us-irs-notices-irb-2022-5-pdf•Internal Revenue Bulletin 2022-5 (PDF rendition): IRS Notices
Internal Revenue Bulletin 2022-5 (PDF rendition): IRS Notices
us-irs-notices-irb-2022-5-pdfInternal Revenue Bulletin 2022-5 (PDF rendition): IRS NoticesGuidance
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Bulletin No. 2022–5 January 31, 2022 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. EMPLOYEE PLANS Notice 2022-6, page 460. This notice updates the life expectancy and mortality tables used to determine substantially equal period- ic payments under the methods set forth in Rev. Rul. 2002-62 and provides a 5 percent floor on the maxi- mum interest rates that may be used to calculate annui- ty payments under the fixed amortization and annuitiza- tion methods. This notice also modifies the guidance in Notice 2004-15 to apply these changes for purposes of section 72(q). INCOME TAX Notice 2022-5, page 457. Because of the Coronavirus Disease 2019 (COVID-19) pandemic, the Department of the Treasury and the Internal Revenue Service issued Notice 2021-12, 2021-6 I.R.B. 828, as clarified by Notice 2021-17, 2021-14 I.R.B. 984, to provide temporary relief from certain requirements under § 42 of the Internal Rev- enue Code (Code) for qualified low-income housing projects and under §§ 142(d) and 147(d) of the Code for qualified residential rental projects. In response to the continuing presence of the pandemic and pre- cautions necessitated by new disease variants, this notice provides certain new relief and extends that temporary relief for certain requirements addressed in Notice 2021-12. Finding Lists begin on page ii. The IRS Mission Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and en- force the law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing of- ficial rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly. It is the policy of the Service to publish in the Bulletin all sub- stantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless other- wise indicated. Procedures relating solely to matters of inter- nal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rul- ings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbar- ment and suspension lists, and announcements. The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. January 31, 2022 Bulletin No. 2022–5 Part III Notice 2022-5 I. PURPOSE Because of the Coronavirus Disease 2019 (COVID-19) pandemic, the De- partment of the Treasury and the Internal Revenue Service issued Notice 2021-12, 2021-6 I.R.B. 828, as clarified by Notice 2021-17, 2021-14 I.R.B. 984, to provide temporary relief from certain require- ments under § 42 of the Internal Revenue Code (Code) for qualified low-income housing projects and under §§ 142(d) and 147(d) of the Code for qualified resi- dential rental projects. In response to the continuing presence of the pandemic and precautions necessitated by new disease variants, this notice provides certain new relief and extends the temporary relief for certain requirements addressed in Notice 2021-12. Section III of this notice describes the persons eligible for the re- lief granted in sections IV through VI of this notice. II. BACKGROUND A. Qualified low-income housing projects In this notice, the terms “Agency,” and “Owner” have the same meanings as de- scribed in section 5 of Rev. Proc. 2014-49, 2014-37 I.R.B. 535. For background on the requirements under § 42 that are receiving an extension under this notice of the relief provided un- der Notice 2021-12, refer to Section II.A of Notice 2021-12. An additional requirement under § 42 relating to an Agency’s inspection of low-income units as provided in § 1.42- 5(c)(2)(iii)(C)(2) of the Income Tax Reg- ulations is the 15-day reasonable notice requirement described in § 1.42-5(c)(2) (iii)(C)(3). Section 1.42-5(c)(2)(iii)(C) (2) provides that an Agency must se- lect the low-income units to inspect and low-income certifications to review in a manner that does not give advance no- tice that a particular low-income unit (or low-income certifications for a particu- lar low-income unit) will or will not be inspected (or reviewed) for a particular year. The Agency may notify the own- er of the low-income units for on-site inspection only on the day of