Form 5329 — Missed Your RMD? Cut the Penalty to 10% or Zero
Missed an RMD? Form 5329 reports the penalty, but SECURE 2.0 cut it to 10% if you fix it fast, and reasonable cause can waive it entirely.
Discovering that you forgot a required minimum distribution is one of those quiet financial gut-punches that tends to arrive months after the fact, usually while you are reconciling a year-end statement or filling out next spring’s tax return. For decades, the cost of that oversight was famously brutal: the Internal Revenue Service charged a 50% excise tax on whatever you failed to withdraw, a penalty severe enough that retirees often described it as confiscatory. The good news, if you are reading this with a sinking feeling, is that the rules changed in your favor, and the form you need to fix the problem is more forgiving than its reputation suggests.
The short answer: if you miss a required minimum distribution (RMD), you report the shortfall and calculate the excise tax on Form 5329, but the SECURE 2.0 Act dropped that tax from 50% to 25%, and down to just 10% if you correct the mistake quickly. Better still, the penalty can be waived entirely when the shortfall stemmed from a reasonable error and you are taking reasonable steps to fix it. The path to relief runs through one form, one short statement, and a corrective withdrawal you make as soon as you notice.
What the penalty is, and how SECURE 2.0 softened it
A required minimum distribution is the amount the IRS forces you to withdraw each year from most tax-deferred retirement accounts once you reach the mandatory age. If you fail to take that distribution by the deadline, the government levies an excise tax on the shortfall, which is simply the dollar amount you should have withdrawn but did not. For years this was a flat 50%, meaning a $10,000 RMD you overlooked could trigger a $5,000 penalty on top of the income tax you would eventually owe on the money itself.
The SECURE 2.0 Act, enacted in December 2022, rewrote that math. The headline excise tax fell from 50% to 25% of the shortfall. And if you correct the shortfall within a defined “correction window,” the rate drops further to 10%. In practical terms, the law transformed a punitive penalty into something closer to a manageable fee, provided you act with reasonable speed once you realize what happened. The reduction does not happen automatically in the sense of erasing your paperwork obligation; you still have to report the missed RMD and claim the lower rate yourself.
The correction window: how long you really have
The correction window is the heart of the reduced-penalty rules, and it is worth understanding precisely because the deadline is not a simple anniversary. The window runs from the date the tax is imposed until the earliest of three events: the date the IRS mails you a notice of deficiency, the date the IRS assesses the tax, or the last day of the second taxable year after the year the RMD was due.
For most people who catch their own mistake before the IRS does, the third milestone is the one that matters. Suppose you missed a required minimum distribution that was due for 2025. You generally have until the end of 2027, the last day of the second taxable year after 2025, to take the makeup distribution and qualify for the reduced 10% rate. That is a meaningful runway, but it is not open-ended, and it can be cut short if the IRS reaches out first with a deficiency notice or an assessment. The lesson is to move promptly rather than assume you have the full window, because two of the three triggers are outside your control.
Where this lands on Form 5329
You report the missed RMD and figure the excise tax on Form 5329, specifically Part IX, which carries the slightly intimidating title “Additional Tax on Excess Accumulation in Qualified Retirement Plans (Including IRAs).” Despite the name, this is the section built for exactly your situation: an account from which too little was withdrawn. Part IX is where you enter the amount that should have been distributed, the amount actually distributed, and the shortfall on which the excise tax is calculated.
Part IX is split in two, a layout the final 2024 and 2025 forms already use and the 2026 draft keeps, and that split is how you ask for the 10% rate. Lines 52a and 53a are for qualified plans from which you “received a distribution of the full amount of the excess accumulation during the correction window”; lines 52b and 53b are for “all other plans.” The “a” lines carry the 10% rate and the “b” lines the 25% rate, and line 55 adds lines 54a and 54b. One caution comes straight from the instructions: do not include on lines 53a and 53b “any distribution(s) received after the deadline for taking the minimum required distribution or during the correction window.” The makeup withdrawal is what earns the lower rate, but it does not go on line 53, so it cannot shrink the shortfall to zero. The instructions also spell out the two conditions for the reduced rate: you must receive a distribution of the amount that resulted in the excess accumulation from the plan for which the tax was imposed, and submit a return reflecting the additional tax, both during the correction window.
The form and its instructions do not line up on one point. The draft form, created 7/31/26, has lines 54a and 54b multiply the shortfall by 10% and 25%, while the draft instructions head that section “This Is Your Total Excess Accumulation” and tell waiver filers to enter the reduced shortfall on those lines. The mismatch is not new: the final 2025 form multiplies on lines 54a and 54b too, and the final 2025 instructions carry the same heading and the same waiver steps, so do not count on the final 2026 form to resolve it.
Form 5329 is also the workhorse for several other retirement-account corrections, which is why it shows up in adjacent situations. The same form, for instance, surfaces in how to fix an excess Roth contribution, where a different part of the form handles a different kind of overage. If you have wrestled with that process before, the mechanics here will feel familiar, even though the part number and the underlying problem differ.
How to request the waiver, step by step
The penalty can be waived entirely if the shortfall was due to reasonable error and you are taking reasonable steps to remedy it. The IRS does not publish a rigid checklist of what counts as reasonable error, but the procedure for asking is well defined. Follow it in order.
- Take the missed distribution first. Before you touch the form, withdraw the amount you should have taken. This makeup distribution is the single most important piece of evidence that you are remedying the error, and the waiver request rests on it.
- Complete Part IX of Form 5329. Work through the section that calculates the excise tax on your shortfall.
