RMD relief for certain individuals in 2023

Caroline McKay

August 03, 2023

The IRS addresses concerns following the passage of SECURE 2.0

On July 14, 2023, the Internal Revenue Service (IRS) issued Notice 2023-54, providing relief related to required minimum distributions (RMDs) for certain individuals. The Notice is intended to address administration concerns following the passage in 2022 of SECURE 2.01 and proposed regulations related to inherited individual retirement accounts (IRAs) issued in 2022.

The Notice provides relief for taxpayers in two key areas:

  • For IRA owners born in 1951: Distributions received in 2023 mistakenly characterized as RMDs can be contributed back to a retirement account, if done so by September 30, 2023; and
  • For certain inherited IRA beneficiaries: No penalty will be incurred for failing to take a “specified RMD” (defined below) in 2023.


At the end of 2022, President Biden signed the Consolidated Appropriations Act, 2023 into law. Among other things, the Act incorporated several provisions affecting retirement plans (commonly referred to as SECURE 2.0). In particular, SECURE 2.0 increased the age at which individuals must start taking RMDs from 72 to 73, starting in 2023, and further increased this beginning date to age 75, starting in 2033. Consequently, for those born in 1951 and turning 72 years old in 2023, no RMD would be required for 2023.   

Because SECURE 2.0 was enacted at the end of 2022, plan administrators voiced concern that their automated payment systems may not get updated in time to reflect the increase in the RMD age from 72 to 73, resulting in the possible mischaracterization of distributions to account owners born in 1951 as an RMD. Because a payment characterized as an RMD is not eligible to be rolled over tax-free into a retirement plan under the typical 60-day rule, the account owner receiving this mischaracterized payment would have no choice but to keep the distribution and pay taxes—unless the IRS provided relief.

Also in 2022, the Treasury Department issued proposed regulations requiring beneficiaries of an inherited IRA who are subject to a 10-year withdrawal period to take RMDs in years one through nine, with full distribution by year 10 (referred to collectively as “specified RMDs”), in the event the account owner died after their required beginning date. Because the RMD requirement under the 10-year rule was a departure from how the IRS had previously explained the rules, a subsequent notice released in October of 2022 provided relief for inherited IRA beneficiaries who did not take a specified RMD in 2021 or 2022, but indicated that a specified RMD would be required in 2023 if the proposed regulations were finalized. 

RMD guidance for 2023

For retirement account owners born in 1951. For account owners born in 1951, no RMD is required until April 1, 2025 (i.e., April following the year in which the owner turns 73). However, should such an account owner mistakenly receive a distribution in 2023 characterized as an RMD, the IRS is allowing the mischaracterized amounts to be rolled back into an eligible retirement account up until September 30, 2023. This relief is provided as an exception to the typical 60-day rule, which generally limits tax-free rollover distributions to a 60-day period and does not apply to RMDs. 

For example, if an account owner born in 1951 received a single-sum distribution in January 2023, part of which was mischaracterized as an RMD, that owner will have until September 30, 2023, to roll over that mischaracterized part of the distribution into a retirement account without having to pay taxes.   

For inherited IRA beneficiaries subject to a 10-year distribution period. Although the IRS indicated in its October 2022 Notice that specified RMDs would be required starting in 2023, the recently released July Notice relieves IRA beneficiaries of such requirement by waiving the excise tax typically associated with not taking an RMD. Consequently, for beneficiaries subject to the 10-year rule (applicable if the account owner died after 2019 and on or after his or her required beginning date), no RMD will be required until 2024. 

To understand how this latest relief from the IRS may apply to your particular situation, please consult with your CIBC Private Wealth team as well as your legal and tax advisors.  

To learn more about other retirement changes enacted under SECURE 2.0, you can read our summary here.  


Caroline McKay is a senior wealth strategist for CIBC Private Wealth in Boston, with over 15 years of industry experience. In this role, Caroline is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high net worth clients.


1 SECURE 2.0 builds on the Setting Every Community Up for Retirement Enhancement Act of 2019.