inspec- tion. However, the Agency may give an owner reasonable notice that there will be an inspection of the project and of not-yet-identified low-income units or a review of low-income certifications of not-yet-identified low-income units. The notice serves to enable the owner to assemble needed documentation for low-income certifications for review and to notify tenants of the possibility of physical inspection of their units. Section 1.42-5(c)(2)(iii)(C)(3) provides that rea- sonable notice is generally no more than 15 days. Under § 42(m)(1)(A)(i), an Agency’s qualified allocation plan (QAP) must have been approved by the governmental unit of which the Agency is a part. This ap- proval is to be made in accordance with rules similar to certain rules in § 147(f) (2), other than § 147(f)(2)(B)(ii). Because approval under § 147(f)(2)(B)(i) involves a public hearing, such a hearing is also re- quired for purposes of § 42(m)(1)(A)(i). In response to the COVID-19 pandemic, hearings under § 147 were permitted to be conducted telephonically. See Rev. Proc. 2021-39, 2021-38 I.R.B. 426. In addition, Notice 2021-12 permitted hearings under § 42(m)(1)(A)(i) to be conducted tele- phonically. B. Qualified residential rental projects financed by bonds In this notice, the terms “Issuer” and “Operator” have the same meanings as described in section 4 of Rev. Proc. 2014- 50, 2014-37 I.R.B. 540. For background on the requirements under §§ 142(d) and 147(d) that are re- ceiving an extension under this notice of the relief provided under Notice 2021-12, refer to Section II.B of Notice 2021-12. C. Postponement of certain deadlines by reason of Presidentially declared disasters On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121 et seq., in response to the ongoing COVID-19 pandemic (Emergency Declaration). 1 The Emergency Declaration instructed the Sec- retary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate, pursuant to 26 U.S.C. 7508A(a).” Subsequent to the Emer- gency Declaration, the President issued ma- jor disaster declarations under the authority of the Stafford Act with respect to all 50 States, the District of Columbia, and 5 ter- ritories (Major Disaster Declarations). 2 In addition, under § 1.42-13(a), the Secretary of the Treasury or her delegate has the gen- eral authority to issue guidance and provide relief to carry out the purposes of § 42. In the context of a Presidentially-de- clared Major Disaster, Rev. Proc. 2014- 49 provides temporary relief from certain requirements of § 42 for Agencies and Owners of low-income housing projects. Under section 8 of Rev. Proc. 2014-49, in the case of a casualty loss suffered due to a Major Disaster that has reduced a low-income building’s qualified basis, the Agency that has jurisdiction over the building must determine what constitutes a reasonable restoration period. The rea- sonable restoration period established by the Agency must not extend beyond the end of the 25th month following the close of the month of the Major Disaster dec- laration (25-month reasonable restoration period). Until the restoration is completed, to determine the credit amount allowable during the reasonable restoration period for a building described in section 8 of Rev. Proc. 2014-49, an Owner must use the building’s qualified basis at the end of the taxable year immediately preceding the first day of the incident period for the Major Disaster. 1 See https://www.fema.gov/news-release/20200514/president-donald-j-trump-directs-fema-support-under-emergency-declaration. 2 See https://www.fema.gov/coronavirus/disaster-declarations. Bulletin No. 2022–5 457 January 31, 2022 Rev. Proc. 2014-49 also provides emer- gency housing relief for individuals who are displaced by a Major Disaster from their principal residences in certain Major Disaster Areas. See Rev. Proc. 2014-49, sections 12-14. In the context of a Pres- identially-declared Major Disaster, Rev. Proc. 2014-50 provides temporary relief from certain requirements under § 142(d) for qualified residential rental projects fi- nanced with exempt facility bonds issued by State and local governments under § 142. Rev. Proc. 2014-50 also provides emergency housing relief for individuals who are displaced by a Major Disaster from their principal