If you missed a required minimum distribution, the IRS can waive the excise tax entirely when you show reasonable cause for the missed RMD and prove you’ve fixed the shortfall. You request that waiver on Form 5329, attaching a short written explanation of what happened and what you did to correct it. The relief is discretionary, but the IRS grants it routinely when the facts genuinely support it.
The Penalty You’re Trying to Avoid
Miss an RMD and the IRS imposes an excise tax equal to 25% of the amount you should have withdrawn but didn’t.1Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans The SECURE Act 2.0 cut that rate from 50% starting in 2023.
Catch the mistake quickly and the rate drops further to 10%. To get that reduced rate, you must withdraw the missed amount and file a return reflecting the tax during the correction window. The window closes at the earliest of three dates: the IRS mailing you a notice of deficiency, the IRS formally assessing the tax, or the last day of the second tax year after the year you missed the distribution.1Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans For a 2025 miss caught on your own, the window stays open at least through December 31, 2028.
A full waiver is a separate track from the reduced-rate correction window. You can pursue both: request the waiver, and if the IRS denies it, the 10% rate may still apply if you acted inside the window. Beneficiaries who inherit a retirement account, including a Roth IRA subject to the 10-year rule, use the same waiver process described below.
What Counts as Reasonable Cause
The statute lets the IRS waive the entire excise tax when you show two things: the shortfall was due to reasonable error, and reasonable steps are being taken to remedy it.1Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans The statutory phrase is “reasonable error,” though people commonly call it reasonable cause. The IRS evaluates each request on all the facts and circumstances, looking at whether you exercised ordinary care and still fell short.2Internal Revenue Service. IRM 20.1.1 – Introduction and Penalty Relief – Section: 20.1.1.3.2 Reasonable Cause
Circumstances that typically support a waiver:
- Serious illness or a death in the family that prevented you from managing financial affairs.
- Genuine confusion about the RMD rules, especially in the first year you were required to take distributions or after inheriting an account.
- An error by the financial institution, such as failing to process a distribution request or calculating the wrong amount.
The IRS has indicated it routinely accepts explanations like these once the taxpayer has taken the missed distribution.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
It also helps to show the error was isolated. Missing one year with a clear reason reads very differently from missing five consecutive years with no explanation.
Arguments That Tend Not to Work
Two common arguments are weaker than people assume.
Blaming the financial institution for not sending a reminder is not the same as showing the institution made an actual error. The Internal Revenue Manual states that delegating responsibility to another party is “generally not a basis for reasonable cause” because the obligation stays with you.4Internal Revenue Service. IRM 20.1.1 – Introduction and Penalty Relief – Section: 20.1.1.3.2.2.5 “My custodian miscalculated the amount” is a real error. “I assumed my custodian would handle it” usually is not.
Reliance on incorrect advice from a tax preparer or financial advisor is recognized only in limited situations. The IRM states that a taxpayer’s responsibility to comply with distribution requirements “generally cannot be excused by reliance on the advice of a tax advisor.”5Internal Revenue Service. IRM 20.1.1 – Introduction and Penalty Relief – Section: 20.1.1.3.3.4.3 If an advisor told you affirmatively that no distribution was required and you can document that advice, relief is still possible, but it’s a harder case than the general “my accountant should have caught it.”
Simple forgetfulness or not knowing the rules existed generally does not qualify. The IRS looks for specific circumstances that prevented compliance, not general inattention.
Take the Missed Distribution First
Before you file anything, withdraw the amount you should have taken. The statute conditions relief on showing that reasonable steps are being taken to remedy the shortfall, and the IRS is unlikely to grant a waiver if the money is still in the account.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs Ask the custodian for a statement confirming the withdrawal date and amount, and keep it with your records.
Filing the Waiver on Form 5329
The request goes on IRS Form 5329, Part IX, which covers the excise tax on excess accumulations in qualified retirement plans and IRAs.6Internal Revenue Service. Instructions for Form 5329 (2025) – Section: Part IX Three steps:
- Report the shortfall. Enter the total RMD that should have been distributed for the year on line 52a and/or 52b, and the amount actually distributed on line 53a and/or 53b. The difference is your shortfall.
- Request the waiver. On the dotted line next to line 54a and/or 54b, write “RC” followed by the shortfall amount in parentheses. Subtract that amount from the shortfall and enter the result on line 54a and/or 54b. For a full waiver, the result is zero.
- Attach a written explanation. Describe why you missed the distribution, when you discovered it, and when you took the corrective withdrawal.
The explanation letter does not need to be a legal brief. State the account type, the tax year, the amount that should have been distributed, the reason for the error, and what you did to fix it. Attach supporting documents where you have them: medical records, correspondence with the custodian showing an error on its end, a written acknowledgment from an advisor. Keep it factual and focused.
Do Not Pay the Excise Tax With the Request
By writing “RC” on the appropriate line and reducing the tax to zero, you are telling the IRS you believe the penalty should be waived. Do not include a payment. If the IRS accepts the explanation, it simply will not assess the tax. If it denies the request, you will receive a notice or bill for the tax plus any interest. Paying up front and waiting months for a refund is the worse position.
Prior Years, Multiple Years, and Joint Filers
If the miss happened this year, attach Form 5329 and your explanation to your Form 1040 (or 1040-SR or 1040-NR) and file everything together by the return’s due date, including extensions.7Internal Revenue Service. Instructions for Form 5329 (2025)
If you have already filed the return, you have two options. File the prior year’s Form 5329 as a standalone document if you have no other changes to that year. A standalone Form 5329 cannot be e-filed; it must be signed, dated, and mailed on paper to the same IRS address where you would send your Form 1040. If you do have other changes to that year, file Form 5329 along with Form 1040-X.7Internal Revenue Service. Instructions for Form 5329 (2025)
Missed RMDs across multiple years require a separate Form 5329 for each tax year, using that year’s version of the form, each with its own explanation letter. Tedious, but not optional. Married couples filing jointly must file a separate Form 5329 for each spouse who missed an RMD; the combined tax from both forms goes on Schedule 2 of the joint Form 1040.8Internal Revenue Service. Instructions for Form 5329
What Happens After You File
The IRS does not typically send a formal approval letter. The absence of a bill or notice over the following months is generally your signal that the waiver was accepted. If more information is needed, the IRS will contact you. If it denies the waiver, you will receive a notice assessing the tax.
Keep copies of the completed Form 5329, the explanation letter, any supporting documents, and proof of mailing. A certified mail receipt is worth the small cost. Hold on to the custodian statement showing when the corrective distribution was taken.
Why Filing Matters Even If You Want a Full Waiver
The IRS generally has three years from the date a return is filed to assess additional taxes, but the clock only starts when the relevant return is actually filed.9Internal Revenue Service. Statute of Limitations Processes and Procedures
For 401(k)s, 403(b)s, and other employer plans, the excise tax reported on Form 5329 is treated as a separate tax from income tax. Filing your Form 1040 does not start the clock for the excise tax; only filing Form 5329 does. Skip the form for a missed employer-plan RMD, and the IRS can assess the penalty at any time, with no expiration.10Internal Revenue Service. Extension of Assessment Statute of Limitations by Consent
For traditional IRAs, the SECURE Act 2.0 changed this starting with the 2022 tax year. Filing your Form 1040, with or without Form 5329, now starts the three-year statute of limitations for missed IRA RMD penalties. That period extends to six years if the omitted penalty exceeds 25% of the total that should have been reported.
Either way, filing Form 5329 with a waiver request puts the clock in your favor. Silence leaves it running against you.