IRS Form 5329 Waiver of Penalty: How to Get a Missed RMD Excise Tax Waived (2026)

By Craig Wear, CFP® | Last reviewed: October 9, 2026

An IRS Form 5329 waiver of penalty can erase the entire 25% excise tax on a missed RMD, and the request costs nothing to file.

To request an IRS Form 5329 waiver of penalty, take the missed required minimum distribution, complete Part IX of Form 5329 for the year it was missed, write “RC” and the amount to be waived in parentheses next to line 54a or 54b, and attach a statement explaining the reasonable error and the fix.

What is the Form 5329 waiver of penalty?

The Form 5329 waiver is a request, made on the form itself, asking the IRS to forgive part or all of the excise tax on a missed required minimum distribution. There is no separate application: the request is the “RC” entry in Part IX plus an attached statement.

The legal basis is section 4974(d) of the Internal Revenue Code. It allows the IRS to waive the tax if the taxpayer shows the shortfall “was due to reasonable error” and that “reasonable steps are being taken to remedy the shortfall” (26 U.S.C. 4974(d)).

The penalty math and the basic fix are covered in our guide to the RMD penalty for a missed required distribution; this page covers the waiver itself.

Which penalties can Form 5329 waive, and which can it not?

Only one tax on Form 5329 has a reasonable-error waiver: the excise tax on excess accumulations in Part IX, which is the missed RMD tax. The other taxes on the form are avoided through statutory exceptions or timely correction, not a waiver request. The errors that most often lead to that tax are reviewed in common RMD mistakes and their fixes.

This is the most common misconception about the form: the “RC” procedure in the instructions appears only under lines 54a and 54b (IRS Instructions for Form 5329).

How do you request the waiver, line by line?

The request follows the sequence the IRS lists under “Waiver of tax for reasonable cause” (Instructions for Form 5329 (2025)).

1. Take the missed RMD. Withdraw the full shortfall once the error is found; “reasonable steps” to remedy it are half of the legal test.
2. Use the form for the year of the miss. A 2025 shortfall goes on the 2025 Form 5329.
3. Complete lines 52a, 52b, 53a and 53b. Line 52 is the required RMD; line 53 is what was taken by the deadline, leaving off later make-up withdrawals.
4. Write “RC” and the amount next to line 54a or 54b. Put “RC” and the amount in parentheses on the dotted line, subtract it, and figure the line on what remains.
5. Finish line 55 and attach the statement. Pay any tax left on line 55 (zero if fully waived) and attach the explanation.
6. Wait for the IRS decision. If the request is not granted, the IRS sends a notice of the tax owed.

Lines 54a and 54b split the shortfall by rate. Line 54a carries plans where the full missed amount was distributed during the correction window and applies 10%; line 54b carries all other plans at 25% (Form 5329 (2025)). Line 55 totals the two and flows to Schedule 2 (Form 1040), line 8.

What should the letter of explanation say?

The statement should answer the two questions in the statute: why the shortfall was a reasonable error, and what has been done to fix it and prevent a repeat. The IRS FAQ calls it “a letter of explanation” and says it must be attached to Form 5329 to qualify (IRS RMD FAQs, Q9).

Neither the Code nor the instructions list what counts as “reasonable error,” and the IRS decides each request individually. Statements commonly describe a serious illness, a death late in the year, a custodian processing error or a calculation mistake. The IRS FAQ notes that the account owner “is ultimately responsible for taking the correct RMD amount,” so a custodian error is stronger when backed by documents.

A clear one-page statement usually covers:

• The account, the tax year, the required amount and the amount actually taken.
• What happened and when it was discovered, with dates.
• The date and amount of the corrective withdrawal, ideally with a custodian confirmation.
• The specific step now in place to prevent a repeat, such as an automatic annual distribution.
• A direct request that the IRS waive the tax on the stated amount under section 4974(d).

Worked example: what a waiver is worth on a missed 2025 RMD

A hypothetical example shows how the three outcomes compare. An IRA owner turned 75 in 2025 and had $500,000 in a traditional IRA on December 31, 2024. The Uniform Lifetime Table factor at 75 is 24.6 (IRS Publication 590-B, Appendix B), so the 2025 RMD was $500,000 ÷ 24.6 = $20,325.20, and none of it was withdrawn by December 31, 2025.

The owner finds the miss in February 2026, withdraws $20,325.20 that month and files the 2025 return.