residences in certain Major Disaster Areas. See Rev. Proc. 2014-50, sections 5-7. Notice 2020-23, 2020-18 I.R.B. 742, published on April 27, 2020, provided certain relief to affected taxpayers and postponed due dates until July 15, 2020, with respect to certain tax filings and pay- ments, certain time-sensitive government actions, and all time-sensitive actions list- ed in Rev. Proc. 2018-58, 2018-50 I.R.B. 990 (Dec. 10, 2018), that were due to be performed on or after April 1, 2020, and before July 15, 2020, including certain ac- tions under § 42 for qualified low-income housing projects. Notice 2020-53, 2020-30 I.R.B. 151, published on July 20, 2020, extended until December 31, 2020, the relief provided in Notice 2020-23 for § 42 qualified low-in- come housing projects, as well as provid- ing until December 31, 2020, additional relief under § 42 and under §§ 142(d) and 147(d) for qualified residential rental proj- ects. Notice 2021-12, published on Febru- ary 8, 2021, extended the temporary relief provided in Notice 2020-53, and also pro- vided temporary relief from additional § 42 requirements not previously addressed in Notice 2020-53. Notice 2021-17, published on April 5, 2021, clarified Notice 2021-12 by provid- ing a more precise citation in Section IV.E of that notice. III. SCOPE OF THE RELIEF GRANTED IN THIS NOTICE Sections IV.A through F of this no- tice apply to certain deadlines related to low-income housing projects under § 42. Sections V.A through D apply to relief involving operational waivers for low-income housing projects, and Sec- tion V.E applies to relief involving op- erational waivers both for those projects and for qualified rental projects under § 142(d). Sections VI.A and B apply to private activity bonds that are issued for the acquisition of buildings intended to be qualified residential rental projects and that are qualified bonds (as defined in § 141(e)) if the applicable require- ments of §§ 142(d) and 147(d)(2) are satisfied. All of the provisions in Sec- tions IV through VI also apply to Agen- cies, Owners, Issuers, and Operators that have responsibilities with respect to those projects and bonds. IV. GRANT OF RELIEF FOR DEADLINES RELATED TO THE LOW-INCOME HOUSING CREDIT In this Section IV, “original deadline” means the deadline without regard to any extension under Notice 2020-23, Notice 2020-53, or Notice 2021-12 (as clarified by Notice 2021-17). A. THE 10-PERCENT TEST FOR CARRYOVER ALLOCATIONS • For purposes of § 42(h)(1)(E)(ii), if the original deadline for an Owner of a building with a carryover allocation to meet the 10-percent test is on or after April 1, 2020, and on or before December 31, 2020, the deadline is extended to the original deadline plus two years. • If the original deadline is on or after January 1, 2021, and before December 31, 2022, the deadline is extended to December 31, 2022. B. THE § 42(e) 24-MONTH MINIMUM REHABILITATION EXPENDITURE PERIOD • For purposes of § 42(e)(3)(A)(ii), if the original deadline for the 24-month minimum rehabilitation expenditure period for a building originally is on or after April 1, 2020, and is on or before December 31, 2021, then that deadline is extended to the original date plus 18 months. • If the original deadline for this requirement is on or after January 1, 2022, and on or before June 30, 2022, then that deadline is extended to June 30, 2023. • If the original deadline for this requirement is on or after July 1, 2022, and on or before December 31, 2022, then that deadline is extended to the original date plus 12 months. • If the original deadline for this requirement is on or after January 1, 2023, and on or before December 30, 2023, then that deadline is extended to December 31, 2023. C. PLACED IN SERVICE DEADLINE • For purposes of § 42(h)(1)(E)(i), if the original deadline for a low-income building to be placed in service is the close of calendar year 2020, the new deadline is the close of calendar year 2022 (that is, December 31, 2022). • If the original placed-in-service deadline is the close of calendar year 2021 and the original deadline for the 10-percent test in § 42(h)(1) (E)(ii) was before April 1, 2020, the new placed-in-service deadline is the close of calendar year 2022 (that is, December 31, 