Submitted by Alan - IRA critic on Fri, 2023-07-14 20:58

  • Thanks for posting this. It probably means that the final Regs will not be ready for release in the next couple months which is the lead time needed for custodians to update systems and communicate the new rules to beneficiaries. It may also mean that other provisions in the 275 pages of proposed Regs have been questioned or that there are conflicts to be resolved. 
  • Of course, many beneficiaries under the 10 year rule will want to spread the tax burden over the 10 years rather than incurring the effects of a large lump sum distribution in year 10.
  • If it takes over 3 1/2 years to issue final Regs for Secure 1.0, that does not bode well for Secure 2.0 where there are far more thorny issues included in the 92 provisions.

Submitted by David Mertz on Fri, 2023-07-14 22:38

  • IRS Notice 2023-54
  • “Final regulations regarding RMDs under § 401(a)(9) and related provisions will apply for calendar years beginning no earlier than 2024.”

 

Submitted by Alan - IRA critic on Mon, 2023-07-17 14:57

With the IRS providing rollover relief for mischaracterized RMDs for those born in 1951, and waiving the one rollover limitation in the event the taxpayer had used up their rollover, the IRS intends to undo the damage caused by the lack of lead time between Secure 2.0 passage and the increased RMD age for those born in 1951. That’s clear enough, but WHY does this Notice then state that if the taxpayer uses this permitted rollover, they are locked out of another one for the following 12 months. Granted, that 12 months starts when most of the mischaracterized RMDs were distributed early in 2023, but this added restriction appears to make no sense whatsoever.  

Submitted by David Mertz on Mon, 2023-07-17 19:08

  • I agree, it doesn’t make sense. Since the IRS has no authority to waive the rollover limitation, it seems that they have to consider this “rollover” as a restorative deposit, in which case the limitation should not apply at all.
  • I wonder if the IRS is trying to provide a disincentive to the affected people taking a distribution between now and July 31 equal to the amount of their RMD with the intent to use the money for something until just before September 30 when the put it back.  However, that seems relatively unnecessary.

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