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IRS Releases Update on Required Minimum Distribution Rule | PLANADVISER

The IRS issued Notice 2022-53providing guidance on the final regulations relating to the minimum distributions required under Section 401(a)(9) of the Internal Revenue Code that will apply no earlier than the 2023 distribution calendar year. Notice also provides guidance on certain provisions of Section 401(a)(9) that apply for 2021 and 2022.

Certain RMD guidelines for 2021 and 2022 state that a DC plan that has not made a specified RMD will not be considered to have failed to satisfy Section 401(a)(9) of the IRS. because he did not make this distribution. Additionally, for taxpayers who have not taken a specified RMD, the IRS will not impose excise tax under IRC Section 4974. “If a taxpayer has already paid excise tax for a missed RMD in 2021 that constitutes a specified RMD, that taxpayer may apply for a refund of that excise tax,” the notice states.

According to the IRS, the notice relates to “specified RMDs”, defined as any distribution that, according to the interpretation included in the draft regulations, should be made under section 401(a)(9) in 2021. or 2022 under a defined contribution plan or IRA subject to the rules of 401(a)(9)(H) for the year in which the employee (or designated beneficiary) died if such payment were to be paid to:

  • a designated beneficiary of an employee under the plan (or the owner of the IRA) if the employee (or the owner of the IRA) died in 2020 or 2021 and on the required start date of the employee (or IRA owner) or later, and the named beneficiary is not taking lifetime or life expectancy payments pursuant to section 401(a)(9)(B)(iii); Where
  • a beneficiary of an eligible designated beneficiary (including a designated beneficiary who is treated as an eligible designated beneficiary under Section 401(b)(5) of the SECURE Act) if the eligible designated beneficiary died in 2020, or 2021, and the designated beneficiary eligible the beneficiary was receiving lifetime or life expectancy payments in accordance with section 401(a)(9)(B)(iii) of the code.

The notices indicate that the final regulations regarding RMDs under section 401(a)(9) of the code and related provisions will apply no earlier than distribution calendar year 2023.


Section 401(a)(9) provides rules for RMDs from a qualified plan during the life and after the death of the employee, the notice states. The rules provide a required start date for distributions and identify the period over which all of the employee’s interest must be distributed.

Under the old rules, an employee’s entire interest in a qualifying plan must be allocated, commencing no later than the employee’s required start date, over the employee’s life or life of the employee and a designated beneficiary (or for a period not extending beyond the life expectancy of the employee and a designated beneficiary).

If the employee dies after the distributions begin, the employee’s remaining interest must be distributed at least as quickly as the method of distribution used by the employee on the date of the employee’s death, says the notice. If the employee dies before the start of the RMDs, the employee’s interest must either be distributed within five years of the employee’s death (five-year rule), or distributed over life or life expectancy of the designated beneficiary, with distributions commencing no later than one year after the date of the employee’s death, subject to exceptions.

That code was amended by the SECURE Act, extending the five-year period to 10 years, which applies regardless of whether the employee dies before the required start date, the notice said. Additionally, the exception to the 10-year rule, whereby the rule is considered satisfied if distributions are paid during the life or life expectancy of the designated beneficiary, only applies if the designated beneficiary is an eligible designated beneficiary.

The new rules also state that where an eligible designated beneficiary dies before that person’s share of the employee’s interest in the plan has been distributed, the beneficiary of the eligible designated beneficiary will be subject to the requirement that the remainder of that person’s share be distributed 10 years after the death of the eligible designated beneficiary.

When a minor child reaches the age of majority, that child will no longer be considered an eligible designated beneficiary and the remainder of that child’s share of the employee’s interest in the plan must be distributed within 10 years from that date, the notice states.

These code changes apply to distributions from deceased employees after Dec. 31, 2019, although later effective dates apply to certain collectively bargained plans and government plans, the release said. The rules do not apply to payments associated with certain annuity contracts whose payments began before December 20, 2019.

If an employee who participated in a plan died before IRC 401(a)(9)(H) came into effect and the employee’s designated beneficiary died after that effective, that designated beneficiary is treated as an eligible designated beneficiary and the new rule applies to any beneficiary of that designated beneficiary.

If the amount distributed during a beneficiary’s taxation year under a qualifying pension plan or a qualifying DC plan is less than the minimum distribution required for that taxation year, then a tax excise duty is imposed on the recipient equal to 50% of the amount by which the required minimum distribution for the tax year exceeds the amount actually distributed in that tax year.

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