2022). • If the original placed-in-service deadline is the close of calendar year 2021 and the original deadline for the 10-percent test in § 42(h)(1)(E)(ii) was on or after April 1, 2020, and on or before December 31, 2020, then the new placed-in-service deadline is the close of calendar year 2023 (that is, December 31, 2023). • If the original placed-in-service deadline is the close of calendar year 2022 (and thus the original deadline for the 10-percent test was in 2021), then the new placed-in-service deadline is the close of calendar year 2023 (that is, December 31, 2023). D. REASONABLE PERIOD FOR RESTORATION OR REPLACEMENT IN THE EVENT OF CASUALTY LOSS For purposes of § 42(j)(4)(E) both in the case of a casualty loss not due to a pre- COVID-19-pandemic Major Disaster and in situations governed by section 8.02 of January 31, 2022 458 Bulletin No. 2022–5 Bulletin No. 2022–5 459 January 31, 2022 Rev. Proc. 2014-49 in the case of a casual- ty loss due to a pre-COVID-19-pandemic Major Disaster, if a low-income building’s qualified basis is reduced by reason of the casualty loss and the reasonable period to restore the loss by reconstruction or re- placement that was originally set by the HCA (original Reasonable Restoration Period) ends on or after April 1, 2020, then the last day of the Reasonable Restoration Period is postponed by eighteen months but not beyond December 31, 2022. Not- withstanding the preceding sentence, the Agency may require a shorter extension, or no extension at all. For purposes of determining the cred- it amount allowable under § 42(a) in the case of a credit year that ends on or after April 1, 2020, and not later than the end of the Reasonable Restoration Period (taking into account any extension under the pre- ceding paragraph), if the Owner restores the building by the end of that extended Reasonable Restoration Period, then for taxable years ending after the first day of the casualty and before the completion of the restoration, the Owner must use the building’s qualified basis at the end of the taxable year immediately preceding the first day of the casualty as the building’s qualified basis for that credit year. E. EXTENSION TO SATISFY OCCUPANCY OBLIGATIONS If the close of the first year of the cred- it period with respect to a building is on or after April 1, 2020, and on or before December 31, 2022, then, for purposes of § 42(f)(3)(A)(ii), the qualified basis for the building for the first year of the credit period is calculated by taking into account any increase in the number of low-income units by the close of the 6-month period following the close of that first year. F. CORRECTION PERIOD For purposes of § 1.42-5, if a correc- tion period that was set by the Agency ends on or after April 1, 2020, and before December 31, 2021, then the end of the correction period (including as already extended, if applicable) is extended by a year, but not beyond December 31, 2022. If the correction period originally set by the Agency ends during 2022, the end of the period is extended to December 31, 2022. Notwithstanding the preceding sen- tences, the Agency may require a shorter extension, or no extension at all. V. GRANT OF RELIEF FOR OPERATIONAL PROVISIONS A. COMPLIANCE-MONITORING— REVIEW OF TENANT FILES For purposes of § 1.42-5, an Agency is not required to review tenant files in the period beginning on April 1, 2020, and ending on December 31, 2021. The Agen- cy must have resumed tenant-file review as due under § 1.42-5 as of January 1, 2022. For purposes of § 1.42-5(c)(2)(iii)(C) (3), between April 1, 2020, and the end of 2022, when the Agency gives an Own- er reasonable notice that it will review low-income certifications of not-yet-iden- tified low-income units, it may treat rea- sonable notice as being up to 30 days. Beginning on January 1, 2023, for this purpose reasonable notice again is gener- ally no more than 15 days. B. COMPLIANCE-MONITORING— PHYSICAL INSPECTIONS For purposes of § 1.42-5, an Agency is not required to conduct compliance-mon- itoring physical inspections in the period beginning on April 1, 2020, and ending on June 30, 2022. Because of high State- to-State and intra-State variability of COVID-19 transmission, an Agency, in consultation with public