IRS Provides Guidance & Relief for 2023 RMD Reporting

The SECURE 2.0 Act was signed into law on December 29, 2022, making numerous changes that affect IRAs. Starting with 2023, one of those changes was to increase the age that required minimum distributions (RMDs) are to begin from 72 to 73 for IRA owners who were born January 1, 1951, through December 31, 1959. The IRS has now released guidance for IRA sponsors on reporting RMDs for 2023. [Notice 2023-23]

Background of the RMD Notification Requirement and RMD Reporting

By January 31 of each calendar year, Traditional, SEP, and SIMPLE IRA sponsors notify each IRA owner who is required to take an RMD for that year.

In addition, IRA sponsors must identify to the IRS using IRS Form 5498 for the immediately preceding year (i.e., on a 2022 Form 5498 for a 2023 RMD) each IRA owner who is required to take an RMD. A checkbox in Box 11 on the 2022 Form 5498 is labeled “Check if RMD for 2023.”

IRS Guidance and Relief for RMD Notification Requirement

The IRS affirms that the required January RMD notification should not have been sent to IRA owners who will attain age 72 in 2023. However, the IRS does recognize that IRA sponsors may not have had sufficient time to update their systems for the SECURE 2.0 Act changes and is providing relief. Under the relief, if an IRA sponsor erroneously provided an RMD notification to an IRA owner who will attain age 72 in 2023 (including when using Form 5498 for the RMD notification by January 31), the IRS will not consider the statement to have been provided incorrectly if the IRA owner is notified by the IRA sponsor no later than April 28, 2023 that no RMD is required for 2023.

The IRS also confirmed that for IRA owners who will attain age 72 in 2023, the 2022 Form 5498 should not include a check in Box 11 or entries in Boxes 12a or 12b.

Supplemental Guidance

The IRS recommends that when communicating the changes to RMDs made by the SECURE 2.0 Act, IRA sponsors should remind IRA owners who attained age 72 in 2022 (last year), and who have not yet taken their 2022 RMDs, that they are still required to take those distributions by April 1, 2023.