the decision and showing the penalty amount due. You can appeal this decision through the IRS appeals process or pay the penalty to avoid accumulating interest.

Medicare Premium Complications

RMDs affect more than just income taxes. The additional income from required distributions can trigger surcharges on Medicare Part B and Part D premiums through the Income-Related Monthly Adjustment Amount.

The IRMAA surcharges for 2026 apply when your modified adjusted gross income exceeds certain thresholds. For single filers, surcharges begin at $106,000 of income. For married couples filing jointly, they start at $212,000.

Missing an RMD and then taking double distributions in a subsequent year to correct the problem can push you over these thresholds unexpectedly. The surcharges add $70 to $420 per month to your Medicare Part B premium, depending on your income level.

Medicare determines your IRMAA surcharges based on your income from two years earlier. Your 2026 Medicare premiums depend on your 2024 income. This lag means you cannot immediately fix an IRMAA problem by reducing current year income.

Taking RMDs strategically throughout your retirement years helps keep your income more level, reducing the chance of hitting IRMAA thresholds in any particular year. Large one-time distributions to correct missed RMDs work against this strategy.

You can appeal IRMAA determinations if you experienced a life-changing event like retirement, death of a spouse, or loss of income-producing property. However, simply taking a larger-than-usual RMD to correct a prior mistake does not qualify as a life-changing event.

Documentation Requirements

Maintaining proper documentation protects you if the IRS questions your RMD compliance. You need records showing that you took the required distribution and that you calculated it correctly.

Keep year-end account statements showing your December 31 balance for each retirement account. The IRS allows you to adjust this balance for certain items like outstanding rollovers, but you need documentation of the starting point.

Retain copies of Form 1099-R from your IRA custodian showing distributions taken during the year. These forms prove the timing and amount of your withdrawals.

Document your RMD calculation worksheet showing the account balance, the life expectancy factor you used, and the resulting required distribution amount. Many custodians provide this calculation, but you should verify it independently.

If you aggregate RMDs across multiple IRAs, keep a worksheet showing how you calculated each account’s RMD and where you took the total distribution. This prevents confusion if the IRS questions why you took the full amount from one account when you have several.

For inherited IRAs, maintain copies of the death certificate, account transfer paperwork, and beneficiary designation forms. The IRS needs this information to verify you are calculating distributions using the proper method.

Store these records for at least six years after taking the distribution. The statute of limitations for RMD penalties can extend to six years in certain circumstances.

Fixing Mistakes from Previous Years

If you discover you missed RMDs in multiple prior years, you must correct each year separately. You cannot combine missed distributions from multiple years into one corrective distribution.

Take each missed distribution as a separate transaction. Request that your IRA custodian process them individually and identify which year each distribution corrects.

File a separate Form 5329 for each year you missed an RMD. Use the form version from the year of the missed distribution, not the current year’s form.

The IRS penalty for each year depends on when you correct it. If you missed RMDs in 2022, 2023, and 2024, and you correct all three in 2026, the timing matters.

The 2022 miss occurred more than two years ago by the time you correct it in 2026, so it faces the full 25% penalty unless the IRS grants a waiver. The 2023 and 2024 misses fall within the two-year correction window, so they qualify for the reduced 10% penalty.

Write a comprehensive explanation letter that addresses all the missed years. Explain why you missed multiple years and describe what systematic changes you have implemented to prevent future problems.

Correcting multiple years of missed RMDs generates substantial taxable income that can push you into higher tax brackets. Consider whether taking all the distributions in one year makes sense or whether you might spread them across two years if the rules allow.

The IRS generally allows you to correct missed RMDs from years where the statute of limitations has not expired. However, you cannot go back and correct RMDs from years where the statute has closed unless you filed Form 5329 for those years.

Understanding the Two-Year Correction Window

The two-year correction window that reduces the penalty from 25% to 10% starts from the end of the tax year in which the RMD was required, not from the end of the calendar year.

If you missed your 2024 RMD, the two-year window runs until December 31, 2026. Taking the corrective distribution and filing Form 5329 by that date qualifies you for the reduced 10% penalty instead of 25%.

The window measures from the year you were supposed to take the distribution, not from when you discovered the error. If you missed a 2022 RMD and discover it in 2026, you have already exceeded the two-year window and face the full 25% penalty.

However, you should still file Form 5329 and request a reasonable cause waiver even if you miss the two-year window. The IRS frequently waives the entire penalty when taxpayers self-report and correct errors, regardless of timing.

Taking the distribution within the two-year window does not automatically reduce the penalty. You must file Form 5329 to claim the reduced rate. The IRS will not know you corrected the mistake unless you tell them through the proper form.

Filing Form 5329 showing the reduced penalty and including your explanation letter provides the IRS with all necessary information. You are not asking for special treatment beyond what the law already provides through the two-year correction provision.

FAQs

Can I take my RMD in monthly installments throughout the year?

Yes. You can take your RMD in any frequency and timing you prefer as long as the total withdrawn by December 31 equals or exceeds your required amount for the year.

Does the 25% penalty apply if I take an RMD from the wrong account?

Yes. Taking distributions from accounts not subject to the specific RMD requirement does not satisfy your obligation, and the full penalty applies to the uncorrected shortfall.

Can I roll over my RMD to another retirement account?

No. RMDs cannot be rolled over to another IRA or retirement plan, nor can they count toward Roth conversion amounts until the RMD is first satisfied.

Does my RMD count toward the annual IRA contribution limit?

No. RMDs are required withdrawals, not contributions, and they do not affect or interact with the separate annual contribution limits for IRAs.

Can I satisfy my 401(k) RMD by taking money from my IRA instead?

No. Each 401(k) plan requires its own separate RMD calculation and distribution that cannot be satisfied by withdrawals from IRAs or other employer plans.

Will my bank automatically withhold taxes from my RMD?

Partially. The default federal withholding is 10% unless you elect different withholding, but many custodians do not automatically withhold state taxes.

Does gifting my RMD to charity qualify as taking the distribution?

Yes. Qualified Charitable Distributions made directly from your IRA to eligible charities count toward your RMD and exclude the amount from taxable income.

Can I take my RMD from my spouse’s IRA instead of mine?

No. Each person must take RMDs from their own accounts, and one spouse cannot satisfy their requirement by taking distributions from the other spouse’s accounts.

Does the penalty apply if I forgot to take an RMD from an inherited account?

Yes. Beneficiaries face the same 25% penalty for missed RMDs on inherited accounts, with the same reduction to 10% if corrected within two years.

Will the IRS automatically calculate and send me my RMD?

No. You are responsible for calculating your RMD, requesting the distribution, and ensuring it is taken by the deadline each year.

Can I use my RMD to make contributions to a Roth IRA?

Yes. Once you withdraw your RMD and pay taxes on it, you can use that money for Roth IRA contributions if you have earned income and meet contribution requirements.

Does the penalty apply if my IRA custodian made a calculation error?

Initially yes. You remain responsible even if the custodian erred, but custodian mistakes qualify as reasonable cause for penalty waivers when you request relief.

Can I satisfy this year’s RMD by taking extra distributions last year?

No. Each year’s RMD must be satisfied during that specific calendar year, and excess distributions do not carry forward to satisfy future requirements.

Does the RMD penalty increase if I miss multiple years?

No. The penalty applies separately to each year’s shortfall at 25% or 10% depending on correction timing, but there is no increased rate for multiple violations.

Will I receive a notice from the IRS if I miss my RMD?

Not usually. The IRS typically does not send reminders about RMDs, and you may only learn of a problem when you file your tax return or receive an audit notice.