What Happens If You Miss a Required Minimum Distribution and How Do You Fix It?
If you just realized you missed a required minimum distribution, or looked back and discovered you missed more than one, don't assume you're facing a massive IRS penalty before you understand what's actually fixable.
A missed required minimum distribution can often be corrected. But what you do next, and how quickly you do it, matters significantly. In this video, we walk through the four steps to fix a missed required minimum distribution, what the penalty situation actually looks like under current law, and how to make sure it doesn't happen again.
Required minimum distribution mistakes are one piece of a larger RMD planning picture. You may also find our guide on what to do with a large IRA before required minimum distributions begin helpful for avoiding these situations in the first place.
What Counts as a Missed Required Minimum Distribution?
A missed required minimum distribution doesn't necessarily mean you took nothing out. It means you didn't take enough. If your required minimum distribution for the year was $30,000 and you withdrew $20,000, your missed amount isn't $30,000. It's the $10,000 shortfall. That distinction matters because the penalty and the corrective distribution are both based on the shortfall, not the full required amount.
Mistakes happen more often than people realize. An automatic distribution didn't process. An account at a different institution was overlooked. An inherited IRA came with different rules that weren't fully understood. Whatever happened, the important thing is addressing it correctly.
Step 1: Figure Out What You Should Have Taken
Start by determining the exact amount of the required minimum distribution you were required to take in the year you missed it. If you took part of it, calculate the shortfall. If you missed multiple years, go back year by year and calculate a separate shortfall for each one.
One large withdrawal is not a shortcut for fixing multiple missed years. The IRS looks at each year's required distribution separately, and your corrective distributions and any required tax filings need to reflect that structure.
Step 2: Take the Missed Distribution
Once you know the shortfall amount, take the corrective distribution as soon as possible. Acting quickly matters because the normal 25% excise tax may be reduced to 10% if you correct the shortfall and meet the requirements within the IRS correction window. If the missed distribution was due to reasonable error and you've taken reasonable steps to fix it, you may also be able to request that the IRS waive the tax.
Step 3: Handle the Tax Reporting
Taking the money out and fixing the tax reporting are two separate things. The excise tax on a required minimum distribution shortfall is generally reported on IRS Form 5329. If you're correcting a shortfall from a prior year, you'll generally need to use the Form 5329 for that specific tax year.
If you're requesting a penalty waiver because the shortfall was due to reasonable error, the Form 5329 needs to accurately explain what happened, confirm that you've corrected the distribution, and show what steps you're taking to prevent it from happening again. This is where working with your tax professional is strongly recommended. Getting the paperwork right matters as much as taking the corrective distribution.
For a deeper look at how required minimum distributions affect your overall tax picture, see our video on the top 10 RMD mistakes and how to avoid them .
Step 4: Put a System in Place So It Doesn't Happen Again
Once the missed distribution is corrected and the paperwork is filed, the last step is making sure this doesn't repeat. Schedule your required minimum distribution earlier in the year rather than waiting until December. Automate it when your account custodian allows it. And if you have multiple retirement accounts at different institutions, make sure someone is coordinating them.
Fix the mistake. Then fix the system that allowed it to happen. Because how you handle required minimum distributions isn't just about avoiding a penalty. It's part of your overall retirement tax plan.
If you're approaching the start of required minimum distributions and want to reduce future taxable withdrawals, you may also find our guide to Roth conversions before RMDs helpful.
Frequently Asked Questions About Fixing a Missed Required Minimum Distribution
What is the penalty for missing a required minimum distribution?
Under current law, the excise tax for failing to take the full required minimum distribution is generally 25% of the amount you failed to withdraw. It may be reduced to 10% if you correct the shortfall and meet the requirements within the IRS correction window. The IRS may also waive part or all of the tax if the shortfall was due to reasonable error and you're taking reasonable steps to correct it. IRS Form 5329 is used to report the shortfall and request a waiver when applicable.
Can a missed required minimum distribution be corrected?
Yes, in most cases. The correction involves taking the missed distribution as soon as possible, calculating the exact shortfall for each year affected, filing IRS Form 5329 for each year with a shortfall, and in some cases requesting a penalty waiver if the shortfall was due to reasonable error. The key is acting quickly and handling the tax reporting correctly. Taking this year's required minimum distribution does not automatically correct a prior year's missed distribution — those need to be addressed separately.
What is IRS Form 5329 and when do you need it for a missed RMD?
IRS Form 5329 is the form used to report additional taxes on qualified plans including the excise tax on required minimum distribution shortfalls. If you missed a required minimum distribution, this form generally needs to be filed for each year in which a shortfall occurred. If you're requesting a penalty waiver due to reasonable error, the explanation and corrective steps are documented on or alongside this form. Filing it incorrectly or not at all can create additional problems, which is why working with a tax professional is strongly recommended for any corrective filing.
What happens if you missed required minimum distributions for multiple years?
Each year's shortfall is treated separately. You can't simply make one large withdrawal to cover everything. For each year in which a required minimum distribution was missed or only partially taken, you need to calculate the specific shortfall, take a corrective distribution for that shortfall, and file IRS Form 5329 for that year. One large withdrawal is not a substitute for calculating and addressing each year individually. Working with a tax professional and financial advisor is particularly important when multiple years are involved.
Can the IRS waive the penalty for a missed required minimum distribution?
Yes. The IRS has the discretion to waive the excise tax on a missed required minimum distribution if the shortfall was due to reasonable error and you've taken reasonable steps to correct it. To request a waiver, you generally need to file IRS Form 5329 with a written explanation of what caused the error, confirmation that you've taken the corrective distribution, and an explanation of what steps you're taking to prevent it from happening again. There's no guarantee of a waiver, but reasonable error situations are regularly addressed this way.
What does a missed required minimum distribution shortfall mean?
A missed required minimum distribution shortfall is the difference between what you were required to withdraw in a given year and what you actually withdrew. If your required minimum distribution was $30,000 and you took out $20,000, your shortfall is $10,000, not $30,000. The penalty and corrective distribution are based on the shortfall amount. This distinction is important because it means partial distributions you already took do count and reduce the amount of the missed distribution you need to correct.
How do you avoid missing a required minimum distribution in the future?
Schedule your required minimum distribution earlier in the year rather than waiting until December, consider automatic distributions when available, and make sure every retirement account subject to RMD rules is being tracked. If you have multiple retirement accounts, remember that the rules for calculating and satisfying RMDs can differ by account type. Coordinating those accounts each year can help reduce the risk of missing a required distribution.
Does taking this year's required minimum distribution fix last year's missed distribution?
No. Taking this year's required minimum distribution satisfies this year's requirement only. If you missed a distribution from a prior year, that shortfall is a separate issue and needs to be addressed separately. You'll need to calculate the prior year's shortfall, take a corrective distribution for that amount, and file IRS Form 5329 for the year in which the shortfall occurred. The two years are independent from the IRS's perspective.
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