- Write “RC” and the shortfall on the dotted line by 54a or 54b. “RC” stands for reasonable cause. The instructions say to enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54a and/or 54b, as applicable. Then subtract that amount from the total shortfall you figured without regard to the waiver and enter the result on line 54a and/or 54b. Complete line 55 as instructed; the instructions are explicit that you must pay any tax due that is reported on line 55. The IRS then reviews your statement and decides whether to grant the waiver.
- Attach a statement of explanation. Explain the error in plain language: what went wrong, the relevant dates, the amount you missed, and the corrective distribution you have now taken. It helps to attach documents that back up your account, such as a letter from your custodian or, if illness was the cause, medical records.
A clean order of operations
The simplest way to keep the process from spiraling is to follow a fixed sequence the moment you discover the problem. Take the missed RMD as soon as you spot the error, without waiting for tax season. Then file Form 5329, either attached to your return or, when necessary, on its own for the year the RMD was due. Filing for the correct year matters because the excise tax is tied to the year the distribution was owed, not the year you happened to notice.
It is also worth a quiet note for the future: certain strategies can satisfy a required minimum distribution and reduce the odds of a repeat. A qualified charitable distribution, in which money goes directly from your IRA to a charity, can count toward your RMD, which is one reason some retirees lean on it to keep the obligation from slipping through the cracks. That is a planning tool for next year rather than a fix for this one, but pairing prompt correction now with a more deliberate withdrawal plan going forward is how you avoid filling out this form twice.
The broader takeaway is reassuring. The missed-RMD penalty earned its fearsome reputation under the old 50% regime, and that reputation lingers. Under current law, a prompt makeup distribution, a correctly completed Part IX, and a candid reasonable-cause statement give most filers a realistic shot at paying 10%, or nothing at all.
What the 2026 draft instructions change
The IRS posted the draft 2026 Instructions for Form 5329 on September 8, 2026, and re-posted them on November 9, 2026 (the revision is dated Nov 6, 2026). The “What’s New” section adds one item, and it is not about required minimum distributions: “Beginning with distributions made after December 29, 2025, a distribution from your employer’s defined contribution plan for or with respect to certified long-term care insurance is not subject to the 10% additional tax on early distributions if certain requirements are met,” with a pointer to Publication 590-B. In the exceptions list this appears as code 24, which carries the condition that if the person covered is the employee’s spouse, the exception applies only if the employee and spouse file a joint return, and cites Notice 2026-33 (not to be confused with Rev. Proc. 2026-33, below). The limits behind that exception ($2,600 for 2026) and the new Form 1099-LPS insurers file are covered in our guide to the qualified long-term care distribution. The list of accounts the form covers now ends with Trump accounts, the new account type created in 2025, alongside IRAs, HSAs, ABLE accounts and the rest. The missed-RMD excise tax, the 10 percent reduced rate and the waiver request described above are not among the changes the draft announces. The draft 2026 form, dated July 31, 2026, does change where the result goes. The 2025 form sent every part to Schedule 2, line 8. The 2026 draft splits them: the 10 percent early-distribution taxes in Parts I and II go to Schedule 2, line 5, while the excess-contribution taxes and the missed-RMD tax on line 55 go to Schedule 2, line 18, a line on the reorganized Schedule 2 for “excess contributions or accumulations.” The draft also adds Part X, a 6 percent tax on contributions above the $5,000 annual limit to a Trump account during its growth period, and Part XI, a tax equal to 100 percent of the earnings on excess Trump account contributions that are distributed; see Trump account gifts and Form 709 for the contribution limit itself. The draft is not for filing; this section will be updated when the final instructions are released.
A second route opens on May 1, 2027. The IRS’s new IRA correction program, Rev. Proc. 2026-33 covers a missed RMD only when it stems from a service provider’s failure, charges $3,500 for most requests filed before 2028 and leaves the free Form 5329 waiver in place.
Correction, November 11, 2026: An earlier version said to write “RC” and the amount of tax to be waived on the additional-tax line. The instructions call for “RC” and the shortfall amount on the dotted line next to lines 54a and 54b.
Sources
- IRS — Instructions for Form 5329: https://www.irs.gov/instructions/i5329
- IRS — Draft 2026 Instructions for Form 5329 (revision Nov 6, 2026): https://www.irs.gov/pub/irs-dft/i5329—dft.pdf
- IRS — Draft 2026 Form 5329 (created 7/31/26): https://www.irs.gov/pub/irs-dft/f5329—dft.pdf
- IRS — 2025 Form 5329: https://www.irs.gov/pub/irs-pdf/f5329.pdf
- IRS — About Form 5329: https://www.irs.gov/forms-pubs/about-form-5329
- IRS — Retirement plan and IRA required minimum distributions FAQs: https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
Quick answers
What is the penalty for missing an RMD in 2026?
The IRS imposes an excise tax on the amount you should have withdrawn but did not. The SECURE 2.0 Act reduced that tax from 50% to 25% of the shortfall, and to 10% if you correct the shortfall within the correction window. It can be waived entirely for reasonable cause.
How do I request a waiver of the missed-RMD penalty on Form 5329?
First take the missed distribution. Then complete Part IX of Form 5329, write "RC" and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54a and/or 54b, subtract that amount from the total shortfall, and enter the result on 54a and/or 54b. Attach a statement of explanation covering the error, the dates, the amount missed, and the corrective distribution, with supporting documents. Any tax left on line 55 must be paid.
How long is the SECURE 2.0 correction window?
It runs from the date the tax is imposed until the earliest of the date the IRS mails a notice of deficiency, the date the IRS assesses the tax, or the last day of the second taxable year after the year the RMD was due. A missed 2025 RMD generally must be corrected by the end of 2027 for the 10% rate.
Where on Form 5329 do I report a missed required minimum distribution?
You report the missed RMD and figure the excise tax in Part IX, Additional Tax on Excess Accumulation in Qualified Retirement Plans (Including IRAs).
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