The IRS has issued Notice 2022-53. It addresses the proposed regulations regarding required minimum distributions. The Notice covers more than one issue, but in this email, the main point is that when those proposed regulations were released earlier this year, one of the major issues that arose was the “as least as rapidly” rule.
The Notice says that Treasury intends to issue final regulations related to required minimum distributions but says they will apply no earlier than the 2023 distribution calendar.
They explained that Section 409(a)(9)(i) provides that if the employee dies after distributions have begun, the employee’s remaining interest must be distributed as least as rapidly as under the distribution method used by the employee as one of the date of the employee’s death. New Section 409(a)(9)(H) added by the SECURE Act added the new 10 year rule which said, basically, if an employee has a “designated beneficiary” the former 5 year rule is lengthened to 10 years, and the 10 year rule applies regardless of whether the employee dies before the required beginning date. The SECURE Act also provided an exception to the 10 year rule for so-called “eligible designated beneficiaries.”
The problem with the proposed regulations and the “at least as rapidly” rule was that it could have been applied retroactively to distributions that, under the proposed regulations, should have been taken in 2021 but which were not taken. Many believed that the 10 year rule applied and the “at least as rapidly” rule did not. For those people the question was whether they would be subject to a penalty for not having done so. The IRS has said “no” they won’t.
The Notice does not say what the final regulations will say. It’s not known if there will be some sort of catch up provision so that distributions not taken last year or this year will have to be taken next year, or if those years will be ignored.
The Notice covers more than the one issue. The Notice can be found here.
The above link came from the Guidewire email that comes from the IRS. If you would prefer not to click on that link and would like to have a copy of the notice, please reply to me and I will reply to you with a copy attached in PDF format.