IRS Provides IRA Reporting Relief in Light of SECURE 2.0 Act’s RMD Age Change

On March 7, The IRS has issued Notice 2023-23, guidance that addresses required minimum distribution (RMD) reporting by IRA trustees, custodians, and issuers. The SECURE 2.0 Act of 2022, contained within the Consolidated Appropriations Act, 2023, altered the age when IRA owners must begin taking mandatory annual distributions, or RMDs. Under Section 107 of the SECURE 2.0 Act, those who reach age 72 after December 31, 2022, can delay beginning RMDs until age 73. Those who reached age 72 in 2022 or earlier years must continue taking annual RMDs.

IRA trustees, custodians, and issuers are required to inform IRA owners by January 31, if an RMD is required to be taken for that year. Because of the timing of this legislation’s enactment (December 29, 2022), IRA processing and reporting systems may have still been programed to inform account owners turning 72 in 2023 – that is, individuals born in 1951 – that an RMD is required to be taken for this year. This information would be incorrect, as these individuals are not required to begin receiving RMDs form their IRAs until they reach age 73. This would constitute a reporting failure by the IRA trustee, custodian, or issuer.

Notice 2023-23 informs these financial organizations that they will be granted relief for such reporting errors, if – by April 28, 2023 – they inform affected IRA owners that no RMD is due for 2023.

As the SECURE 2.0 Act did not change the age when RMDs are to begin for individuals who attained age 72 prior to January 1, 2023, the IRS is encouraging financial institutions to remind IRA owners who attained age 72 in 2022 and have not yet taken their RMD for 2022, that these are still required by April 1, 2023.