Retirement accounts that grew tax-deferred for decades come with a yearly bill for the taxes that were put off. The required minimum distribution is the amount an account owner must take out each year, and the penalty for skipping it is steep. With two months left in 2026, the year-end deadline is close enough to plan around.
The question for any account owner of the right age is whether this year’s required withdrawal has been taken, and what happens if it was not. The IRS answers both on one FAQ page, including a lower penalty rate for people who fix the mistake quickly.
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The 25% tax lands on the amount not taken
The IRS’s required minimum distribution FAQs, last updated January 29, 2026, say a person who fails to take an RMD “may be subject to an excise tax of 25%.” The tax applies to the shortfall, meaning the gap between what should have come out and what did, and not to the account balance.
A simple illustration shows the scale. If an account owner was required to withdraw $10,000 and took $4,000, the shortfall is $6,000 and the excise tax at 25% is $1,500. The ordinary income tax on the money that was withdrawn is a separate matter.
The penalty is also in addition to the withdrawal itself. Missing the deadline does not cancel the requirement, so the shortfall still has to come out of the account, and the tax is the price of the delay.
A tenth if the mistake is fixed within two years
The same IRS page says the tax is “10% if the RMD is timely corrected within two years.” The reduced rate depends on correcting the shortfall inside that window, which means taking the missed amount out and reporting the error rather than waiting for the IRS to find it.
On the $6,000 shortfall in the earlier illustration, the lower rate would mean $600 instead of $1,500. The gap between the two rates is the reason a missed withdrawal found in January is worth fixing at once, since the two-year clock for the correction is already running.
The IRS also allows a person to ask for the penalty to be waived. Its FAQ says the request is made on Form 5329 with a letter of explanation attached, and the penalty may be waived when the shortfall came from a reasonable error and reasonable steps are being taken to fix it.
December 31 is the line for most years
The IRS FAQ illustrates the annual timing with an example in which a second RMD “is due by December 31, 2025, based on your account balance on December 31, 2024.” For an account owner already past the first distribution year, the same pattern means the 2026 withdrawal has to leave the account by December 31, 2026, and is sized from the December 31, 2025 balance.
The rule starts at 73. The IRS says required distributions begin “for the year in which you reach age 73,” so anyone who turned 73 during 2026 is in a first-year situation that works differently from the annual deadline.
Trustees and custodians often calculate the figure and send a notice, but the legal duty rests with the account owner. A custodian’s reminder is not a substitute for checking that the money actually left the account, particularly when an owner holds several IRAs.
The first-year trap and the April 1 option
The first RMD can be postponed. The IRS FAQ says a person “can delay taking the first RMD until April 1 of the following year.” For someone who turned 73 in 2026, that means the first withdrawal can wait until April 1, 2027.
The catch is that the delay stacks two distributions into one calendar year. The year-two RMD still falls due by December 31, so a person who uses the April 1 option takes the first and second withdrawals within the same 2027 tax year, which can push taxable income higher than spreading them out would have.
That arithmetic is why the headline’s December 31 deadline applies to the annual withdrawal and not to every first distribution. Someone in the first year has a real choice between taking the money in 2026 or waiting, and the penalty clock follows whichever date applies.
How a shortfall gets reported
A missed withdrawal is reported on Form 5329, which the IRS says is used to report additional taxes on IRAs and other tax-favored accounts. The FAQ says the form is filed with the federal return for the year the distribution was required. The IRS’s Form 5329 page, last reviewed in August 2026, lists the form and its instructions.
The IRS’s separate penalty-relief change, announced in release IR-2026-83, concerns late-filing, late-payment and failure-to-deposit penalties on original returns, not this excise tax. The RMD penalty runs through its own waiver request on Form 5329, so an account owner with a shortfall follows the steps in the RMD FAQ.
With roughly nine weeks left before the end of 2026, the practical order is to find each account’s required amount, add up what has already been withdrawn, and move any gap before December 31. A shortfall still left after that date is the situation that triggers the 25% tax.
Has this year’s required withdrawal left the IRA, and what if it has not?
An IRA owner who is a few thousand dollars short on the 2026 withdrawal faces a tax of 25% of that gap, and an owner just turned 73 can end up with two distributions landing in the same year. The deadline is December 31, so the cost of waiting is set by the calendar.
Cut Your Retirement Tax Bill: 12 Moves covers RMDs on time, without the 25% penalty or the first-year trap, and giving from your IRA straight to charity, left out of your taxable income. It also lays out the 2026 numbers on one page, along with the form to use for each move, including Form 5329.
Get the RMD-on-time and first-year-trap steps in the Cut Your Retirement Tax Bill guide →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
