Rev. Rul. 2020-23, Notice 2020-80: Distributions from terminating section 403(b) plans

Distributions from terminating section 403(b) plans

The IRS today released advance versions of guidance regarding certain distributions from terminating section 403(b) plans.


Related content

As briefly noted in an IRS release—IR-2020-251—the IRS provided this guidance for employers and employees with terminating section 403(b) plans that fund benefits through section 403(b)(7) custodial accounts.

The following guidance reflects changes provided in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

  • Rev. Rul. 2020-23 [PDF 41 KB] provides that: (1) section 403(b) retirement plans funded through individual or group section 403(b)(7) custodial accounts can be terminated through the distribution of individual custodial accounts; and (2) if a distributed custodial account continues to comply with certain requirements, no portion of the distributed custodial account is includible in gross income until amounts are actually paid out of the account to a participant or beneficiary. 

  • Notice 2020-80 [PDF 56 KB] requests comments on the application of annuity and spousal rights provisions related to distributions in certain plans described in Rev. Rul. 2020-23. Comments are due on or before February 3, 2021.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal