Dec. 31 is the deadline for most account owners to take this year’s required minimum distribution, and the penalty for missing it is 25% of the amount that was not withdrawn, the Internal Revenue Service says. The tax drops to 10% if the shortfall is corrected in time. The IRS spells out both rates in its required minimum distribution FAQs, last updated Jan. 29, 2026.
A required minimum distribution, or RMD, is the amount an account owner must take out of a traditional IRA or a workplace plan each year after reaching the starting age. The IRS says the first RMD is due for the year in which the owner reaches age 73.
Owners who have taken part of this year’s amount, or none of it, need to know how large the shortfall is and whether it is due by Dec. 31 or by April 1. Those two questions decide how much of a possible penalty is at stake.
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25% of the shortfall, not of the whole account
The IRS FAQ says the amount not withdrawn “may be subject to an excise tax of 25%, 10% if the RMD is timely corrected within two years.” The tax applies to the missing portion only, which the Form 5329 instructions call the excess accumulation.
Take an owner whose required amount is $20,000 and who withdrew $5,000 by Dec. 31. The shortfall is $15,000, so the tax at 25% is $3,750. The rest of the account is not touched by the penalty.
The tax is reported on Form 5329, filed with the federal return for the year in which the full amount was required but not taken, the FAQ says.
The 10% rate comes with conditions
The Form 5329 instructions say the additional tax is reduced to 10% of the excess accumulation if the owner meets certain requirements. During the correction window, the owner has to receive a distribution of the amount that caused the shortfall from the plan that imposed the tax, and has to submit a return that reflects the additional tax.
The correction window ends on the earliest of three dates: the day the IRS mails a notice of deficiency, the day the tax is assessed, or the last day of the second taxable year beginning after the year the tax is imposed. On the same $15,000 shortfall, the 10% rate would mean $1,500 instead of $3,750.
The IRS FAQ describes the same rule as correction “within two years.” The window can close sooner than two years if the IRS mails a deficiency notice or assesses the tax first.
Who has until April 1 instead of Dec. 31?
An owner can delay the first RMD until April 1 of the year after the year of reaching the starting age, according to the FAQ. Someone who reaches 73 in 2024, for instance, has until April 1, 2025 for the first distribution and until Dec. 31, 2025 for the second.
The delay means an owner who waits until April 1 for the first RMD takes two distributions in the same calendar year, the first for the year of reaching 73 and the second for the following year.
For every later year, the FAQ’s example puts the due date at Dec. 31.
A waiver exists for a reasonable error
The IRS can waive part or all of the tax. The FAQ says relief is possible if the shortfall was due to “reasonable error” and “reasonable steps are being taken to remedy the shortfall.” To ask, the owner files Form 5329 and attaches a letter of explanation.
The Form 5329 instructions add the mechanics: write “RC” and the waived amount next to the line for the tax, attach the statement, and pay any remaining tax. The IRS decides whether to grant the waiver.
A waiver is a request, not a right, and the 10% rate and the waiver are separate routes. The first depends on a timely corrective distribution, and the second depends on the reason for the miss.
How much of this year’s required amount is still left to withdraw?
That figure sets the size of any 25% tax.
An RMD miss costs a quarter of the shortfall, and a correction can cut it to a tenth only if it is made in time. The stake rises with the size of the account and falls with every dollar taken out before Dec. 31.
“Cut Your Retirement Tax Bill: 12 Moves” is a 14-page guide that includes a section on taking RMDs on time, without the 25% penalty or the first-year trap. It also covers giving from an IRA straight to charity, with the gift left out of taxable income.
Get RMDs on time, without the 25% penalty, in Cut Your Retirement Tax Bill: 12 Moves →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
