If you have retirement savings in tax-deferred accounts, such as a traditional IRA or a 401(k), you’ll be required to withdraw money every year after reaching a certain age. Known as required minimum distributions, or RMDs, the amount to be withdrawn is calculated based on your age (represented as your life expectancy factor, described in more detail below) and your account balance on December 31 of the prior year.
What to do if you miss your RMD
The deadline to take your first RMD is April 1 of the year after you reach your RMD age, which is generally 73 (individuals born in 1960 or later will have an RMD age of 75). All subsequent RMDs must be withdrawn by December 31 each year.2
If you miss your RMD, it's important to try to act quickly to fix the error. Penalties for missed RMDs can be significant, but they may be reduced if you attempt to correct the mistake in a timely manner.
What happens if you miss an RMD?
The penalty for a missed RMD is a 25% excise tax on any amount that should have been withdrawn by the deadline. The penalty drops to 10% if you correct the mistake by the IRS deadline, which is generally within 2 years. For example, if your RMD was $10,000 and you withdrew only $8,000, the tax penalty would apply to the $2,000 left for distribution from your account, otherwise known as the “excess accumulation.”
If you miss an RMD, take the distribution as soon as possible. IRS Form 5329 is used with your tax return to report the missed amount and calculate any penalty owed. You may be able to request a reduced or waived penalty if you have reasonable cause for the missed RMD.
How common is it to miss an RMD?
Missing an RMD, or taking less than the amount required, is quite common. Some retirees are not familiar with the rules, or they own multiple accounts, making calculations complex and mistakes more likely. Others may forget to set up their RMD by the deadline due to unforeseen life events, health issues, or other personal reasons. Still others who are beneficiaries of tax-deferred accounts may not be aware of the RMD rules and deadlines associated with inherited retirement plans.
The good news is that the IRS offers RMD correction paths for good-faith mistakes, including a 2-year correction window in which the penalty drops to 10%. Filers may also be able to apply for a waiver for some or all of the penalty if they can explain why there was a shortfall and steps they have taken or are taking to fix it. Note: Regular income tax will always be due on the amount withdrawn.
RMD basics: Deadlines to know
RMDs apply to most IRAs (but not Roth IRAs) and qualified plans, including 401(k), 403(b), and 457 plans. Here’s when you must take your first RMD, depending on the account type.
Your first RMD
By April 1 of the year following the year you turn 73:
- RMDs must be taken from traditional, SEP, SIMPLE, and SARSEP IRAs, even if you’re still working.
- RMDs must be taken from employer-sponsored, pre-tax defined contribution plans, like 401(k), 403(b), and 457 plans, if you are at least a 5% owner of the plan sponsor. (May apply to company founders, family businesses, or partnerships, for example.)
By April 1 of the year following the latter of the year you turn 73, or the year you retire (if allowed by your plan):
- RMDs must be taken from employer-sponsored pretax defined contribution plans, like 401(k), 403(b), and 457 plans if you are not at least a 5% owner of the plan sponsor. (Typically applies to ordinary employees.)
Subsequent RMDs
With any type of account, all subsequent RMDs after the first RMD must be taken by December 31 each year. This can lead to some retirees taking 2 RMDs in a single calendar year. RMDs are taxed as ordinary income, so be aware that doubling up on RMDs can increase your taxable income. If you’re worried about jumping into the next tax bracket, consider taking your first RMD the year you turn 73, rather than the following year, to spread out the tax liability.
What are RMD rules for inherited accounts?
RMD deadlines for inherited IRAs depend on the type of beneficiary—spouse, non-spouse, or non-person entity—and when the original owner of the account died.
Spousal beneficiaries generally have the most flexibility when it comes to taking RMDs and emptying inherited IRA account balances. Options include moving inherited assets into their own IRA as if they were the original owner, transferring them to a separate inherited IRA and taking RMDs, depleting the balance over 10 years, or delaying RMDs until their late spouse would have reached RMD age.
