I Just Found Out I Missed RMDs on My Inherited IRA — Do I Take Them All at Once?

You inherited your father’s IRA a few years back. You read — correctly, you thought — that the SECURE Act gave you ten years to empty it, so you left it alone to grow and figured you’d deal with it before the deadline. Then someone mentions, offhand, that because your father was already taking his own distributions, you were supposed to be pulling money out every single year along the way. Now you’re counting on your fingers: 2022, 2023, 2024, 2025 — four years you took nothing. The first thing through your head is the penalty number you half-remember, something like 50%, and the second is a practical one: do I have to yank all four years out at once to fix this? That’s the inherited IRA missed RMD problem, and it is far more survivable than that first jolt of panic suggests.

Here’s the short version before I walk through it. You almost certainly do not take all those years out at once, because most of them were never actually owed — the IRS forgave the annual distributions for 2021 through 2024 outright. The penalty is 25%, not 50%, and it drops to 10% — or to nothing — when you fix it the right way. So take a breath. Let me separate what you genuinely owe from what’s already been written off, and then show you the cleanup.

Do I have to take all the missed years out at once?

No — in almost every case you don’t, because the years you think you missed were mostly excused, not merely deferred. This is the single most important thing to understand, and it’s the opposite of what the panic tells you.

When the SECURE Act rewrote these rules, nobody — taxpayers, custodians, or frankly half the tax-prep world — knew for several years whether annual distributions were required inside the ten-year window. The IRS itself didn’t finalize the answer until 2024. So rather than punish a few million beneficiaries for following guidance that didn’t exist yet, the IRS issued a string of relief notices (Notice 2022-53, then Notice 2023-54, then Notice 2024-35) that did two things: they waived the penalty for missed annual RMDs in 2021, 2022, 2023, and 2024, and they treated those distributions as not required in the first place. Those years are gone. You don’t make them up, you don’t take them now, you don’t file anything for them.

What that leaves is a much smaller problem: the years the relief doesn’t cover. The final regulations took effect for distribution years beginning on or after January 1, 2025, so 2025 is the first year the annual distribution is genuinely, enforceably due for most beneficiaries in your shoes. If you missed 2025, that’s the one — singular — you actually have to deal with. Not four years stacked into one brutal tax bill. One.

There’s a threshold question underneath all of this, though, and it decides whether you owed annual distributions at all.

Was I even required to take an annual RMD in the first place?

That turns on one fact: whether the person you inherited from had reached their required beginning date before they died. If they had, you owe an annual distribution in years one through nine and you empty the account by year ten. If they hadn’t, you owe no annual distribution at all — your only obligation is to drain the account by the end of the tenth year.

The required beginning date is the point at which the original owner’s own RMDs had to start — generally April 1 of the year after they turned 73. A parent who died at 80 and was taking distributions was obviously past it; a parent who died at 68 was not. This pre- versus post-required-beginning-date fork is the hinge the whole inherited-IRA system swings on, and I won’t re-litigate all of it here — our guide to the inherited IRA 10-year rule lays out exactly which camp you land in. The reason it matters for you right now is simple: if the owner died before their required beginning date, there is no missed annual RMD to fix. You can’t have skipped something you never owed. The rest of this article is for the people who genuinely were on the hook — post-required-beginning-date — and didn’t take the money.

What do I actually do about the year I really did miss?

Take the money first, then file the paperwork — in that order. The correction only works if the distribution is already out of the account by the time you ask for relief, so the withdrawal comes before everything else.

Calculate the amount you should have taken for the missed year. For a beneficiary, that’s based on your own life expectancy from the Single Life Table in IRS Publication 590-B, divided into the account’s prior-year-end balance. Pull at least that much out of the inherited IRA now. It’s taxable in the year you receive it — the custodian will report it on a Form 1099-R — so it lands on this year’s return, not the year you should have taken it. That timing quirk is normal and expected; don’t let it stop you.

Once the money’s out, you file to clear the penalty. And the penalty is smaller and more forgiving than the number burned into your memory.

Is the penalty really 50% of what I missed?

No. It used to be 50%, but for any miss in a tax year beginning after the end of 2022 the penalty is 25% of the shortfall, and it drops to 10% if you correct it promptly. The 50% figure floating around online is simply out of date.

