Tax News Update    Email this document    Print this document  

January 24, 2020
2020-0186

IRS releases guidance to financial institutions that erroneously issued RMD statements for 2020 under new SECURE Act requirements

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.

———————————————

Contact Information
For additional information concerning this Alert, please contact:
 
Compensation and Benefits Group
• Christa Bierma (christa.bierma@ey.com)
• Catherine Creech (catherine.creech@ey.com)
• Stephen Lagarde (stephen.lagarde@ey.com)
• Andrew Leeds (andrew.leeds@ey.com)
• Bing Luke (bing.luke@ey.com)
• Helen Morrison (helen.morrison@ey.com)
• Rachael Walker (rachael.walker@ey.com)
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement