Business is booming.

Born In 1951? Want To Undo Your RMD? Deadline Is September 30

If you were born in 1951, did you receive a required minimum distribution between January 1, 2023 and July 31, 2023? If you don’t want that RMD, you can undo it by redepositing the funds into the retirement plan if you act by September 30.

Why am I directing this information to those born in 1951? That’s the cohort that is affected by a change in the law that increased the RMD age from 72 to 73.

72? Or 73?

SECURE Act 2.0, which became law at the end of 2022, changed the age for people taking their first RMDs to 73 from 72.

Let’s think about that.

Those born in 1950 turned 72 in 2022 and 73 in 2023. Those born in 1951 turned 72 in 2023 and will be 73 in 2024.

Confused? So were many others.

However, SECURE Act 2.0 made it clear that the age 73 change applies to “an individual who attains age 72 after December 31, 2022.” That means that the change from age 72 to age 73 does not apply to those born in 1950. They needed to take their first RMDs before December 31, 2022 — or by April 1, 2023, which is an option only available for the very first RMD.

Problem With RMD Age Change

Retirement plan administrators and other payors were caught unprepared for the age change. A number told the IRS that their automated payment systems would need to be updated to accommodate the 72 to 73 age change, as reported in IRS Notice 2023-54, Transition Relief and Guidance Relating to Certain Required Minimum Distributions.

The administrators indicated that the updates could take some time, and, as a result, some of the retirement plan participants and IRA owners who were born in 1951 might receive distributions in 2023 that would be “mischaracterized” as RMDs.

And, indeed, it seems that some plan administrators did issue what they thought would be RMDs for 2023 unnecessarily.

The IRS stepped in with a fix, a way to get those mischaracterized RMDs back into the retirement plan — if the IRA owner or plan participant wanted to do so.

Notice 2023-54 Offers Relief

Notice 2023-54 clarified a few things.

Most importantly, if you were born in 1951, a special rule applies to you. If you received an “RMD” between January 1, 2023 and July 31, 2023, that distribution doesn’t count as an RMD — it can be redeposited as a rollover. This is an exception to the rule (that is, normally RMDs are not eligible for a rollover or trustee-to-trustee transfer).

To repeat, since a mischaracterized RMD is not considered an RMD, it can be redeposited, but only if done timely. (See “Timing” below.)

When doing a rollover, the notice provides relief from the 12-month rule (the rollover is permitted even if the plan participant or IRA owner had rolled over another distribution within the past 12 months). However, doing the rollover “will preclude the IRA owner or surviving spouse from rolling over a distribution in the next twelve months,” quoting the notice. (That future rollover limitation can be avoided by doing a trustee-to-trustee transfer instead of a rollover. A good resource on rollovers and transfers is available on the IRS website.)


If you were born in 1951 and want to redeposit your 2023 “RMD,” you’ll need to act quickly. You have until September 30, 2023 to make that happen.


Contact your plan administrator or IRA custodian for information on how to do the redeposit, but I caution you to also get your tax adviser involved.

You’ve “heard” me say this time and again, but let me repeat it: Your situation is unique and needs to be reviewed with tax counsel before taking action.


To keep up with topics that I cover, be sure to follow me on the site (and if you would like to subscribe, check out the red box at the top right). Write to me at Include your city and state, and mention that you are a reader. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future post.

Source link

Comments are closed, but trackbacks and pingbacks are open.