That excise tax lives in IRC § 4974(a), and SECURE 2.0 cut it from 50% to 25% effective for tax years beginning after December 29, 2022. The further reduction to 10% comes from IRC § 4974(e): if you take the missed distribution and file the return reporting the tax during what the statute calls the “correction window,” the rate is halved again to 10%. The correction window runs from when the tax is imposed and closes on the earliest of the IRS mailing you a notice of deficiency, the IRS assessing the tax, or the last day of the second tax year that begins after the year of the miss. In plain English: you generally have a couple of years to self-correct, and the clock can close early only if the IRS contacts you first. Fixing it now, before anyone comes looking, is exactly how you stay on the cheap end.

And here’s the part people don’t expect: the penalty often isn’t 10% either. It’s frequently zero, because the IRS will waive it.

How do I get the missed-RMD penalty waived?

You request the waiver on Form 5329, and the IRS grants it routinely when the miss was an honest mistake and you’ve already fixed it. This is not a long-shot appeal — for inherited-IRA RMDs missed out of genuine confusion, a granted waiver is the normal outcome, not the exception.

The authority is IRC § 4974(d), which lets the IRS waive the excise tax entirely if you show two things: the shortfall was due to “reasonable error,” and “reasonable steps are being taken to remedy” it. Confusion over the post-SECURE-Act rules is about as textbook a reasonable error as exists — the IRS spent four years issuing relief precisely because the rules were a moving target. The mechanics on the form are specific and easy to get wrong, so here’s how it actually goes:

You complete Form 5329 for each year you’re fixing, using Part IX (the section for excess accumulations — the IRS’s name for a missed RMD). You enter the amount that should have been distributed and the amount you actually took. Then, rather than calculating and paying the tax, you write “RC” — for reasonable cause — next to the line, enter the amount you want waived, and report a tax due of zero if you’re asking for the full waiver. Attach a short statement: a sentence or two explaining the honest reason you missed it and confirming you’ve now taken the distribution in full. That’s the whole package. If you’ve already filed your return for that year, Form 5329 can be filed by itself — you don’t have to amend the entire return to fix this.

Where does it all end up on your taxes? The corrective distribution shows up as ordinary income on this year’s return. Any excise tax that isn’t waived flows from Form 5329 to Schedule 2 of your Form 1040, line 8. If the waiver is granted in full, there’s no tax to carry over at all — just the income from the distribution itself.

What if it was my parent’s own final RMD that got missed, not mine?

That’s a different problem with a different owner, and it doesn’t belong on this page. If what slipped through was the distribution your parent themselves was supposed to take in the year they died — the “year-of-death” RMD — that’s handled separately, with its own automatic waiver, and we walk through it in the post on a parent who wasn’t taking their RMDs. This page is about the distributions you were required to take from the inherited account after it became yours. Keep the two straight, because they’re cleaned up on different timelines and one of them is even easier than the other.

I’ve fixed the back years — how do I size the withdrawals going forward?

Take at least the required minimum every year from here out, but treat that minimum as a floor, not a target. The whole reason to think past the minimum is the year-ten deadline: whatever’s left has to come out by the end of the tenth year, and a beneficiary who only ever takes the small required amount usually gets ambushed by a large, highly taxed lump in that final year.

The required annual amount is modest — it’s spread over your own life expectancy — which is exactly why it’s so easy to forget in the first place. The smarter move is to pull more than the minimum in your lower-income years, deliberately filling up the cheaper tax brackets so the account drains evenly instead of detonating in year ten. That’s a real plan with real numbers, and it’s the entire subject of our guide to how much to withdraw from an inherited IRA each year. Sorting the missed years is the emergency; sizing the next several years well is where the actual money is saved.

What should I do first?

Four steps, in order. First, settle the threshold question — did the owner die after their required beginning date? If not, you owe no annual RMD and there’s nothing to fix. Second, figure out which missed years are real: for deaths in 2020 through 2023, 2021 through 2024 are forgiven, so your exposure usually starts at 2025. Third, take the distribution for any year that genuinely was required and still unpaid — get the money out of the account now. Fourth, file Form 5329 for each of those years with “RC” and a short reasonable-cause statement to request the waiver.

After that, it stops being an emergency and becomes an ordinary multi-year withdrawal plan. If you’d rather have someone confirm which years you actually owe, calculate the catch-up amount, and prepare the Form 5329 waiver so it gets granted the first time, that’s exactly what our inherited IRA tax planning is for. Book a remote consult with our office — sorting this out properly costs a great deal less than a penalty you didn’t have to pay.

Disclaimer: This article is for educational purposes only and does not constitute investment, tax, or financial advice. Tax law is highly fact-specific and subject to change. Always consult a qualified professional about your specific situation.