IRS clarifies required minimum distribution reporting

The IRS provided guidance to financial institutions regarding reporting for required minimum distributions (RMDs), the rules for which were changed by the SECURE 2.0 Act.

The SECURE 2.0 Act, which was enacted as Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328, delayed the required beginning date for RMDs to age 73, allowing IRA owners who turn 72 in 2023 to not take an RMD for that year.

Under the relief provided in Notice 2023-23, which was issued Tuesday, the IRS said an RMD statement sent by a financial institution to an IRA owner turning 72 this year will not be considered to be improperly sent, provided the financial institution notifies the owner by April 28.

The SECURE 2.0 Act did not change the required beginning date for IRA owners who reached age 72 before Jan. 1, 2023. To reduce misunderstanding among IRA owners, the IRS is encouraging all financial institutions to remind IRA owners who reached age 72 in 2022 that they are still required to take those distributions by April 1, 2023.

The SECURE 2.0 Act contains several retirement and tax provisions, which mostly focus on expanding coverage, increasing retirement savings, and simplifying and clarifying retirement plan rules, but other changes were also included.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.