Ed Slott: New IRS Guidance Clarifies 2023 RMDs

What You Need to Know

Under Secure 2.0, IRA owners who turn 72 this year do not need to take RMDs.
Because the law was enacted late in 2022, financial institutions might have erroneously sent RMD notices to these investors.
IRA providers have until April 28 to notify these investors that they have no RMDs this year.

New guidance issued by the Internal Revenue Service gives IRA providers until April 28 to notify IRA owners who will turn 72 in 2023 that they do not have a required minimum distribution this year, according to Ed Slott of Ed Slott & Co.

The Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act, signed into law by President Joe Biden as part of a spending bill on Dec. 29, 2022, raised the age at which RMDs must start, beginning this year.

Because the law was enacted so late in the year, “financial institutions were not able to stop the presses on RMD notices that were sent out to IRA owners notifying them that they have an RMD due for 2023 when they in fact did not,” Slott said. “It only takes one small change like this enacted late in the year to throw the RMD rules into turmoil.”

The IRS relief in Notice 2023-23 was granted to financial institutions “because they may have sent out unintentionally incorrect RMD info to their IRA holders,” Slott told ThinkAdvisor on Monday.

Advisors, Slott said, “should contact every client with an IRA who turned 72 last year, or will turn 72 this year, and let them know when they must begin taking RMDs. The notices they received from their IRA institutions may be incorrect.”