On October 7, 2022, the IRS issued Notice 2022-53 which grants limited relief with respect to certain new requirements for required minimum distributions (RMDs) from qualified plans (including 401(k) plans). Specifically, the notice provides relief for 401(k) plans that failed to make RMDs in 2021 or 2022 to beneficiaries under a new 10-year payment rule that came into effect under the Setting Every Community Up for Retirement Enhancement (“SECURE”) Act, and provides related excise tax relief to affected beneficiaries. The relief should be welcome news for plan administrators and beneficiaries alike who, without the relief, could have faced potential adverse consequences, as explained below.

Background – SECURE Act Changes.

The SECURE Act (see our blog entitled “Congress Finally Passes SECURE Act – The Most Sweeping Pension Legislation in Over a Decade is Now Law” for details) among many other things, made certain changes to the rules regarding RMDs from 401(k) plans. Generally stated, in addition to raising the required beginning date from age 70 ½ to age 72, the new law altered the timing requirements for RMDs made to designated beneficiaries following a participant’s death.

Whereas previously such RMDs had to follow one of two rules, depending on whether the participant died before or after his or her required beginning date, the SECURE Act prescribed a single 10-year rule. Under SECURE, 401(k) plans generally must distribute benefits to a designated beneficiary within 10 years of the participant’s death, regardless of whether the participant died before or after the required beginning date. The change was generally effective for participants who die after 2019.

Proposed Regulations.

On February 22, 2022, the IRS issued proposed regulations on RMDs which addressed the SECURE Act changes. See our article entitled “401(k): New IRS Proposed Regs Update RMD Rules for SECURE Act and Other Changes” for details.

Among the topics addressed under the proposed regulations, the timing of the 10-year rule is spelled out in detail. One provision is particularly noteworthy – in the case of a participant who dies after his or her required beginning date, payments under the 10-year rule generally must now begin during the year after the participant’s death.

The phrasing of the above provision took some commentators and plan administrators by surprise. Under the old, pre-SECURE Act payment scheme, RMDs for years during the then five-year span following a participant’s death could be delayed until the end of the fifth year after the participant’s death. Extending this rationale, many 401(k) plans did not pay RMDs during 2021 and 2022, believing that they could be paid at the end of the new ten-year period following the participant’s death. But under the proposed regulations, there is no similar delaying tactic; these RMDs should have been paid during 2021 and/or 2022, as applicable.

Failure to Follow RMD Rules Could Result in Substantial Adverse Consequences.

The difference in timing is no small matter – as a potential violation of Internal Revenue Code Section 401(a)(9), failure to make RMDs when due could subject the 401(k) plan to potential disqualification and/or other substantial penalties, necessitating corrective action; and beneficiaries who did not timely receive RMDs could be subject to a possible 50 percent excise tax on the amount that should have been distributed.

Notice 2022-53 to the Rescue.

Recognizing the dilemma, Notice 2022-53 does two things:

  • The Notice states that final regulations mirroring the proposed regulations, when issued, will not be effective until at least 2023.
  • The Notice provides that “specified” RMDs will not be deemed to be violative of the RMD rules, either for purposes of the plan qualification requirements or for purposes of the 50 percent excise tax.
    • In simplified terms, a “specified” RMD is an RMD that:
      • Under the proposed regulations’ application of the SECURE Act’s 10-year rule, would have been required to have been made in 2021 or 2022; to
      • The beneficiary of a participant who died in 2020 or 2021 after reaching his or her required beginning date (assuming the beneficiary is not taking certain “stretch payments” under the proposed regulations).

OBSERVATION: As a practical matter, many 401(k) plans provide that, for purposes of administrative simplicity, death benefits must be paid within a shorter time period, such as by the end of the calendar year following the year of the participant’s death. Accordingly, the problem posed by the new guidance is probably somewhat more limited in scope that might first meet the eye. Nevertheless, plan administrators and beneficiaries that are affected should exercise caution, because the relief offered by Notice 2022-53 is limited and is unlikely to be extended to future years.

More Information on RMDs. For more information about RMDs, see our Compliance Task entitled “Required Minimum Distributions”.

This article is intended only as a brief overview of IRS Notice 2022-53 with respect to required minimum distributions (RMDs) for 2021 and 2022 under 401(k) plans. It is not intended to address the details of 401(k) plan qualification, RMDs generally, other legal requirements for 401(k) plans, details about taxation of distributions, or similar topics. As always, please consult your own ERISA attorney or advisor for individualized advice concerning your own 401(k) plan.


The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. As always, for specific questions concerning your 401(k) retirement plan, or for help in operating your plan during the current COVID-19 crisis, please consult your own ERISA attorney or professional advisor.

Leave a Reply

Your email address will not be published. Required fields are marked *