Notice 2023-54

Submitted by James Short on Wed, 2023-07-26 16:36

Wondering if someone smarter than me can give me an English translation for Section V C (well really the entire Notice, but for sanity purposes V C).



Submitted by Alan - IRA critic on Wed, 2023-07-26 20:13

  • The Notice extends for another year (2023) the waiver of certain RMDs and Sec VC defines the type of RMD that is being waived. These RMDs are for beneficiaries who fall under the 10 year rule when the participant passed post RBD. These are the RMDs that the IRS has required in the proposed Sec Act Regs that were unexpected because many people thought that the 10 year rule would be introduced as just a longer version of the 5 year rule. But the 10 year rule applies regardless of when the participant passed (for non EDBs) whereas the 5 year rule never applied for deaths post RBD. The IRS has reasoned that if the participant had begun RMDs, therefore passed post RBD, that these RMDs should continue under the 10 year rule. This is sometimes also referred to as the “at least as rapidly” rule. For some reason the IRS took 2 years to publish the proposed Regs, and it has been another year and a half since those Regs were published and they have still not been finalized. Therefore, lacking finalization, the IRS has extended the waiver of just these specified beneficiary RMDs for another year. 
  • Another portion of the Notice allows a chance for a distribution represented as an RMD due to the change of RMD age that turned out NOT to be an RMD to be rolled back. This occurred because Congress passes legislation like the Secure Act and Secure 2.0 that takes effect in part only a week after passage since these bills always seem to be signed in late December. That provides no time for processing systems to be re programmed to reflect the changes. This roll over opportunity only applies to those born in 1951 whose RMD age instantly changed from 72 to 73 when Secure 2.0 was signed. 
  • The solution is simple – make this type of legislation effective long enough after passage to allow time for the IRS to publish Regs and custodians to update their programs to reflect those Regulations. That said, 3.5 years should not be necessary for the IRS to finalize Regs. 2 years should be the longest time they need. 


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