health experts, may extend the waiver in the preceding sentence if the level of transmission makes such an extension appropriate. Depending on varying rates of transmission, the ex- tension may be State-wide, may be limited to specific locales, or may be on a proj- ect-by-project basis. No such extension may go beyond December 31, 2022. The Agency must resume compliance-moni- toring reviews as due under § 1.42-5 once the waiver expires. For purposes of § 1.42-5(c)(2)(iii)(C) (3), between April 1, 2020, and the end of 2022 only, when the Agency gives an Owner reasonable notice that it will phys- ically inspect not-yet-identified low-in- come units, it may treat reasonable notice as being up to 30 days. Beginning on Jan- uary 1, 2023, for this purpose reasonable notice again is generally no more than 15 days. C. COMMON AREAS AND AMENITIES A temporary full or partial unavail- ability or closure of an amenity or com- mon area in a low-income building or project does not result in a reduction of eligible basis of the affected building if the unavailability or closure is during some or all of the period from April 1, 2020, to December 31, 2022, and is in re- sponse to the COVID-19 pandemic and not because of other noncompliance with § 42. During the above period, an Agen- cy may deny any application of the above waiver or, based on public health criteria, may limit the waiver to partial closure, or to limited or conditional access of an amenity or common area. (For exam- ple, the Agency may apply the waiver to access an amenity or common area that is limited to persons wearing masks or to persons fully vaccinated against COVID-19.) D. PERMISSION FOR AGENCIES TO CONDUCT HEARINGS IN THE SAME MANNER AND UNDER THE SAME PROCEDURES AS PRIVATE- ACTIVITY-BOND HEARINGS Beginning on April 1, 2020, for the purposes of QAP approval under § 42(m) (1)(A), if a public hearing is conducted in a manner and under procedures such that § 1.147(f)-1(d) would be satisfied, taking into account the date on which the hearing is held, then the manner and procedures of the hearing are acceptable for QAP ap- proval under § 42(m)(1)(A). 3 Continued application of the preceding sentence is not dependent on the continuation of the COVID-19 pandemic. 3 For example, while Rev. Proc. 2021-39 is in effect, satisfying the hearing procedures in that revenue procedure satisfies the procedural requirements for QAP hearings. January 31, 2022 460 Bulletin No. 2022–5 E. EMERGENCY HOUSING FOR MEDICAL PERSONNEL AND OTHER ESSENTIAL WORKERS If individuals are medical personnel or other essential workers (as defined by State or local governments) that provide services during the COVID-19 pandemic, then, for purposes of providing emergency housing from April 1, 2020, to December 31, 2022, under Rev. Proc. 2014-49 or un- der Rev. Proc. 2014-50, Agencies, Issuers, Owners, and Operators of low-income housing projects may treat these individ- uals as if they were Displaced Individuals (defined under section 5.02 of Rev. Proc. 2014-49 or section 4.04 of Rev. Proc. 2014-50, as applicable). That is, Agencies, Issuers, Owners, and Operators may pro- vide emergency housing for these individ- uals pursuant to the provisions of the ap- plicable revenue procedure. See sections 12, 13, and 14 of Rev. Proc. 2014-49 and sections 5, 6, and 7 of Rev. Proc. 2014-50. VI. GRANT OF RELIEF FOR DEADLINES ASSOCIATED WITH QUALIFIED RESIDENTIAL RENTAL PROJECTS In this Section VI, “originally” means without regard to any extension under No- tice 2020-23, Notice 2020-53, or Notice 2021-12 (as clarified by Notice 2021-17). A. THE 12-MONTH TRANSITION PERIOD TO MEET SET-ASIDES FOR QUALIFIED RESIDENTIAL RENTAL PROJECTS For purposes of section 5.02 of Rev. Proc. 2004-39, if the last day of a 12-month transition period for a qualified residential rental project originally was on or after April 1, 2020, and before December 31, 2022, then that last day is postponed to December 31, 2022. B. THE § 147(d) 2-YEAR REHABILITATION EXPENDITURE PERIOD FOR BONDS USED TO PROVIDE QUALIFIED RESIDENTIAL RENTAL PROJECTS If a bond is used to provide a qualified residential rental project and if the last day of the § 147(d) 2-year rehabilitation expenditure period for the bond origi- nally was on or