The IRS published Notice 2020-6 in January, regarding relief for reporting required minimum distributions (RMD) for IRAs for 2020.
Background: The SECURE Act changed the required beginning date applicable to certain retirement plans, including IRAs and annuities. The new required beginning date for an IRA owner is April 1 of the calendar year following the calendar year in which the individual attains age 72, rather than April 1 of the calendar year following the calendar year in which the individual attains age 701⁄2. This amendment is effective for distributions required to be made after December 31, 2019, with respect to individuals who will attain age 701⁄2 after that date. As a result, IRA owners who will attain age 701⁄2 in 2020 will not have a required beginning date of April 1, 2021. This means these IRA owners (who, prior to enactment of the SECURE Act, would have been required to take minimum distributions from their IRAs for 2020) will have no RMD for 2020.
Guidance: The IRS provided the following directions:
• IRA owners who have an RMD due for 2020 (turned 701⁄2 before 2020):
• If an IRA owner has an RMD due for 2020, the financial institution must file a 2019 Form 5498 (IRA Contribution Information) by June 1, 2020, and indicate by a check in Box 11 an RMD is required for 2020. The financial institution may also choose to provide further information in Box 12a (RMD Date) and Box 12b (RMD Amount).
• If an IRA owner has an RMD due for 2020, the financial institution should have furnished an RMD statement to the IRA owner by January 31, 2020, informing the IRA owner of the date the RMD must be distributed, and either provides the RMD amount or offers to calculate that amount upon request.
• The SECURE Act did not change the required beginning date for IRA owners who attained age 701⁄2 prior to January 1, 2020. In order to reduce misunderstanding among IRA owners, the IRS encourages all financial institutions, in communicating these RMD changes, to remind IRA owners who attained age 701⁄2 in 2019, and have not yet taken their 2019 RMDs, they are still required to take those distributions by April 1, 2020.
• IRA owners who do not have an RMD due for 2020 (turn 701⁄2 in 2020 or afterward):
• The RMD statement should not have been sent. However, in recognition of the short amount of time after the enactment of the SECURE Act that financial institutions have had to change their systems for furnishing the RMD statement, the IRS is providing relief. Under this relief, if financial institution already provided an RMD statement to an IRA owner who will attain age 701⁄2 in 2020 (including by providing a Form 5498), then the IRS will not consider such a statement to have been provided incorrectly, but only if the IRA owner is notified by the financial institution no later than April 15, 2020, that no RMD is required for 2020.
• The 2019 Form 5498 should not include a check in Box 11 or entries in Box 12a or 12b.
Both the Treasury and IRS are considering additional guidance.
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