Missed an Inherited IRA RMD: How to Fix It and Reduce the Penalty

The IRS waivers that protected missed distributions from 2021 through 2024 are over. If you missed a 2025 annual RMD from an inherited IRA, the 25% excise tax applies — but a correction window cuts it to 10%, and a reasonable-cause waiver may eliminate it entirely.

Key takeaway: Take the missed distribution as soon as possible, then file Form 5329 (Part IX) for each missed year — either to report the reduced 10% corrected rate or to request a reasonable-cause waiver. Historically the IRS has been lenient with first-time, promptly corrected mistakes. The bigger risk is doing nothing.

Why 2025 is different: the waivers are gone

When the IRS finalized its inherited IRA rules in July 2024 (T.D. 10001), it confirmed that beneficiaries of post-RBD inherited IRAs must take annual RMDs throughout the 10-year SECURE Act window — not just deplete the account by year 10.¹ (See Inherited IRA RMD Rules for the full pre-RBD vs. post-RBD split.)

The IRS had previously waived all penalties for missed annual distributions for years 2021, 2022, 2023, and 2024 via a series of notices.² Those waivers are exhausted. Distributions due in 2025 and later are subject to the full penalty structure — with one critical exception: the two-year correction window.

The penalty structure: 25%, or 10% if you fix it in time

The excise tax for a missed RMD is imposed under IRC § 4974. Under SECURE 2.0 (§ 302), the rate was reduced from the prior 50% to:³

25% of the amount you should have withdrawn but didn't (the "shortfall")
10% if you correct the shortfall within the correction period

What is the correction period?

For IRAs (including inherited IRAs), the correction period ends on the earlier of:

The date the IRS mails you a notice of deficiency for the excise tax, or
The date the excise tax is assessed, or
December 31 of the second calendar year after the calendar year in which the RMD shortfall occurred.

In practice: if you miss your 2025 RMD (deadline December 31, 2025), you have until December 31, 2027 to correct it and qualify for the 10% rate — as long as the IRS hasn't already assessed the tax. Correct it quickly: custodians may flag shortfalls, and the IRS cross-references Form 5498 (IRA year-end balances) against the distributions you report.

Example: You inherited a traditional IRA from your mother, who died in 2022 at age 78 (past her RBD at 73). You turned 52 in 2023. Your 2025 annual RMD was $21,400, but you took nothing.

Penalty if uncorrected: $21,400 × 25% = $5,350 excise tax (plus the income tax you'll eventually owe on the distribution).
Penalty if corrected by Dec 31, 2027: $21,400 × 10% = $2,140 excise tax (and the income tax on the distribution, which you'll pay in the year you actually take it).
Penalty if waiver is granted: $0 excise tax.

How to calculate your missed RMD amount

If you inherited a post-RBD IRA, your annual RMD is calculated using the Single Life Expectancy Table in IRS Publication 590-B, Appendix B, Table I.⁴

Find your starting factor: Use your age as of December 31 of the year after the original owner's death. Look up that age in the Single Life Expectancy Table to get your initial factor.
Reduce by 1 for each subsequent year: For year 2 of the 10-year window, reduce by 1; for year 3, reduce by 1 again; and so on.
Divide the prior December 31 balance: RMD = account balance on December 31 of the preceding year ÷ your factor for that year.

Selected Single Life Expectancy factors (2022 updated tables, effective through present):
Age 45 → 40.6 | Age 50 → 35.8 | Age 55 → 31.1 | Age 60 → 26.5 | Age 65 → 22.0 | Age 70 → 17.8
Full table: IRS Publication 590-B, Appendix B, Table I.⁴

Missed multiple years? Calculate the shortfall separately for each year using that year's December 31 prior balance and the correct factor for that year. You'll file a separate Form 5329 for each missed year.

Your custodian (Fidelity, Schwab, Vanguard, etc.) can often tell you what they calculated as your RMD for a given year, which is a useful cross-check — but you are legally responsible for the correct amount, not the custodian.

Step-by-step: how to correct a missed inherited IRA RMD

Step 1: Take the missed distribution immediately

Contact your custodian and request a distribution equal to the shortfall amount. This is the first and most important step — the correction period clock is running, and the IRS expects to see that you remedied the error promptly.

If you missed more than one year, take each year's shortfall. You can take them as a single distribution (custodians will allow this), but the Form 5329 filing tracks each year separately.

Step 2: File Form 5329, Part IX, for each missed year

Form 5329 is filed as an attachment to your Form 1040 for the year in question — or as a standalone form if you're filing for a prior year you've already filed.⁵ Part IX covers "Tax on Excess Accumulation in Qualified Retirement Plans."

Line 52: Enter the RMD that should have been distributed for the year.
Line 53: Enter the amount actually distributed.
Line 54: The shortfall (line 52 minus line 53). If you are requesting a waiver, enter "RC" (reasonable cause) and the amount of the shortfall on line 54; write $0 on line 55. If you are not requesting a waiver, multiply line 54 by 25% (or 10% if within the correction period) and enter that on line 55.

File a separate Form 5329 for each tax year in which a shortfall occurred, using the version of Form 5329 that corresponds to that year (available at IRS.gov).⁵

Step 3: Attach a reasonable-cause letter (if requesting a waiver)

The IRS may waive the penalty entirely if you can show the shortfall was due to reasonable error and that you have taken — or are taking — reasonable steps to remedy it.⁶ This waiver request is separate from the correction-period reduction: you can pursue it regardless of whether the 2-year window has passed.

