The IRS has issued Notice 2023-54, which provides:

For more information on RMDs, see Practice Note, Required Minimum Distributions from Retirement Plans.

As background, the SECURE Act modified the post-death RMD requirements for defined contribution plans and IRAs by adding Internal Revenue Code Section 401(a)(9)(H), which limits the ability of beneficiaries to take distributions over a period not extending beyond the beneficiary's life expectancy (see Legal Update, Government Funding Legislation Includes the SECURE Act, Which Changes Retirement Plan Requirements: Plan Distributions and Practice Note, Required Minimum Distributions from Retirement Plans: SECURE Act Changes Post-Death Distributions for Defined Contribution Plans and IRAs). Now, if a participant in a defined contribution plan or IRA dies before their entire interest is distributed, the designated beneficiary generally must take the inherited interest within ten years of the participant's death (ten-year rule) (26 U.S.C. § 401(a)(9)(H)(i)). However, the ten-year rule does not apply if the distribution is made to an eligible designated beneficiary and certain conditions are met. This change is generally effective for distributions made for participants who die after December 31, 2019.

In February 2022, the IRS issued proposed regulations that would amend the RMD regulations to reflect the SECURE Act changes (87 Fed. Reg. 10504 (Feb. 24, 2022); see Legal Update, Proposed Required Minimum Distributions (RMD) Regulations Reflect SECURE Act Changes). Under the proposed regulations:

The proposed regulations would apply for RMDs for calendar years beginning on or after January 1, 2022.

In response to the proposed regulations, commenters indicated they had expected the ten-year rule to apply differently than what was set out in the proposed regulations (that is, no distributions would be required until the end of the ten-year period). Instead, the proposed regulations would require annual distributions, with the entire benefit needing to be distributed by the end of the ten-year period. As a result, some commenters who were beneficiaries of participants who died in 2020 did not take distributions in 2021 and were not sure if they needed to take distributions in 2022.

The IRS issued Notice 2022-53 to address commenters' concerns (see Legal Update, IRS Issues Guidance Regarding 2021 and 2022 Required Minimum Distributions). In Notice 2022-53, the IRS:

Before the IRS could issue final regulations reflecting the SECURE Act's RMD changes, Congress passed the Consolidated Appropriations Act, 2023 (Pub. L. No. 117-328 (Dec. 29, 2022)), which includes SECURE 2.0 (see Legal Update, SECURE 2.0 Act Makes Comprehensive Changes to Retirement Plans).

SECURE 2.0 increases the age for the RBD. Under SECURE 2.0, RMDs from an IRA or employer-sponsored retirement plan must start on April 1 of the calendar year following the calendar year in which the individual attains age 73, rather than age 72, as was required before SECURE 2.0. This change is effective for distributions required to be made after December 31, 2022, with respect to individuals who turn 72 after December 31, 2022. Therefore, participants or IRA owners who attain age 72 in 2023 will not have:

Instead, the RBD for participants or IRA owners who attain age 72 in 2023 will be April 1, 2025.

In Notice 2023-54, the IRS addresses concerns that, due to the RBD changes under SECURE 2.0, certain distributions made in 2023 could be mistakenly treated as RMDs, which would make them ineligible for rollover. Accordingly, the IRS guidance provides that payors and plan administrators will not be treated as having failed to satisfy the Code's rollover rules based on their failure to treat certain distributions as eligible rollover distributions (26 U.S.C. §§ 401(a)(31), 402(f), and 3405(c)). This relief applies to distributions that:

Notice 2023-54 also extends the 60-day deadline for rolling over distributions mischaracterized as RMDs until September 30, 2023. Regarding IRAs, the guidance provides that if an IRA owner (or their surviving spouse) rolls over a distribution that was mistakenly treated as an RMD, they may not roll over another distribution for 12 months.

Notice 2023-54 states that final regulations regarding RMDs will not apply before the 2024 calendar year.

Additionally, regarding RMDs for 2023, the guidance provides that:

The guidance defines a specified RMD as "any distribution that, under the interpretation included in the proposed regulations, would be required to be made … under a defined contribution plan or IRA that is subject to the rules of § 401(a)(9)(H)[,]" in 2023 to:

In Notice 2023-54, the IRS has provided some much needed clarifications and guidance regarding RMDs and the interplay between changes made by the SECURE Act and the SECURE 2.0 Act. Plan sponsors, IRA providers and taxpayers who are dealing with RMDs should familiarize themselves with the transition rules and avail themselves of the relief provided, if they are eligible.