Under SECURE 2.0, the penalty for any underwithdrawn amount for the year’s RMD will be assessed a 25% penalty unless the underwithdrawn amount is ‘timely’ corrected, which I believe means within 2 years of the withdrawal year and which would reduce the penalty to 10%. However, every post I’ve ever read on this topic from those who routinely deal with IRA or employer plan underwithdrawals have said the older 50% penalty was waived by the IRS with the filing of the form 5329. In fact, I don’t think I’ve ever read of the 50% penalty actually being imposed by the IRS.

So does the new rule mean that ANY underwithdrawn amount will be assessed a 10% penalty regardless of when during the first 2 year period following the RMD year the withdrawal is actually made? Will the IRS grant waivers for the 10% penalty as they did with the former 50% penalty? If not, then the 10% penalty seems to be a revenue generator.