To request the waiver, write "RC" on Form 5329, line 54, and attach a letter explaining:

What happened — specifically why the distribution was not taken (e.g., you were unaware of the annual RMD requirement for post-RBD inherited IRAs, which was only finalized by the IRS in July 2024)
That you have now taken the corrective distribution (include the date and amount)
That you have taken steps to prevent recurrence (e.g., set up automatic distributions)

The IRS has historically been lenient with first-time errors that are promptly corrected, particularly for rules that changed recently. The annual RMD requirement for post-RBD inherited IRAs was not finalized until July 2024 — the argument that a beneficiary was following what seemed like the law through the extended waiver period is a reasonable one to make.

Sample letter language: "The shortfall occurred because I was unaware that IRS final regulations (T.D. 10001, July 2024) imposed annual RMD requirements on inherited IRAs where the decedent had passed their Required Beginning Date. Upon learning of this requirement, I immediately took a corrective distribution of $[amount] on [date]. I have established automatic annual distributions with my custodian to prevent future shortfalls. I respectfully request that the penalty be waived pursuant to IRC § 4974(d)."

Step 4: Report the corrective distribution on your tax return

The distribution you take to correct the shortfall is taxable income in the year you take it — not the year it should have been taken. Your custodian will send Form 1099-R for that calendar year. Include it in your income as you would any other inherited IRA distribution.

Special case: year-of-death RMD

If the original IRA owner died before taking their own RMD for the year of their death, that year-of-death RMD passes to the beneficiary. If you didn't take it, the deadline is December 31 of the year following the owner's death — not December 31 of the owner's death year. The IRS provides an automatic waiver for year-of-death missed RMDs as long as the corrective distribution is taken by that December 31 deadline.¹ If you missed that as well, the same Form 5329 procedure applies.

Common situations that lead to this problem

Inherited during 2020–2024 and assumed no annual RMD was required. The rule was unsettled through early 2024. Many financial professionals and beneficiaries operated on the assumption that only year-10 depletion was required. That's no longer the law for post-RBD inherited IRAs.
Custodian didn't notify you. Custodians calculate RMDs as a service, but they are not required to take the distribution on your behalf. Silence from your custodian doesn't mean you had no obligation.
Multiple inherited IRAs — missed one. If you inherited multiple accounts, the annual RMD is calculated separately for each inherited IRA (unlike your own IRA, where you can aggregate). Missing one account is a separate shortfall.
Trust as beneficiary — trustees missed the calculation. When a see-through trust holds an inherited IRA, the trustee is responsible for calculating and requesting annual distributions from the custodian. If the trustee was unfamiliar with T.D. 10001, the trust may have missed required distributions since 2025.

What about inherited Roth IRAs?

Inherited Roth IRAs are subject to the 10-year depletion rule but not the annual RMD requirement — even if the original Roth IRA owner died after what would have been their RBD (Roth IRAs have no RBD). No annual RMD means no Form 5329 issue for years 1–9. The only failure that would trigger the excise tax is failing to fully deplete the account by the year-10 deadline. See the Inherited Roth IRA guide for the full rule set.

When should you involve an advisor?

Correcting a single missed year with a clear shortfall amount is a Form 5329 filing task your CPA can handle. Where an advisor adds meaningful value:

Multi-year shortfalls: If you've missed 2025 and you inherited in 2020, you potentially missed 2025 as the first required distribution year. But if the inherited IRA started before T.D. 10001's effective date and the IRS waivers covered 2021–2024, your correction scope is limited. An advisor or tax attorney can confirm exactly which years require correction.
Large inherited IRAs: A $1M+ inherited IRA with a missed $35,000 RMD creates real exposure. The difference between a 25% penalty ($8,750), a 10% correction ($3,500), and a waived penalty ($0) justifies professional help.
Calculating a going-forward strategy: Once you correct the shortfall, you need a 10-year plan — factored distributions, Roth coordination, income-gap timing — to avoid both future penalties and unnecessary bracket creep. The correction is the start, not the end.

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Sources

IRS T.D. 10001, "Required Minimum Distributions," finalized July 18, 2024. Effective for distributions beginning in 2025. Confirms annual RMD requirement for non-EDB beneficiaries of post-RBD IRAs, and year-of-death RMD obligation for beneficiaries. IRS — RMD FAQs.
IRS Notice 2022-53 (waiving 2021–2022 penalties); IRS Notice 2023-54 (waiving 2023 penalties); IRS Notice 2024-35 (waiving 2024 penalties). All waivers limited to non-EDB beneficiaries subject to the 10-year rule where the decedent had passed their RBD. No further notices have extended waivers to 2025 distributions. IRS Notice 2024-35 (PDF).
SECURE 2.0 Act of 2022, § 302, amending IRC § 4974. Reduced excise tax on missed RMDs from 50% to 25%; further reduced to 10% if corrected within the correction period (second calendar year after the year of the shortfall, or earlier IRS action). IRS — Correcting RMD Failures.
IRS Publication 590-B (2025 edition), Appendix B, Table I — Single Life Expectancy factors. Table values reflect T.D. 9930 updated life expectancy tables effective January 1, 2022. IRS Publication 590-B.
IRS Form 5329 (2025) and Instructions. Part IX covers "Tax on Excess Accumulation in Qualified Retirement Plans." Separate Form 5329 required for each tax year of shortfall. IRS — About Form 5329; 2025 Form 5329 Instructions.
IRC § 4974(d): "The tax imposed by this section shall not apply to any failure to make a minimum distribution to the extent the Secretary determines that the failure was due to reasonable error and that reasonable steps are being taken to remedy the failure." IRS — Correcting RMD Failures.

Penalty rates and correction procedures verified against SECURE 2.0 Act as enacted (December 2022) and IRS guidance current as of April 2026. IRC § 4974 excise tax: 25% (10% within correction period). Waiver notices 2022-53, 2023-54, 2024-35 covered tax years 2021–2024 only.