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In our business, staying updated on the latest developments from the IRS is difficult. That job seems more complicated regarding the SECURE Act and SECURE 2.0.

On Friday, July 14, 2023, the IRS released IRS Notice 2023-54, which brings significant relief for IRA owners and beneficiaries affected by required minimum distributions (RMDs). In this article, we will discuss what we consider the two key points of the notice and explain what you should communicate to your clients.

Deadline Extension for Returning Distributed RMDs

One of the notable aspects of IRS Notice 2023-54 is the extension of the return deadline for individuals who unnecessarily initiated RMDs this year upon turning 72. The Secure 2.0 Act, enacted in December 2022, raised the RMD initiation age to 73 from 72, starting in 2023. However, due to the late enactment of the law, some financial institutions had already sent out RMD notices to IRA owners who turned 72 in 2023, causing confusion.

To address this issue, the IRS has granted these IRA owners an extension until September 30 to return the distributed RMD amounts to their accounts. This extension will enable them to avoid unnecessary tax liabilities.

It is essential to inform your clients of this extended deadline, ensuring they understand the opportunity to rectify any inadvertent RMDs and avoid undesired taxes.

RMD Relief for Inherited IRAs

Another crucial aspect covered in IRS Notice 2023-54 pertains to beneficiaries subject to RMDs under the 10-year rule. This relief is especially significant for those who inherited IRAs in 2020 or later. The Secure Act passed in 2019, eliminated the ability for most individuals inheriting IRAs to stretch distributions over their lifetimes. Instead, it required them to empty the accounts within ten years.

However, proposed regulations from the IRS created confusion regarding the timing of RMDs for beneficiaries under this 10-year rule. The recently released notice relieves these beneficiaries by confirming they do not have to take RMDs in 2023 due to the ongoing uncertainty surrounding the proposed regulations. While waiting for the final regulations, this relief offers much-needed clarity to beneficiaries and their advisors.

Final Thought

The recent release of IRS Notice 2023-54 has brought much-needed relief for IRA beneficiaries affected by RMDs. At Dunham, we endeavor to stay informed so you can share this valuable information with your clients.

By proactively guiding your clients through these changes, you can help them navigate their retirement accounts more effectively while minimizing potential tax consequences.


“Notice 2023-54: Transition relief and guidance related to certain required minimum distributions’ By KPMG, July 14, 2023

“IRS provides limited RMD relief” by InvestmentNews, July 17, 2023.


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