Reminder: Penalties for Missed RMDs Reduced, But Not Eliminated Post-SECURE 2.0

The second SECURE Act reduced the penalties that apply to taxpayers who fail to take their required minimum distributions (RMDs) from traditional retirement accounts. The SECURE Act 2.0 reduced the previously-existing 50 percent penalty amount to 25 percent of the missed RMD (the reduction was effective beginning in 2023). The penalty amount is further reduced to 10 percent of the missed RMD if the taxpayer takes all of their missed RMDs and files a tax return paying the required tax and penalty amount before the earlier of (1) receiving a notice of assessment of the RMD penalty tax or (2) two years from the year of the missed RMD. As we approach the end of the year, taxpayers who have reached their required beginning date should be advised of the new changes. It also remains possible to request a waiver for certain missed RMD penalties. For more information on the penalty for missed RMDs, visit Tax Facts Online. Read More: Link to Q3685.