When Are RMDs Waived? Exceptions, Penalty Relief, and QCDs

Required minimum distributions are waived only in a handful of situations. Roth IRAs and, since 2024, designated Roth accounts in workplace plans carry no lifetime RMD at all. If you are still working past 73 and don’t own more than 5% of your employer, you can delay RMDs from that employer’s plan. Congress suspended RMDs across the board once, for calendar year 2020 under the CARES Act. A qualified charitable distribution can satisfy an RMD without adding to your taxable income. And if you miss one, the IRS can waive the 25% excise tax when you show reasonable cause.

Accounts That Never Require Lifetime RMDs

Two categories of retirement account are permanently exempt from RMDs while the original owner is alive.

Roth IRAs have always been outside the RMD system. Because contributions go in after tax, there is no deferred tax revenue for the government to recapture, and the balance can sit untouched for the owner’s lifetime.¹ Starting in 2024, SECURE 2.0 extended that same treatment to designated Roth accounts inside 401(k) and 403(b) plans. Before that change, Roth 401(k) and Roth 403(b) balances were subject to RMDs even though the distributions themselves came out tax-free. That quirk is gone.²

The lifetime exemption does not carry over to heirs. Once a Roth IRA or Roth 401(k) passes to a non-spouse beneficiary, it falls under the distribution rules that apply to inherited accounts.

The Still-Working Exception

If you are employed past age 73, you can delay RMDs from the retirement plan sponsored by your current employer. The exception covers 401(k), 403(b), and similar workplace plans, and it lasts until the year you actually retire. Your first RMD from that plan is then due by April 1 of the year after retirement.¹

Two limits are worth knowing. You cannot own more than 5% of the business sponsoring the plan; if you do, RMDs must begin at 73 regardless of whether you keep working.² And the exception does not reach IRAs or plans from prior jobs. Traditional IRAs, SEP IRAs, SIMPLE IRAs, and any old 401(k) sitting at a former employer still owe RMDs on schedule, even while you’re drawing a paycheck.

The 2020 CARES Act Suspension

Congress has waived RMDs universally exactly once. The CARES Act suspended all RMD obligations for calendar year 2020, a response to the pandemic-era market drop. The concern was that forcing retirees to sell into depressed markets would lock in losses simply to satisfy a withdrawal requirement.³

The waiver reached nearly every defined contribution vehicle: Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, 403(b)s, and governmental 457(b) plans. Both account owners and beneficiaries of inherited accounts qualified, and no application was necessary.³ Nothing comparable has been enacted since, and no similar legislation is pending as of 2026.

For anyone who had already taken a 2020 RMD before the March 27, 2020 signing, the IRS extended the normal 60-day rollover window to August 31, 2020. Money rolled back into an IRA or eligible workplace plan by that date was treated as if the distribution never happened.⁴

Using a Qualified Charitable Distribution to Satisfy an RMD

A qualified charitable distribution isn’t technically a waiver, but for anyone who already gives to charity it produces the same result. Money moves directly from a Traditional IRA to a qualifying charity, counts toward the year’s RMD, and never enters your taxable income.

You must be at least 70½ at the time of the distribution, and the funds have to go straight from the IRA custodian to a charity qualifying under IRC section 170(b)(1)(A). The annual QCD limit for 2026 is $111,000 per person, with a separate one-time option to direct up to $55,000 to a charitable remainder trust or charitable gift annuity.⁵ QCDs cannot come from 401(k)s or other employer plans; the vehicle has to be an IRA.

Timing is the trap. A QCD only counts toward your RMD if it is processed before you have already satisfied the full RMD through other withdrawals. If your custodian sends out an automatic January distribution and you make the QCD in March, the QCD is still tax-free but the earlier withdrawal has already used up the RMD. Most advisors suggest making the QCD early in the year, before any scheduled distributions run.

Waiving the Penalty When You Miss an RMD

If you take less than the required amount, the IRS imposes a 25% excise tax on the shortfall. That rate is already a reduction; before SECURE 2.0, the penalty was 50%.⁶ Two separate avenues can reduce or eliminate it.

The Correction Window Cuts the Penalty to 10%

The tax code provides a correction window that runs from the date the penalty is imposed until the IRS mails a notice of deficiency, assesses the tax, or the end of the second tax year after the shortfall, whichever comes first.⁶ In practice, that gives you roughly two years. To qualify for the 10% rate, you must withdraw the missed amount from the same plan and file a return reflecting the corrected tax within that window.¹

Reasonable Cause Can Waive the Penalty Entirely

The IRS can waive the excise tax outright if you show the shortfall was due to reasonable error and that you are correcting it.⁶ Common accepted reasons include a custodian processing error, a serious illness that kept you from managing your accounts, or incorrect advice from a financial institution. The IRS tends to be receptive when the mistake is genuine and you have already taken the missed distribution by the time you file.

Request the waiver on Form 5329, Additional Taxes on Qualified Plans. Complete the lines that calculate your shortfall and the excise tax, then write “RC” on the dotted line next to the penalty line, enter the amount you want waived in parentheses, and subtract it so the penalty line reflects the reduced figure. Attach a signed letter describing what went wrong and what you did to fix it. Be specific: “my custodian failed to process the automatic withdrawal” is more persuasive than “I forgot.” The IRS will either grant the waiver or send a notice of additional tax owed.⁷

Inherited Accounts: A Waiver That Has Now Expired

Beneficiaries who inherited a retirement account after 2019 face a separate set of rules under the SECURE Act. Most non-spouse beneficiaries must empty the account by the end of the tenth year after the owner’s death, replacing the older stretch-IRA method.⁸

Whether annual RMDs are also required during years one through nine depends on when the original owner died. If they died before their required beginning date, no annual distributions are mandated as long as the account is empty by year ten. If they died on or after their required beginning date, annual RMDs are required in each of the first nine years, with the balance out by year ten.⁹

Because the annual-distribution requirement caught many beneficiaries off guard, the IRS waived penalties for missed annual RMDs in that situation from 2021 through 2024.⁹ That relief has ended. For calendar years beginning on or after January 1, 2025, the final regulations apply, and missing one of these annual inherited-account distributions triggers the standard excise tax.

A narrower group known as eligible designated beneficiaries — surviving spouses, minor children of the account owner, individuals who are disabled or chronically ill, and people no more than ten years younger than the deceased owner — can still use the life-expectancy method instead of the 10-year rule.⁸ Surviving spouses have the most flexibility of any beneficiary; they can treat the inherited IRA as their own, resetting the RMD timeline to their own age.

1
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
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Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
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Internal Revenue Service. Coronavirus Relief for Retirement Plans and IRAs
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Internal Revenue Service. Notice 2020-51 Guidance on Waiver of 2020 Required Minimum Distributions
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Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
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Office of the Law Revision Counsel. 26 U.S. Code 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
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Internal Revenue Service. Instructions for Form 5329 (2025)
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Internal Revenue Service. Retirement Topics – Beneficiary
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Internal Revenue Service. Notice 2024-35, Certain Required Minimum Distributions for 2024