Non-spouse beneficiaries must generally empty an inherited account within 10 years of the original owner’s passing and take RMDs annually if the original owner had already started taking RMDs.
An eligible designated beneficiary (EDB) does not have to follow the 10-year rule and can take RMDs based on their age or the age of the original owner if they were younger and were already taking RMDs from their IRA.
An EDB is a non-spouse beneficiary who can be either a minor child of the original owner at the time of their passing, a chronically ill or disabled person, or someone not more than 10 years younger than the original owner. Spouse beneficiaries are also EDBs. RMD rules for an EDB depend on whether the original account owner had begun taking RMDs yet, and the age of the beneficiary.
These rules can be complex, further complicating RMD calculations and increasing the likelihood of mistakes. If you inherit an IRA, consider consulting a financial or tax professional promptly to establish a withdrawal strategy that’s appropriate for your situation.
Find out about all of your inherited IRA RMD options at Fidelity: Managing RMDs for inherited IRAs.
How to fix a missed RMD
Take the following steps if you miss an RMD.
Step 1: Take the missed distribution ASAP.
Calculate your RMD for last year and be sure to keep it separate from any current-year calculations. The calculation is straightforward: First, locate your account balance on December 31 of the year before you missed the RMD. This should be accessible in your account statements. Then find the life expectancy factor corresponding to your age in the IRS Uniform Lifetime Table (PDF). Finally, divide your balance as of December 31 for the prior year by the life expectancy factor to get your RMD. Your missed RMD amount should be withdrawn over and above your RMD for the current year.
Note that if your spouse is the sole beneficiary of the account and is more than 10 years younger than you, you can use the IRS Joint Life Expectancy Table (PDF), which will likely result in a smaller RMD.
You may be able to find a prior year RMD amount printed on a prior year account statement. If your account was with Fidelity, you can find prior year RMD calculations in Fidelity’s retirement distributions center. You may also want to consult with a financial or tax professional if your situation is complex—for example, if you’re dealing with multiple accounts or an inherited IRA with more than one beneficiary.
Good to know: You can also use Fidelity's online RMD calculator to determine your current-year RMD amount.
Step 2: Keep in mind the IRS correction window.
You generally have 2 years to correct an RMD mistake and qualify for a reduced penalty, from the end of the year in which you missed a distribution. For example, you have until December 31, 2026, to make up a distribution shortfall from 2024. If you do so in this timeframe, you can pay a 10% penalty on the shortfall rather than 25%.
Step 3: Determine the correct IRS form.
To qualify for the reduced penalty, you could consider filing IRS Form 5329 along with your tax return showing the additional tax penalty you owe. You may also want to consult with a tax or financial professional who can help you with IRS Form 5329 and any questions about your specific situation.
IRS Publication 590-B is the IRS’s official guide to how money is withdrawn from IRAs. It contains the instructions for IRS Form 5329, which can also help you complete the form.
How to request a penalty waiver
If you believe you have reasonable cause to have missed your RMD, such as a health reason, attach a statement of explanation to Form 5329 and follow the instructions to estimate your waiver.
How to prevent missing an RMD in the future
RMDs happen annually, so planning for them can be as simple as setting a reminder every year on your birthday or halfway through the year to see that you’re on track to meet your RMD based on your current frequency of withdrawals.
Remember, RMDs are calculated using the prior year’s account balance. So you might consider calculating your RMD in January and then setting up regular automatic withdrawals throughout the year to ensure you’ve met your RMD by December 31.
Whichever method you choose, it’s best practice to get your withdrawal request in before the holidays to avoid any possible transaction processing delays.
Get help if you think you need it
Professional guidance can be invaluable in special RMD situations. If you’ve inherited an IRA, an advisor can help you understand whether the account is subject to RMDs and create a plan for taking withdrawals to avoid penalties and maximize tax efficiency. An advisor can also be helpful for anyone with multiple tax-deferred accounts subject to RMDs, including workplace plans and IRAs, to determine the best strategy for when and how to take withdrawals while being mindful of the tax impact and the overall investment strategy.