RMD Correction window
The correction window is the period during which a missed required minimum distribution (RMD) can be corrected in a way that may reduce the applicable excise tax.
Under current rules, a 25 percent excise tax generally applies to any RMD shortfall. However, that tax may be reduced to 10 percent if the shortfall is corrected within the correction window.
The correction window begins in the year the RMD is missed and ends on the earlier of:
- The date the IRS assesses the excise tax, or
- The last day of the second tax year following the year the RMD was missed
To qualify for the reduced penalty, the missed RMD amount must be distributed during this period.
Even if the correction window has passed, a taxpayer may still request a full waiver of the excise tax by filing IRS Form 5329 and providing a reasonable cause explanation.
Understanding the correction window is important, because acting within that timeframe can significantly reduce the penalty for missed RMDs.
