Here are step by step instructions from one of our eXtension financial experts:

The form to use is 5329, section IX – despite the misleading title of that section, Additional Tax on Excess Accumulation in Qualified Retirement Plans (Including IRAs).

 She should attach a letter of explanation, requesting a waiver of the penalty. The IRS makes these decisions on a case-by-case basis. The question is whether the IRS sees this as a reasonable cause.

 Natalie Choate, the guru in this area, gives additional explanation in this Morningstar piece. In part, she says:

 If the client's income tax return for that year has not yet been filed, Form 5329 can be attached to the income tax return. For years for which the income tax return has already been filed, file each year's 5329 as a separate stand-alone return.

 The client should take the missed RMD as soon as possible.

IRS regulations contain a formula for computing the adjusted year-end balance and adjusted RMD catchup amount, to reflect earnings and losses that have occurred since the year the RMD should have been taken.