From 24/7 Wall St. · Vilma Rios · · 1m 20s
Miss RMD Penalty Waiver Process
IRS waives 25% penalty for missed RMDs with two-paragraph letter.
In brief
IRS waives 25% penalty for missed RMDs with two-paragraph letter. Retirees can avoid 25% IRS penalty for missed required minimum distributions by filing Form 5329 with a two-paragraph letter explaining the error. Originally reported by 24/7 Wall St..
RMD Missed Penalty
The IRS charges 25% excise tax on missed required minimum distributions from IRAs.
“The tax code charges an excise tax of 25% of the amount owed.”
Historical Penalty Rate
Section 4974 of the Internal Revenue Code charged 50% of the shortfall for decades before the SECURE 2.0 Act cut it to 25%.
“Section 4974 Charged 50% for Decades, and SECURE 2.0 Cut It to 25%”
Corrective Window
The IRS allows up to two years from the missed RMD to correct the error and avoid the penalty.
“That window generally runs to the end of the second year after the missed rmd”
Waiver Process
File Form 5329 with a two-paragraph letter explaining the error and a corrective withdrawal.
“Attach a two-paragraph letter. Paragraph one explains what went wrong.”
Why Waivers Work
Tax specialists report nearly all waiver requests are approved when the person withdraws the money promptly and files Form 5329.
“Ed Slott told kiplinger in 2019 that he had never seen a penalty not waived when the person withdrew the money promptly and filed form 5329.”
Common Mistakes
Waiting too long, skipping the form, or missing the double-up can sink a waiver request or cost more later.
“Three mistakes that can sink a waiver request or cost more later”
2026 RMD Deadline
Retirees with 2026 RMDs have less than three months to set up automatic withdrawals to avoid writing letters.
“If you have an rmd due this year, december 31, 2026, is less than three months away.”
What Happens Next
The IRS has waived penalties for nearly everyone who has asked for relief through the two-step process.
“The agency has waived it for nearly everyone who has asked”
In short
Retirees can avoid 25% IRS penalty for missed required minimum distributions by filing Form 5329 with a two-paragraph letter explaining the error.
