Can I avoid the penalty for forgetting to take my IRA RMD in 2021?

A missed 2021 RMD taken in 2022 is reported on the 2022 tax return along with the 2022 RMD.  

For 2022, download the 2021 5329 form from the IRS website and fill it to include in next year's tax return. You will need to Print and mail your return with the 5329 form and explanation attached as described in the 5329 instructions. 

You will need to file the 5329 form and request a waiver of the penalty.  (The waiver would only be denied if there is no reasonable explanation and the missed RMD was not taken at all.) To request the waiver in the 2021 5329.

The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows. 

   1. Complete lines 52 and 53 as instructed.

   2. Enter “RC” and the amount you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54. 

   3. Complete line 55 as instructed. You must pay any tax due that is reported on line 55.

  The IRS will review the information you provide and decide whether to grant your request for a waiver. 

Just remember because of the downloaded 2021 5329, you will need to print and mail your return next year, which will include an explanation on why you did not take an RMD distribution in 2021.