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By Bill Harris, CFP

If anything can be blamed for creating chaos in the world of required minimum distributions (RMDs), it’s COVID-19. In response to the financial disruption caused by the pandemic – and in hopes of providing some relief – the Corona Aid, Relief, and Economic Security (CARES) Act of March 2020 offered some concessions in the traditional RMD obligations.

Bill Harris is a Retirement Management Advisor® (RMA®), a CERTIFIED FINANCIAL PLANNER™ practitioner (CFP®), a Master Elite Ed Slott Advisor, and author of ‘Inheriting Your Spouse’s IRA’. He is President of WH Cornerstone Investments, a financial advisory firm located in Kingston, MA. Learn more at

Bill Harris

From that one gesture, the IRS has managed to issue a series of unclear, incomplete – and maybe even contradictory – guidance as taxpayers try to meet those obligations.

How the IRS created the confusion

Investors were given a free pass for 2020 by waiving the need to take RMDs from tax-deferred retirement accounts – 401(k)s, 403(b)s and IRAs – that tax year. However, the waiver did not extend to future years.

The goal of the waiver was a good one. It allowed investors to keep their funds invested in their qualified accounts – where they could avoid locking in losses and hopefully benefit from some market recovery – without risking the 50% penalty on the amount that should otherwise have been distributed. They could wait until 2021 to take their next RMD.

However, earlier legislation had already stirred the waters around RMDs. On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 addressed account holders who inherited IRAs after 2019 as Non-Designated Beneficiary (NDB), Non-Eligible Designated Beneficiary (NEDB) and Eligible Designated Beneficiary (EDB). For a Non-Eligible Designated Beneficiary, the ability to stretch distributions over a beneficiary’s life expectancy is now gone. Instead, under the new 10-year rule, the account’s entire balance had to be emptied by the end of the tenth year after the original account owner’s death, but most people understood that there would be no RMDs during the ten years.

Then on February 24, 2022, the IRS issued proposed regulations stating that certain inherited account holders – where the original IRA owner died on or after the start date for lifetime RMDs – would have to take annual RMDs under the new 10-year rule. By now, holders of inherited accounts were totally confused and started a campaign of complaints to the IRS, resulting in Notice 2022-53 of October 7, 2022.

Notice 2022-53 indicated that those individuals with inherited accounts who should have taken RMDs for 2021 and 2022 – but who didn’t because of the lack of clarity – would not have to pay the 50% excise tax otherwise applied. And those who had paid the tax could request a refund. Penalties on 10-year payout accounts would only be applied again in 2023.

Although the notice didn’t say so, the account holders affected by Notice 2022-53 interpreted “waiving the 50% excise tax” to mean that RMDs did not have to be taken for the years 2021 and 2022. Next, the interpretation spread to those with accounts that had nothing to do with inheritances or beneficiaries – but who instead were subject to lifetime RMDs and 50% penalties for missed deadlines.

A noticeable uptick was seen in the number of missed RMDs for 2021.

Did you miss your 2021 or 2022 RMD?

So where does that leave all the original (not inherited) account holders of 401(k)s, 403(b)s, and IRAs?

If you missed your 2021 RMD deadline, you might also have missed taking your 2022 RMD unless you withdrew the funds before December 31, 2022. An exception will be if this is your first year, in which case you have until April 1, 2023.

Regardless of the year or years you may have missed, a missed RMD has serious consequences. Once you take the distribution – which you will ultimately have to do – in addition to the taxes you’ll owe, you will be assessed a 50% penalty on the amount of the RMD not taken by the deadline. Penalties are not cumulative, meaning if you fail to pay for two years, your first missed RMD will not be penalized twice. But the cost adds up quickly, nonetheless.

How do you fix a missed RMD using Form 5329?

The IRS has shown leniency based on 26 USC Section 4974(d), “Waiver of tax in certain cases,” if you can show reasonable cause and take the appropriate steps to correct the situation as soon as you discover the oversight. These are the steps:

Step One: Start by taking the missed RMD(s) immediately and in their totality.

Step Two: Complete one Form 5329, “Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts,” for each RMD year you missed. If filing Form 5329 for a prior year, use the prior year’s version of the form. If you and your spouse are both required to file Form 5329, complete and file separate forms. Use the form to request a waiver for the 50% penalty – and possibly to pay. The process won’t be triggered automatically: you’ll have to start it, and filing Form 5329 is what starts the statute of limitations running on the open 50% penalty. Without that, the penalty can continue growing through interest and other penalty assessments.

Step Three: You don’t have to prepay the 50% penalty, but there’s a downside: if the IRS later assesses the penalty, it might add interim interest on the penalty amount.

Step Four: Attach a short statement to the form that explains the reason for the nonpayment, how you’ve remedied the mistake (by taking the RMD) and what you are doing to ensure timely distributions in the future.

Step Five: Wait. You will not have to pay the excise tax unless the IRS contacts you and assesses it, which it may not. How long should you wait? The general rule is that the IRS must assess additional taxes and penalties no later than three years after a tax return’s due date or the date the tax return is filed. (Form 5329 is considered a tax return.) Your waiver was likely granted if you haven’t heard in three years.

As for 2023 and beyond, there are no active waivers at this time.

Navigating the world of RMDs can be a challenge without rule changes. But when you combine changes with the less-than-intuitive terminology used to explain the requirements of the various circumstances under which RMDs exist, it might make sense to ask for professional help as you get yourself set up for the long term.

About the author: Bill Harris, CFP®, RMA®

Bill Harris is a Retirement Management Advisor® (RMA®), a CERTIFIED FINANCIAL PLANNER™ professional (CFP®), a Master Elite Ed Slott Advisor, and author of Inheriting Your Spouse’s IRA: The Widow's Guide to Keeping More of Her Assets. He is president of WH Cornerstone Investments, a financial advisory firm located in Massachusetts. Learn more at