The IRS on July 14 made multiple announcements concerning required minimum distributions (RMDs), including relief concerning RMDs and rollovers in accordance with Section 107 of SECURE 2.0. The guidance is contained in Notice 2023-54. 
Transition Relief
The IRS says that after SECURE 2.0 was enacted, plan administrators and other payors indicated that automated payment systems would need to be updated to reflect the change in the required beginning date, and that the revisions could take time to implement. As a result, they warned, plan participants and IRA owners who would have been required to begin receiving RMDs for calendar year 2023 and who receive distributions in 2023 could have had them mischaracterized as RMDs—and therefore ineligible for rollover.
Accordingly, the guidance grants certain relief relating to certain distributions made during 2023 to individuals that were characterized as RMDs but are not actually RMDs as a result of the enactment of Section 107 of SECURE 2.0.
The IRS says that a payor or plan administrator will not be considered to have failed to satisfy the requirements of Internal Revenue Code (IRC) Sections 401(a)(31), 402(f), and 3405(c) just due to a failure to treat certain distributions as eligible rollover distributions. This relief applies regarding any distribution made from a plan between Jan. 1, 2023, and July 31, 2023, to a participant born in 1951 (or that participant’s surviving spouse) that would have been an RMD but for the change in the required beginning date under Section 107 of the SECURE 2.0 Act.
The Treasury and the IRS are extending the 60-day rollover period for any such distribution, so the deadline for rolling over such a distribution will be Sept. 30, 2023.
For example, if a participant who was born in 1951 received a single-sum distribution in January 2023, part of which was treated as ineligible for rollover because it was mischaracterized as an RMD, that participant will have until Sept. 30, 2023, to roll over that mischaracterized part of the distribution.
Rollover Relief
The Treasury Department and the IRS are extending the 60-day rollover period for certain IRA distributions made to an IRA owner (or the IRA owner’s surviving spouse), so that the deadline for rolling over that portion of the distribution will be Sept. 30, 2023.
The distributions that are subject to this extension are distributions made from an IRA between Jan. 1, 2023, and July 31, 2023, to an IRA owner born in 1951 (or that individual’s surviving spouse) that would have been RMDs but for the change in the required beginning date under Section 107 of SECURE 2.0.
This rollover is permitted even if the IRA owner or surviving spouse has rolled over a distribution within the last 12 months. However, making such a rollover of the portion of an IRA distribution mischaracterized as an RMD will preclude the IRA owner or surviving spouse from rolling over a distribution in the next 12 months—in that case, that individual could still make a direct trustee-to-trustee transfer.
Guidance for Specified RMDs for 2023
Notice 2023-54 addresses specified RMDs for 2023 in these ways:
Guidance for defined contribution plans that did not make a specified RMD. A DC plan that failed to make a specified RMD will not be treated as having failed to satisfy IRC Section 401(a)(9) just because it did not make that distribution.
Guidance for certain taxpayers who did not take a specified RMD. To the extent a taxpayer did not take a specified RMD, the IRS will not assert that an excise tax is due under IRC Section 4974.
Definition of specified RMD. For purposes of this notice, a specified RMD is any distribution that, under the interpretation included in the proposed regulations, would be required to be made pursuant to Code Section 401(a)(9) in 2023 under a DC plan or IRA that is subject to the rules of Section 401(a)(9)(H) for the year in which the employee (or designated beneficiary) died if that payment would be required to be made to:
- a designated beneficiary of an employee under the plan (or IRA owner) if: (1) the employee or IRA owner died in 2020, 2021, or 2022, and on or after the employee’s or IRA owner’s required beginning date, and (2) the designated beneficiary is not using the lifetime or life expectancy payments exception under Section 401(a)(9)(B)(iii); or
- a beneficiary of an eligible designated beneficiary (including a designated beneficiary who is treated as an eligible designated beneficiary under Section 401(b)(5) of the SECURE Act) if: (1) the eligible designated beneficiary died in 2020, 2021, or 2022, and (2) that eligible designated beneficiary was using the lifetime or life expectancy payments exception under Section 401(a)(9)(B)(iii).
Application of Impending Final Regs
Notice 2023-54 announces that the final regulations the Treasury and IRS intend to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning no earlier than 2024.
Publication
Notice 2023-54 will be published in Internal Revenue Bulletin 2023-31, which will be published on July 31, 2023.
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