A required withdrawal from a retirement account is one of the few tax rules with a hard calendar date. Miss it, and the Internal Revenue Service adds a penalty on top of the income tax that is already due on the money. For most people subject to the rule, the date is the last day of the year.
The penalty is an excise tax, which is a tax charged on a specific act, here the act of leaving money in the account that should have come out. The IRS sets the rate and the way to reduce it. Does an account owner 73 or older still have time to take the required amount by Dec. 31, and what happens if the date slips past?
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Who has to take the money out, and by when
The IRS says withdrawals generally have to start from an IRA, SIMPLE IRA, SEP IRA or workplace retirement plan account when the owner reaches age 73. The rule covers traditional IRAs, SEP and SIMPLE IRAs, and plans such as 401(k), 403(b) and 457(b) accounts. It also reaches Roth IRA beneficiaries, according to the agency’s page on required minimum distributions, often shortened to RMDs.
The same page sets the yearly deadline: “For each year after your required beginning date, you must withdraw your RMD by December 31.” That means a person who turned 73 in an earlier year has until the end of this calendar year to take the amount that applies for 2026.
The amount is not the same for everyone. It depends on the account balance and the owner’s age, and anyone with several accounts has to work out the figure for each one.
What the 25% charge applies to
The IRS says an owner who does not take the required amount may owe a 25% excise tax “on the amount not distributed as required.” The charge is a share of the shortfall, not of the whole account. If the required amount is short by a given sum, the penalty is a quarter of that sum.
The tax is separate from ordinary income tax. A withdrawal from a traditional account is generally taxable income when it comes out, so missing the date does not avoid the income tax. It only adds the penalty.
Form 5329, titled “Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts,” is the IRS form used to report the tax, the agency says.
How the penalty drops to 10%
The IRS RMD page says the rate is 10% when the missed amount is withdrawn within two years. The instructions for Form 5329, which cover the 2025 tax year, add the conditions. The reduced rate applies when the shortfall is taken out during the correction window, and when a return is filed that reflects the additional tax.
That makes the cut conditional. The 10% rate is not automatic and does not apply to a shortfall that is left alone. The shortfall has to be withdrawn, and the tax has to be reported.
The IRS also says it can waive part or all of the tax when the shortfall resulted from reasonable error and reasonable steps are being taken to fix it. The Form 5329 instructions say to attach a statement of explanation, file the form, and write “RC” and the waived amount in parentheses next to line 54a or 54b. A waiver is a request the IRS can grant or refuse, so it works as a backstop, not a plan.
The first-year exception
The Dec. 31 date has one notable exception. For a first RMD from an IRA, SEP or SIMPLE IRA, the IRS says the due date is April 1 of the year after the owner reaches 73. Workplace plan participants may have a different date, depending on the plan and whether they are still working.
Waiting has a cost. The IRS explains that a person who delays the first withdrawal into the following year generally faces two deadlines in that year: April 1 for the first RMD and Dec. 31 for the next one. Both amounts count as income in the same year. The agency also says the first RMD can be taken by Dec. 31 of the year the owner turns 73 instead.
The 25% charge in the headline applies to the yearly Dec. 31 deadline. Someone taking a first RMD should read the first-year dates on the IRS page before assuming Dec. 31 controls.
Where to find the exact rules
The IRS RMD page was last reviewed or updated April 8, 2026. It points to two longer references. One is the Instructions for Form 5329, which carry the penalty math and the waiver steps. The other is Publication 590-B, the IRS guide to IRA distributions, which has sections on the tax on excess accumulations, the reduced rate, reporting the tax and the request to waive it. The edition online is written for 2025 returns.
Account custodians, the banks and brokerages that hold the money, are the usual place to ask for a calculated RMD figure and to arrange the withdrawal. The IRS pages explain the rules, and the custodian moves the money.
Taking the amount early in December leaves time for a transfer to clear. A withdrawal requested in the final days of the year can land after Dec. 31 and count for the next year.
Is the required withdrawal done before Dec. 31, and if not, how fast can it be fixed?
An account owner 73 or older who lets Dec. 31 pass owes a 25% excise tax on whatever was not taken, and the cut to 10% depends on fixing the shortfall within two years. A first-year owner can also land two withdrawals, and two sets of income, in a single tax year.
Cut Your Retirement Tax Bill: 12 Moves is a guide that shows each income line that sets a retiree’s tax bill, in 2026 numbers. It 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,” along with the Medicare surcharge line, where one dollar over can cost more than $1,100 a year per person.
Get the RMD deadline and first-year guide in the 12-move tax kit →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
