A new law enacted late in 2019 made a significant change in the minimum distribution requirements for individual retirement accounts (IRAs). The “Setting Every Community Up for Retirement Enhancement” (SECURE) Act became effective on December 20, 2019, and it raised the required minimum distribution (RMD) age from 70½ to 72 for individuals who will reach the age of 70½ after December 31, 2019.
This law change came so late in the year that many financial institutions have been unable to update automated systems that generate required notices to individuals regarding RMDs. Many taxpayers who will turn 70½ in 2020 may have received instructions about RMD obligations that are incorrect.
The IRS has provided relief to financial institutions that were expected to provide RMD statements to IRA owners by January 31, 2020. Notice 2020-6 (PDF) clarifies that if an RMD statement was provided for 2020 to an IRA owner who will turn age 70½ during the year, the IRS will not treat the issuing institution as having provided an incorrect statement as long as the institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.
IRA owners who reached age 70½ in 2019 are still required to begin taking RMDs as required under the prior law. If an IRA owner turned 70½ in 2019 and has not yet taken a 2019 RMD, he or she is still required to do so by April 1, 2020. Those owners will continue to be subject to RMD rules under prior law, so they will need to continue annual RMDs even in years prior to the year in which they turn 72.
If your financial institution has questions about this IRS relief or any aspect of the SECURE Act, please contact your CRI advisor.