Missed 2025 RMD Deadline? Options Exist to Mitigate Tax Penalty

Individuals who missed their 2025 required minimum distribution (RMD) deadline may still have options to reduce or avoid the associated tax penalty. The IRS offers pathways to lower the penalty from 25% to 10% or potentially have it waived entirely.

• A 25% penalty typically applies for missing the 2025 RMD deadline.
• The penalty can be reduced to 10% if the RMD is taken within two years of the missed deadline.
• The IRS may waive the penalty if the failure was due to a reasonable error that has been corrected.
• Individuals must file Form 5329 with their 2025 tax return or an amended return if already submitted.
• Providing a letter of explanation may support a request for penalty waiver.
• Acting promptly is crucial to mitigate financial consequences.