What happens if I miss an RMD or take out too little?

Missing a required minimum distribution used to trigger a brutal 50% penalty on the shortfall. SECURE 2.0 cut that to 25%, and it drops to just 10% if you correct the mistake quickly – generally within two years – and file Form 5329. So if you should have withdrawn $20,000 and took nothing, the base penalty is $5,000 on top of the regular income tax you still owe. The fix is straightforward: withdraw the missed amount as soon as you notice, file Form 5329 with a brief letter explaining the reasonable error, and request a waiver. The IRS frequently grants waivers for honest mistakes. The simplest prevention is to ask your custodian to automate RMDs each year so you never miss the December 31 deadline.