IRS Issues Notice on Required Minimum Distributions

Published October 10, 2022

The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued Notice 2022-53 announcing they intend to issue final regulations related to required minimum distributions (RMDs) under section 401(a)(9) of the Internal Revenue Code. The notice also provides guidance related to certain provisions of section 401(a)(9) that apply for 2021 and 2022.

The IRS previously issued a proposed rule addressing the RMD requirements for plans qualified under IRC Section 401(a) to reflect provisions of the SECURE Act enacted in 2019. The SECURE Act eliminated the so-called “stretch IRA,” which had permitted lifetime distributions to certain beneficiaries with respect to inherited DC plan and IRA balances. Under the legislation, inherited DC plan and IRA balances generally required to be distributed to a beneficiary by the end of the 10th calendar year following the year of the participant’s or IRA owner’s death, but certain exceptions were provided.

Notice 2022-53 provides:

A Defined Contribution (DC) plan that failed to make a “specified RMD” (a limited category of RMDs owed following a participant’s death, as defined in the notice) will not be treated as having failed to satisfy Internal Revenue Code Section 401(a)(9) because it did not make that distribution;
To the extent a taxpayer did not take a specified RMD, the IRS says it will not assert that an excise tax is due under IRC Section 4974. “If a taxpayer has already paid an excise tax for a missed RMD in 2021 that constitutes a specified RMD, that taxpayer may request a refund of that excise tax,” the notice advises; and
Guidance for DC plans and certain taxpayers who did not take a specified RMD for 2021 and 2022 under Section 401(a)(9).

Final regulations regarding RMDs under section 401(a)(9) of the Code and related provisions will apply no earlier than the 2023 distribution calendar year.