So it appears that the age for RMDs has been increased to 72 - does anyone have a template for how they are changing the verbiage of their notices?

Swapping 72 for 70 1/2? What other changes are there?

We went broad and basic and just covered the 3 biggest topics: RMDs, Beneficiaries, and Contributions. Here is a copy of the notice we provided:


The newly enacted SECURE Act (effective January 1, 2020) may affect your IRA and/or your beneficiary designation(s). Please review the information below.

1) The age for Required Minimum Distributions (RMDs) is now 72. Because the effective date is January 1, 2020, if you were 70.5 years old or older on December 31, 2019 this will not have an affect on your IRA and you will still be required to take your RMD in 2020.

2) There is no longer an age cap for contributions to a Traditional IRA as long as you have earned income. Because of the effective date you may make a contribution to your IRA in 2020 regardless of age (as long as you have earned income); however, if you were 70.5 in 2019 you WILL NOT be able to make a prior year contribution.

3) For IRA owners who pass away on or after January 1, 2020, most beneficiaries now must take the balance of the IRA within 10 years. Spousal inheritance, minor children, chronically ill patients, and beneficiaries less than 10 years younger than the original IRA owner are exempted.

You may contact XXX or XXX with questions at 999-999-9999. However, Bank employees are not tax professionals; therefore, we strongly encourage you to seek guidance from a tax professional.

I have been asked by our Deposit Operations manager about the timing of the annual letter. In the past we have mailed these by January 31st of each year; however our processor will be delaying that this year until they have updated their system with the new information. Other than state law - is there required timing for the annual notice. Truth be told I have never gotten involved with this during my career as a compliance professional.

Thank you!

What annual letter? If you're talking about withholding election for automatic distributions, those must be delivered no more than 6 months prior to the distribution date.

Page 19 of the IRS Instructions for form 1099R / 5498 contains this information regarding RMDs. Fair Market Value and Required Minimum Distribution information must be provided by 01/31. You do not have to provide this information on a form 5498.

RMDs. An IRA (other than a Roth IRA) owner/participant must begin taking distributions for each calendar year beginning with the calendar year in which the participant attains age 701/2. The distribution for the 701/2 year must be made no later than April 1 of the following calendar year; RMDs for any other year must be made no later than December 31 of the year. See Regulations section 1.401(a)(9)-6 for RMDs from annuity contracts.

For each IRA you held as of December 31 of the prior year, if an RMD is required for the year, you must provide a statement to the IRA participant by January 31 regarding the RMD using one of two alternative methods described below. You are not required to use the same method for all IRA participants; you can use Alternative one for some IRA participants and Alternative two for the rest. Under both methods, the statement must inform the participant that you are reporting to the IRS that an RMD is required for the year. The statement can be provided in conjunction with the statement of the FMV.

* * *

Alternative one. Under this method, include in the statement the amount of the RMD with respect to the IRA for the calendar year and the date by which the distribution must be made. The amount may be calculated assuming the sole beneficiary of the IRA is not a spouse more than 10 years younger than the participant. Use the value of the account as of December 31 of the prior year to compute the amount. See the instructions for boxes 11, 12a, and 12b, later, for how to report.
Alternative two. Under this method, the statement informs the participant that a minimum distribution with respect to the IRA is required for the calendar year and the date by which such amount must be distributed. You must include an offer to furnish the participant with a calculation of the amount of the RMD if requested by the participant.

Instructions document: https://www.irs.gov/pub/irs-pdf/i1099r.pdf

Thank you Steven. You're going to teach this old dog some new tricks.

Customers born before July 1, 1949, are subject to the old (70-1/2) rule. Those born after June 30, 1949, are subject to the new (72) rule.

And if you're wondering about whether there are new life expectancy and RMD multiplier tables, there are not. The IRS proposed updating those tables for longer life expectancies last year, but a final rule hasn't been issued. It's likely the revised tables will be used for RMDs beginning in 2021.

Ironically, U.S. life expectancy has just begun to lessen in the last couple of years, but it's still long enough that the tables need updating.

What if our core processor needs to make a system patch before we can issue RMD notices? Is there a penalty to the bank for not having them out by January 31?

Is there any requirement to notify customer of the change in what was presented a account opening on the 5305-A form?

IRS Notice 20-06 addresses RMD letters. Issued today.

https://www.irs.gov/pub/irs-drop/n-20-06.pdf

Summary from IRS Guidewire email

Under pre-amended law, by January 31st, the financial institutions would have had to notify IRA owners who turned 70½ in 2020 about the required minimum distribution (RMD) which would have needed to be made for 2020. The SECURE Act changed the age triggering the RMD requirement from 70 and ½ to 72, so these notices are no longer due under the amended law. Notice 2020-06 proves that if a RMD statement is provided for 2020 to an IRA owner who will attain age 70½ in 2020, the IRS will not consider such statement to be incorrect, provided that the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.
Notice 2020-06 will be in IRB: 2020-7, dated February 10, 2020.

With the contribution deadline being extended to July 1....has anyone heard anything about a new due date being established for delivering copy B to the participant....an extension of some sort form June 1???

I haven't been able to find anything....

copy B of form 5498

Also, the date to submit to the IRS....I believe it is currently 5/31....does anyone know the extension for that.....

Would the FDIC logo need to be on this letter?

No. It's not an advertisement.