Client needed to take a RMD for $40,000 in 2006...he only took $39,500...what happens if he didn't take the additional $500 that was required?

Thanks

A 50% excise tax applies on the shortfall.

However, the tax may be waived if it was due to a reasonable error and reasonable steps are taken to remedy the shortfall.

You might also want to review the calculations made in determining the RMD.