Executive summary: Notice 2023-23
Notice 2023-23 provides guidance to financial institutions on reporting required minimum distributions (RMDs) for 2023 based on SECURE 2.0 changes.
Notice 2023-23: Financial institution reporting for 2023 RMDs
On March 7, 2023, the IRS released notice 2023-23 providing guidance to financial institutions on reporting RMDs for 2023.
SECURE 2.0 amended section 401(a)(9)(C) to delay the required beginning date applicable to section 401(a) plans and other eligible retirement plans under section 402(c)(8), including individual retirement accounts and annuities (IRAs).
The required beginning date (date by which RMDs must begin) for an IRA owner who turns age 72 after Dec. 31, 2022 and age 73 before Jan. 1, 2033 is April 1 of the calendar year following the year in which the individual turns 73. Prior to SECURE 2.0 an IRA owner would need to begin RMDs by April 1 of the calendar year following the year in which they turn 72.
The amendment under SECURE 2.0 is effective for distributions required to be made after Dec. 31, 2022 for individuals who will turn 72 after that date. Individuals who turn 72 in 2023 (anyone born in 1951) will have a required beginning date of April 1, 2025 rather than April 1, 2024. Therefore, these individuals will have no RMD due for the 2023 tax year.
For IRA owners who have a RMD due in 2023 the financial institution acting as the trustee, custodian or issuer must file a 2022 Form 5498 by May 31, 2023 and check Box 11 that a RMD is required for 2023. The financial institution may also provide further information in Box 12a (RMD date) and Box 12b (RMD amount). Under notice 2002-27, 2002-1 CB 814, the financial institution must furnish a statement to the IRA owner by Jan. 31, 2023 that informs the IRA owner of the date by which the RMD must be distributed and either provides the amount of the RMD or offers to calculate that amount on request (RMD statement).
For IRA owner who will turn 72 in 2023 the financial institution should not send the RMD statement required under Notice 2002-27 and the 2022 Form 5498 should not have Box 11 checked or any entries in Box 12a or 12b. This notice does provide relief for financial institutions who may have already sent out RMD statements to those individuals who will turn 72 in 2023. As long as the financial institution notifies the IRA owner that no RMD is actually required for 2023 by April 28, 2023, the IRS will not consider the RMD statement to have been provided incorrectly to the IRA owner.
SECURE 2.0 did not change the required beginning date for IRA owners who turned 72 in 2022. The IRS encourages all financial institutions to remind IRA owners who turned 72 in 2022 that they are still required to take their RMDs by April 1, 2023.