The excise tax is separate from income tax. The $20,325.20 make-up withdrawal is still ordinary income in 2026, the year it is received, and the 2026 RMD is its own requirement: at age 76 the factor is 23.7, applied to the December 31, 2025 balance. For a 2025 shortfall, the correction window ends no later than December 31, 2027, the last day of the second taxable year beginning after 2025, or earlier if the IRS mails a deficiency notice or assesses the tax first (section 4974(e)(2)).

When is a waiver automatic, with no request needed?

Some missed RMDs never need an “RC” request because the regulations or IRS notices waive the tax outright.

The final RMD regulations, effective for taxable years beginning on or after January 1, 2025, include two automatic waivers (Treas. Reg. 54.4974-1(g)):

• Year-of-death RMD. If an owner dies before taking that year’s RMD, the tax is waived automatically when the beneficiary takes the corrective amount by the beneficiary’s tax filing deadline, including extensions, or, if later, the last day of the following calendar year.
• Late 10-year election. An eligible designated beneficiary who defaulted into life-expectancy payments after a death before the required beginning date, and missed them, is waived automatically if the beneficiary elects the 10-year rule by the end of the ninth year after the death.

Separately, three IRS notices covered beneficiaries confused by annual payments under the 10-year rule: Notice 2022-53 (2021 and 2022), Notice 2023-54 (2023) and Notice 2024-35 (2024). In each, “the IRS will not assert that an excise tax is due under § 4974” for a specified RMD, generally one owed by a designated beneficiary of an owner who died in 2020 through 2023 on or after the required beginning date (Notice 2024-35). Notice 2022-53 adds that a taxpayer who already paid the tax on a 2021 specified RMD “may request a refund” (Notice 2022-53).

From 2025, annual 10-year-rule payments are enforceable, so a missed 2025 amount follows the standard path: correct it, then request the waiver. The rules for who owes annual payments are in the three versions of the inherited IRA 10-year rule, and the math is in how to calculate an inherited IRA RMD.

Do you file it with your return or by itself?

Form 5329 is filed with the Form 1040 for the year of the shortfall if that return has not yet been filed; otherwise it can be filed by itself for the prior year. The instructions say a taxpayer with no other changes who has not previously filed a federal income tax return for that year files “the prior year’s version of Form 5329 by itself,” and one with other changes files it with Form 1040-X (Instructions for Form 5329).

A Form 5329 filed by itself “can’t be filed electronically,” must show the address on page 1 and needs a signature and date on page 3. Missed RMDs in several years need a separate Form 5329 for each year, on each year’s version of the form, and shortfalls for 2022 and earlier fall under the old 50% rate.

The Form 1099-R for a make-up withdrawal reports the year it was paid, not the year it was owed.

How long can the IRS take, and is there a statute of limitations?

The IRS publishes no response time for a waiver request, but SECURE 2.0 put a clock on how long it can assess the tax. The instructions describe a notice only if the request “is not granted,” not an approval letter.

SECURE 2.0 section 313, enacted December 29, 2022, added a rule that, for the section 4974 tax, the Form 1040 for the year of the shortfall counts as the return that starts the general 3-year period (26 U.S.C. 6501(l)(4)). For the 6% IRA excess contribution tax under section 4973, the same rule applies with a 6-year period.

For someone not required to file a return, the 3-year period starts on the date the return would have been due, excluding extensions. This limits how far back the IRS can reach; it does not remove the tax.

How does the waiver fit into a Roth conversion and RMD plan?

A missed RMD affects Roth conversion planning because, once RMDs begin, the year’s RMD has to come out before any amount can be converted. The IRS FAQ confirms RMD amounts cannot be rolled over (IRS RMD FAQs, Q12), so a make-up withdrawal cannot be moved into a Roth IRA either. The sequencing is covered in Roth conversions in your first RMD year and whether a Roth conversion counts as an RMD.

Roth IRAs have no lifetime required minimum distributions, so balances converted before RMD age shrink the pre-tax base future RMDs are figured on. Owners of several accounts can also review the RMD aggregation rules. A financial professional can model whether conversions in lower-bracket years, such as years within the 24% bracket that tops out at $201,775 single or $403,550 married filing jointly in 2026, fit a household’s plan.

Frequently asked questions

This article is for educational purposes only and is not individualized investment, tax, or legal advice. Consult a qualified professional about your specific situation.