In Notice 2020-6, the IRS released guidance for financial institutions that erroneously sent required minimum distribution (RMD) statements for 2020 to individual retirement account (IRA) owners under age 72.

The SECURE Act amended IRC Section 401(a)(9) to raise the age for RMDs to 72 from 70½. The new required beginning date for RMDs is April 1 of the calendar year following the calendar year in which the IRA owner reaches age 72. The amendment is effective for RMDs required after December 31, 2019, for IRA owners who are 70½ after that date.

Although RMD statements should not be sent to IRA owners who will reach age 70½ in 2020, the IRS said it recognizes that financial institutions have only had a short time to change their systems for furnishing the RMD statement. Accordingly, Notice 2020-6 will not consider financial institutions that send an RMD statement to an IRA owner who will reach age 70½ in 2020 to have sent the statement incorrectly. This only applies, however, if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is required for 2020.

Implications

This guidance will be welcomed by IRA custodians and trustees, many of which have not had adequate time to amend their systems since the SECURE Act was signed into law.

———————————————