RMD Penalty

Tax Planning
Updated Apr 2026

The IRS excise tax imposed when a taxpayer fails to take the required minimum distribution from a retirement account.

Tax laws change annually and vary by country. The information on this page is for educational purposes only. Always verify figures with current official sources (IRS, HMRC, CRA, ATO) and consult a qualified tax professional before making any tax-related decision.

What is RMD Penalty?

The RMD penalty is a federal excise tax charged when an account holder fails to take the required minimum distribution (RMD) from a tax-deferred retirement account—such as a traditional IRA, 401(k), or 403(b)—by the applicable deadline. Under the SECURE 2.0 Act of 2022, the penalty was reduced from 50% to 25% of the shortfall amount, and further to 10% if corrected within a two-year correction window. The IRS may waive the penalty entirely for reasonable cause. Beginning in 2023, RMDs are generally required starting at age 73.

Example

Example

A 75-year-old retiree has a traditional IRA with an RMD of $12,000 due by December 31, 2024, but takes only $2,000. The $10,000 shortfall triggers a 25% penalty: $2,500 in excise tax on the 2024 return. If they file Form 5329 and take the missed distribution promptly, they may qualify for the reduced 10% corrective penalty of $1,000.

Source: IRS — Required Minimum Distributions FAQs