Retirement Plans Newsletter

BULLETIN
January 24, 2020

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[Official Guidance]

Text of IRS Notice 2020-6: Financial Institutions Can Issue Corrected Statements by April 15 to IRA Owners Turning 70 in 2020 (PDF)

Under pre-amended law, by January 31, 2020, financial institutions acting as IRA trustees, custodians or issuers were required to provide a statement to IRA owners who will turn 70½ in 2020 notifying them about the required minimum distribution (RMD) which would have been needed by April 1, 2021. Under the SECURE Act, 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, not 70½.

Hence Notice 2020-6 clarifies that such a statement is no longer due by January 31, 2020 to persons who will attain age 70½ in 2020. 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, Notice 2020-6 provides that if an RMD statement is (or already has been) provided for 2020 to an IRA owner who will attain age 70½ in 2020, the IRS will not consider such statement to be incorrect, if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.

The guidance notes that the SECURE Act did not change the required beginning date for IRA owners who attained age 70½ prior to January 1, 2020 and encourages (but does not require) these financial institutions to remind IRA owners who attained age 70½ in 2019, and have not yet taken their 2019 RMDs, that they are still required to take those distributions by April 1, 2020.  

(Additional guidance is being considered with respect to the SECURE Act, including guidance for plan administrators, payors, and distributees if a distribution to a plan participant or IRA owner who will attain age 70½ in 2020 was treated as an RMD.)

Internal Revenue Service [IRS]

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