IRA RMD Statement Reporting: IRS Issues Notice Indicating Relief for 2020 Reporting
ComplianceTax & AccountingJanuary 27, 2020

IRA RMD statement reporting: IRS issues notice indicating relief for 2020 reporting

Overview

On Friday, January 24, the Internal Revenue Service (IRS) issued Notice 2020-6 providing reporting relief as it relates to individual retirement account (IRA) owner required minimum distribution (RMD) statement reporting for 2020.

Background

The Setting Every Community Up for Retirement Enhancement Act of 2019 (i.e., the SECURE Act), includes a provision which changes when traditional (including simplified employee pension – SEP) and Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA owners must begin taking RMDs. Effective for years after 2019, traditional and SIMPLE IRA owners will not be required to begin taking RMDs until they attain age 72. Prior to 2020, traditional and SIMPLE IRA owners were required to take RMDs for the year they attained age 70½.

RMD statements

By January 31 of each year IRA custodians and trustees are required to provide IRA owners in RMD status for such year with a statement which indicates the RMD amount (or offers to calculate the RMD amount), the deadline by which the RMD must be taken, and the fact that the IRA owner’s RMD status will be provided to the IRS. Prior to 2020, the first year an IRA owner would have received such statement was the year he/she attained age 70½.

Reporting relief

Because the SECURE Act was passed late in December it is likely that some financial organizations may not have enough time prior to the statement deadline to identify and purge from their list of statement recipients those IRA owners who will attain age 70½ in 2020. As a result, the IRS indicates the following in Notice 2020-6:

The RMD statement required under Notice 2002–27 should not be sent to IRA owners who will attain age 70½ in 2020. 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, relief is being provided.”

The IRS goes on to state that it will not consider statements (if sent) were provided incorrectly to IRA owners attaining age 70½ in 2020 considering notification is provided to those individuals no later than April 15, 2020 indicating no RMD is required for 2020.

Conclusion

Wolters Kluwer continues to analyze the SECURE Act’s impact on forms, brochures, training, and reference materials. Additionally, we expect more information and guidance to be forthcoming from the IRS over the next several months.

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Mike Schiller
Manager, Specialized Consulting, Tax Advantaged Accounts
With more than 22 years of experience, Mike has worked closely with hundreds of financial organizations to help them create, implement, and maintain their tax-advantaged accounts program.