RMD Deadline 2025: Don’t Get Hit with a 25% IRS Penalty

Picture this: It’s mid-December, you’re finally relaxing after the holiday rush, and then it hits you like a brick – you forgot about that required withdrawal from your retirement account. Suddenly the cozy vibe turns into cold sweat because you remember hearing something about a penalty that can eat up a quarter of what you were supposed to take out.

You’re not alone. Recent numbers show that more than half – yes, 53% – of investors who need to take money out this year still haven’t done it with just weeks remaining. And honestly? I’ve seen this panic moment play out with clients more times than I can count.

The 2025 RMD Deadline Is Closing Fast

Here’s the hard truth: if you’re 73 or older (or inherited certain retirement accounts), the IRS doesn’t care about your holiday plans. They want their cut, and they want you to follow the rules. Miss the deadline and they’re perfectly happy to charge you 25% of whatever you should have withdrawn.

That penalty used to be 50%. They cut it in half a couple years ago, which feels like they’re being nice until you realize 25% is still an insane amount of money to lose because you forgot to push a button or write a check.

Who Actually Has to Take RMDs in 2025?

Let’s make this crystal clear because there’s so much confusion here.

• Anyone who turned 73 in 2025 (or earlier)
• People who turned 73 last year but delayed their first RMD until April 1, 2025 (you still need this year’s too by Dec 31!)
• Certain beneficiaries of inherited IRAs – especially if the original owner died after 2019
• Anyone with a traditional IRA, SEP IRA, SIMPLE IRA, or most 401(k)s from previous employers

Roth IRAs? You’re off the hook during your lifetime. But inherited Roths can have different rules. The devil really is in the details.

The Two Deadlines That Trip Everyone Up

This is where most people get completely confused, and honestly, it’s designed to be confusing.

Your first RMD has a generous deadline – April 1 of the year after you turn 73. That sounds great until you realize you then have to take two RMDs in the same calendar year if you wait that long. Which means double the tax hit in one year.

Every RMD after that? Hard deadline of December 31. No extensions. No “I was busy with grandkids.” Nothing.

“Take it as soon as you possibly can at this point. The longer you wait, the less flexibility you’ll have.”

– Retirement distributions expert at a major brokerage firm

The Penalty Is Brutal (But Sometimes Forgivable)

Let’s talk numbers because this is what keeps people up at night.

Say you were supposed to take out $40,000 this year and you forgot. That’s a $10,000 penalty. Ten. Thousand. Dollars. Gone. For getting the date wrong.

But here’s something most articles don’t tell you: the IRS will often waive this penalty if you have a reasonable excuse and fix it quickly. They’ve been surprisingly understanding lately, especially with all the rule changes.

• File Form 5329 with your tax return
• Explain what happened (be honest – “I didn’t know” actually works sometimes)
• Show you’ve taken the distribution
• Ask for penalty relief

Many people get full relief this way. I’ve seen it happen repeatedly. The key is acting fast and documenting everything.

Inherited IRAs: The Biggest Disaster Zone Right Now

If I had to pick one area where people are getting absolutely crushed right now, it’s inherited IRAs.

The rules changed dramatically in 2020, and the IRS spent years sending mixed signals about enforcement. They waived penalties for missed withdrawals in 2021-2024. But that grace period ended.

Now in 2025, if your parent or spouse died after 2019 and you inherited their retirement account, you might have annual RMD requirements and need to empty the entire account within 10 years.

“This is the biggest landmine in 2025 for beneficiaries. Many have no idea the rules actually apply now.”

– Certified Financial Planner specializing in retirement distributions

Almost 30% of outstanding RMDs right now are from inherited accounts. That’s wild when you think about it – people grieving, trying to figure out complex tax rules, and now facing massive penalties.

Smart Strategies to Handle Your RMD (Before It’s Too Late)

Okay, enough doom and gloom. Let’s talk solutions.

First and most important: Take the distribution now. Don’t overthink it. You can always adjust your tax strategy later.

• Log into your account and set up the withdrawal today
• Consider taking it as a direct transfer to your bank account
• Think about doing a Qualified Charitable Distribution if you’re charitably inclined (this counts toward your RMD and isn’t taxable!)
• If you don’t need the money, consider withholding 0% tax and investing it in a taxable account instead

The QCD strategy is honestly one of the best kept secrets in retirement planning. If you’re 70½ or older, you can send your RMD directly to charity and it never shows up as taxable income. It’s like getting a 100% deduction regardless of whether you itemize.

How to Calculate Your Actual RMD Amount

Most brokerage firms do this calculation for you, but it’s good to understand the basics.

Take your account balance as of December 31 of last year, then divide by a life expectancy factor from the IRS tables. There are actually three different tables now, and which one you use matters a lot.

That last one is huge – if your spouse is significantly younger, your RMD could be dramatically lower. I’ve seen this save people tens of thousands in required withdrawals over time.

What If You Already Missed Previous Years?

Don’t panic. This happens more than you’d think.

You can still fix it. Take the missed distributions now, file Form 5329 for each year you missed, and request penalty relief. The IRS has been granting these requests at very high rates recently, especially when people show they didn’t understand the rules.

In my experience, the worst thing you can do is nothing. The IRS isn’t hunting down small missed RMDs aggressively, but if they do notice (usually when you die and your heirs file taxes), the penalties plus interest can be devastating for your family.

The Bottom Line Before December 31

Here’s what you need to do this week:

1. Check if you or any inherited accounts need an RMD this year
2. Log in and verify the amount your custodian calculated
3. Take the distribution before markets close on December 31
4. Consider tax withholding carefully (or don’t withhold and handle it at tax time)
5. If charitable, look into QCDs – they need to be direct transfers

The peace of mind you’ll have on January 1st is worth whatever inconvenience this causes now. Trust me – I’ve watched too many people learn this lesson the hard way.

Retirement should be about enjoying the fruits of decades of hard work, not stressing about IRS penalties because of paperwork mistakes. Take fifteen minutes this week to handle this, and you’ll thank yourself later.

You’ve earned the right to enjoy your retirement without this hanging over your head. Make it happen before the ball drops.