Missed Your RMD? The IRS Just Charged You a 25% Penalty. Here Is How to Use 'Form 5329' to Get Your Money Back

You spent 40 years saving into your Traditional IRA or 401(k) to defer taxes. But the IRS doesn't let you keep that money forever. Once you turn age 73, you must start taking Required Minimum Distributions (RMDs).

What happens if you forget? The IRS imposes one of the harshest penalties in the tax code: an excise tax of 25% on the amount you failed to withdraw.

Did you miss the deadline? Don't panic and pay the penalty yet. There is a "secret" IRS form that can wipe out this fine if you act fast. Here is the 2026 guide to fixing a missed RMD.

Here Is How to Use 'Form 5329' to Get Your Money Back

1. The "Age 73" Trigger (SECURE 2.0 Act)

Under the new rules, RMDs start at age 73 (for those born between 1951 and 1959). You must take your first withdrawal by April 1st of the year after you turn 73. For all subsequent years, the deadline is December 31st.

💰 The Math of the Penalty

If your RMD was $20,000 and you forgot to take it:

• The Penalty is $5,000 (25% of the amount).
• *Note: If you correct it promptly (generally within 2 years), the penalty drops to 10%, but our goal is to use the waiver to pay 0%.

2. How to Request a Waiver (The "Get Out of Jail Free" Card)

The IRS is historically lenient if you have a "reasonable cause" (e.g., illness, death in the family, or bad advice from a broker) and you fix the mistake immediately.

Step-by-Step Fix:

1. Withdraw the Money NOW: Do not wait. Take the missed RMD amount immediately from your IRA. (You will pay regular income tax on this, which is normal).
2. File Form 5329: This is the "Additional Taxes on Qualified Plans" form. You will need to file this with your Form 1040.
3. The Magic Words ("RC"): On the form instructions for the penalty line, you will likely need to write "RC" (Reasonable Cause) and the amount you want waived. Attach a short letter explaining why you missed it (e.g., "I was hospitalized," or "I was confused by the recent SECURE 2.0 rule changes").
4. Don't Pay the Penalty Yet: File the form requesting the waiver without paying the 25% penalty. Wait for the IRS to review your request; if approved, you owe nothing extra.

3. Automation is Your Friend

To ensure this never happens again, call your custodian (Vanguard, Fidelity, Schwab) and set up "Automatic RMD Service."

They will calculate the exact amount based on your life expectancy factor and deposit it into your checking account every December. This puts your compliance on autopilot.

Recovering Your Funds

A missed RMD feels like a disaster, but it is a fixable error. The IRS wants your tax revenue, not your penalty money.

If you realized you missed a payment, file Form 5329 with your tax return this year. That simple piece of paper could save you thousands of dollars.

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Disclaimer: Tax laws are complex and subject to change. This article is for informational purposes only and does not constitute financial or legal advice. Always consult a CPA or tax professional when filing Form 5329 to ensure the waiver request is drafted correctly for your specific situation.