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Form 5329
Form 5329

Form 5329Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

52 — Reduced Tax for Corrected RMD Updated for tax year 2025

Does this apply to you?

  • You missed your RMD in a prior year and took the shortfall amount before the correction deadline
  • You discovered an RMD shortfall and withdrew the required amount to qualify for the reduced penalty
  • You are filing Form 5329 for a year when you missed an RMD but have since corrected it

Easy to overlook

The correction window extends through the end of the second following tax year If you missed your 2025 RMD, you have until December 31, 2027, to take the missed amount and qualify for the 10% rate. This is a generous window. Filers who discover a missed RMD during the following year’s tax preparation have time to correct it and still qualify for the reduced penalty. 1 SECURE 2.0 Act — RMD penalty reduction

You must still file Form 5329 even with the reduced rate Correcting the shortfall does not eliminate the filing requirement. You file Form 5329, report the shortfall on line 50, and calculate the reduced 10% tax on line 52 instead of the 25% tax on line 51. Skipping the form means the IRS does not know you corrected the shortfall and assesses the full 25% penalty. 2 IRS Form 5329 instructions — Line 52

Watch out for this

Taking the corrected distribution but failing to take the current year’s RMD as well. If you missed your 2024 RMD and take it in 2025, you still owe the 2025 RMD separately. Taking only the prior-year shortfall and skipping the current year creates a new shortfall. Both years’ required amounts must be withdrawn.

Footnotes

  1. SECURE 2.0 Act of 2022, Section 302. https://www.congress.gov/bill/117th-congress/house-bill/2617

  2. IRS Form 5329 Instructions, Part IX, Line 52. https://www.irs.gov/instructions/i5329

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