On July 14, 2023, the IRS issued Notice 2023-54 announcing that traditional IRA owners who will attain age 72 in 2023 (that is, individuals born in 1951) will have to take their first required minimum distribution (RMD) by April 1, 2025, rather than April 1, 2024.

This delay in the required beginning date means that these IRA owners (who, prior to enactment in late December 2022 of the SECURE 2.0 Act, would have been required to take minimum distributions from their IRAs for 2023) will have no RMD due from their IRAs for 2023. Thus, the first distribution for these IRA owners that will be treated as an RMD will be a distribution made for 2024, not 2023.

The significance of this for an individual having their 72nd birthday in 2023 is that IRA distributions in 2023 mischaracterized as 2023 RMDs will be eligible to be rolled back into their IRA account. Thus, the portion of the distribution that is redeposited will avoid tax in 2023. Tax law doesn’t allow RMDs to be rolled over, so this is why the IRS is identifying these distributions as mischaracterized RMDs and eligible for rollover.

The normal period allowed for a rollover is 60 days from the time of the distribution. But to accommodate those who would have preferred not to take this mischaracterized distribution in 2023, the IRS extended the 60-day rollover period to September 30, 2023 for IRA owners and IRA owners’ surviving spouses.

There is also a 12-month waiting time between IRA rollovers but for purposes of the extended rollover period for mischaracterized distributions, the rollover is allowed even if the IRA owner or their surviving spouse has rolled over a distribution within the last twelve months. However, making such a rollover of the mischaracterized IRA distribution would prevent the IRA owner or surviving spouse from rolling over another IRA distribution in the next twelve months.

If you have questions, please contact this office. (206) 838-3800 — info@ygacpa.com…(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

RMD Relief for People Reaching 72 in 2023 (Don’t Miss the Rollover Period!)

Planning for retirement is a crucial aspect of financial management. As individuals approach their golden years, they must be mindful of rules and regulations that govern their retirement accounts. One such rule is the Required Minimum Distribution (RMD), which kicks in when individuals turn 72. However, thanks to the RMD Relief, individuals reaching this milestone in 2023 can benefit from an extended rollover period. It’s essential not to miss out on this opportunity to make the most of your retirement savings.

In the United States, tax-advantaged retirement accounts, such as Individual Retirement Accounts (IRAs) and 401(k)s, come with certain guidelines and restrictions. One of these rules requires account holders to take a minimum distribution from their retirement accounts each year once they reach the age of 72. The purpose behind the RMD is to ensure that individuals do not hoard their retirement savings indefinitely and instead use it as a source of income during their retirement years.

For those turning 72 in 2023, this means they must begin taking their RMDs by April 1st of the following year, 2024. However, there is a unique opportunity for these individuals to take advantage of RMD Relief, which grants them an extended rollover period. Typically, when an individual receives a distribution from their retirement account, they have only 60 days to complete a rollover if they wish to return the funds back to the account without incurring taxes and penalties.

Now, with the RMD Relief, individuals reaching 72 in 2023 have until the end of the year to complete the rollover, making it a generous extension period compared to the usual 60 days. This relief was introduced to provide individuals with greater flexibility in managing their retirement accounts, ensuring they have enough time to explore various strategies to optimize their distributions.

The extended rollover period can be particularly advantageous for those who may not need their RMD funds immediately. By carefully planning and consulting with financial advisors or tax professionals, individuals can identify opportunities for tax-efficient rollovers, potential investment opportunities, or even charitable contributions. This additional time allows retirees greater control over their financial decisions and minimizes any unintentional tax burdens.

It is, therefore, crucial for individuals turning 72 in 2023 to be aware of this RMD Relief and the extended rollover period. Delaying your RMD distribution until the end of the year can provide you with ample time to evaluate your options and make informed decisions regarding your retirement savings.

To take full advantage of this relief, it’s recommended to start the planning process well in advance. Seek guidance from financial advisors or tax professionals who can provide valuable insights tailored to your specific situation. They can help you evaluate your financial goals, tax implications, and potential rollover strategies to maximize your retirement savings.

In conclusion, the RMD Relief provides valuable opportunities for individuals reaching 72 in 2023 to strategically manage their retirement accounts. By taking advantage of the extended rollover period, individuals can explore various financial options and make informed decisions about their retirement funds. Do not miss out on this opportunity and ensure you plan ahead to make the most of your RMD Relief.