The IRS unleashed massive confusion last year. To the surprise of many, it released proposed SECURE Act regulations requiring beneficiaries (on some occasions) to take required minimum distributions (RMDs) during the 10-year payout period. To help with the confusion, the IRS issued some transitional RMD relief.

Notice 2022-53

Last year, the IRS issued Notice 2022-53, which waived penalties for missed 2021 and 2022 RMDs within the 10-year period. Recently, the Service released Notice 2023-54, which extends the penalty waiver to cover missed 2023 RMDs when the death occurred in 2020 or 2021. It also excuses the penalty for missed 2023 RMDs within the 10-year period when the death took place in 2022.

At first it may seem that every beneficiary who is subject to the 10-year rule and would otherwise be required to take an RMD for 2023 should take advantage of the opportunity. It may seem like a no-brainer to keep the funds in the account to avoid an immediate tax bill. However, this may not actually be a smart planning move.

Why? Well, anyone who is eligible for this relief also has the 10-year deadline looming. It may be tempting to skip an RMD for 2023, but that could mean more pain later. Pain that may lead to a potentially larger tax bill at the end of the 10-year holding period. A better strategy may be to say ‘no thank you’! Instead, take advantage of the waiver to do some flexible distribution planning.


Debra, age 75, died in 2020. The beneficiary of her traditional IRA is her adult daughter, Brittany. Brittany is a non-eligible designated beneficiary subject to the 10-year rule under the SECURE Act. The proposed regulations say that because Debra died after her RBD, Brittany must take RMDs based on her single life expectancy during years 1-9 of the 10-year period. However, Notice 2022-53 said that if Brittany failed to do so for 2021 and 2022, there is no penalty on the missed RMDs. Notice 2023-54 extends this relief to the 2023 RMD.

Because Brittany is eligible for relief from the RMDs during the 10-year period for years 2021, 2022, and 2023, she could take nothing in 2023 for a third year in a row. However, she may want to consider taking distributions anyway to minimize the tax hit in future years. Despite Notices 2022-53 and 2023-54, drawing down the inherited IRA throughout the 10-year period while being cognizant of current tax brackets could be a wise tax planning strategy.


By Sarah Brenner, JD
Director of Retirement Education

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