If you have a retirement account, you must begin taking Required Minimum Distributions (RMDs) starting in the year you turn 73. You can delay your first RMD until April 1 of the following year, but all future RMDs must be taken by December 31 each year.
Note: Different rules may apply to those amounts if you have a 403(b) plan with contributions made before 1987.
What If You Miss Your RMD Deadline?
If you fail to withdraw the full RMD by the deadline, the IRS may impose an excise tax of 25% on the amount not taken. However, correcting the shortfall within a specific timeframe—called the correction window—may reduce the penalty to 10%.
What Is the RMD Correction Window?
The correction window is the period during which you can fix a missed RMD and potentially qualify for the reduced penalty. It begins on the RMD due date and ends on the last day of the second tax year following the year the RMD was missed, or when the IRS assesses the penalty, whichever comes first.
How do I report my missed RMD in the program?
To report a missed RMD and calculate the excise tax, you’ll use Form 5329. The program supports this form and allows you to enter the necessary information on the following lines:
- 'Total minimum required distribution in current year from all qualified plans for which you received a distribution of the full amount of the excess accumulation during the correction window that is subject to 10% tax' carries to Line 52a
- 'Total minimum required distribution for current year from all other plans subject to 10% tax' carries to Line 53a
- 'Total minimum required distribution in current year from all qualified plans for which you received a distribution of the full amount of the excess accumulation during the correction window that is subject to 25% tax' carries to Line 52b
- 'Total minimum required distribution for current year from all other plans subject to 25% tax' carries to Line 53b
Note: Lines 54a, 54b, and 55 are automatically calculated based on your entries in lines 52a - 53b.
If a waiver is requested, the difference between the required and actual distributions is noted on lines 53a and 53b with an RC annotation.
Can You Request a Waiver?
Yes. If the missed RMD was due to a reasonable error and you’re taking steps to correct it, the IRS may waive the penalty entirely. To request a waiver:
- Complete Form 5329.
- Check the box to claim the waiver.
- Enter the amount of the RMD that qualifies for the waiver.
- Provide a written explanation of the error and the corrective actions taken.
The program allows you to enter this explanation and claim the waiver directly within the Form 5329 workflow.