How much are RMD penalties and can they be reduced?

The IRS assesses a 25% excise tax on the amount you failed to withdraw. If you correct the shortfall within the correction window and file Form 5329, that penalty can be reduced to 10%. Act quickly, document the missed amount, and keep proof of the make-up distribution with your tax records.

What if I turned 73 this year? Can I delay my first RMD?

Yes. You may delay your first required minimum distribution until April 1 of the following year. If you do, you will also need to take that year’s regular distribution by December 31, which means two payments in the same calendar year. Consider the tax impact before choosing to delay.

How do I use Form 5329 to fix a missed RMD?

Take the missed amount as soon as possible, then file Form 5329 with your tax return to report the shortfall and claim the 10% rate under timely correction. Attach a brief explanation if you seek relief. Keep distribution confirmations and custodian statements with your records for support.

Do Roth IRAs have required minimum distributions?

Roth IRAs do not require lifetime distributions for the original owner, so there is no RMD penalty risk while you are alive. Beneficiaries of inherited Roth IRAs may have distribution requirements. Traditional, SEP, and SIMPLE IRAs, and most employer plans, do require distributions once you reach the applicable age.

Global Market Insights

January 04: RMD Misses Put Up to $1.7B at Risk, Vanguard Warns

ByHuzaifa Zahoor January 5, 2026January 5, 2026

RMD penalties are back in focus after the Dec. 31 cutoff. Vanguard says 6.7% of required minimum distribution clients missed 2024 withdrawals, putting up to $1.7 billion at risk. The IRS charges 25% on the shortfall, but timely fixes can cut that to 10% by filing Form 5329. With age 73 RMD rules in effect, we show who must take distributions, how to correct a miss right away, and ways to avoid another costly mistake.