after April 1, 2020, and before December 31, 2023, then that last day is postponed to the earlier of eighteen months from the original due date or De- cember 31, 2023. VII. EFFECT ON OTHER DOCUMENTS Notice 2020-23, Notice 2020-53, No- tice 2021-12, Notice 2021-17, Rev. Proc. 2004-39, Rev. Proc. 2014-49, and Rev. Proc. 2014-50 are amplified. VIII. DRAFTING INFORMATION The principal authors of this notice are Dillon Taylor and Michael Torruella Costa, Office of Associate Chief Coun- sel (Passthroughs & Special Industries) and David White, Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regard- ing this notice relating to the low-income housing credit, please contact Dillon Tay- lor or Michael Torruella Costa at (202) 317-4137 (not a toll-free call); for further information regarding this notice relating to qualified residential rental projects, please contact David White at (202) 317- 4562 (not a toll-free number). Determination of Substantially Equal Periodic Payments Notice 2022-6 SECTION 1. PURPOSE .01 This notice provides guidance on whether a series of payments from an in- dividual account under a qualified retire- ment plan is considered a series of sub- stantially equal periodic payments within the meaning of section 72(t)(2)(A)(iv) of the Internal Revenue Code. This guidance also applies for purposes of determining whether a distribution from a non-qual- ified annuity contract is part of a series of substantially equal periodic payments within the meaning of section 72(q)(2) (D). This notice modifies and supersedes Rev. Rul. 2002-62, 2002-2 CB 710, and Notice 2004-15, 2004-1 CB 526. SECTION 2. BACKGROUND .01 Section 72(t) provides for an ad- ditional income tax on early withdrawals (which generally applies to withdrawals before age 59½) from qualified retire- ment plans (as defined in section 4974(c)). Section 4974(c) provides, in part, that the term “qualified retirement plan” means (1) a plan described in section 401 (includ- ing a trust exempt from tax under section 501(a)), (2) an annuity plan described in section 403(a), (3) a tax-sheltered annuity arrangement described in section 403(b), (4) an individual retirement account de- scribed in section 408(a), or (5) an indi- vidual retirement annuity described in section 408(b). .02 Section 72(t)(1) provides that if a taxpayer receives any amount from a qualified retirement plan, the taxpayer’s income tax is increased by an amount equal to 10% of the amount received from the qualified retirement plan that is inclu- dible in gross income. Section 72(t)(2) sets forth exceptions to this 10% addition- al tax. Under section 72(t)(2)(A)(iv), one of the exceptions to the 10% additional tax is for distributions that are part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the em- ployee or the joint lives (or joint life ex- pectancies) of the employee and designat- ed beneficiary. .03 Pursuant to section 72(t)(5), the term “employee” includes any participant, and in the case of distributions from an individual retirement account or annui- ty (IRA), the IRA owner is treated as an employee for purposes of applying section 72(t). .04 Section 72(t)(4) provides that if a distribution is excepted from the 10% ad- ditional tax because the distribution is part of a series of substantially equal period- ic payments as described in section 72(t) (2)(A)(iv) and that series of payments is subsequently modified (other than by rea- son of death, disability, or a distribution to which section 72(t)(10) applies) before the end of the 5-year period beginning on the date of the first payment, or before the employee attains age 59½, the employee’s tax for the first year of the modification is Bulletin No. 2022–5 461 January 31, 2022 increased by an amount equal to the tax that, but for the exception in section 72(t) (2)(A)(iv), would have been imposed, plus interest for the deferral period. .05 Q&A-12 of Notice 89-25, 1989-1 CB 662, provides that payments are con- sidered to be substantially equal periodic payments under section 72(t)(2)(A)(iv) if they are made in accordance with one of the following three methods: (1) the re- quired minimum distribution method; (2) the fixed amortization method; or (3) the fixed annuitization method. .06 Rev. Rul. 2002-62 restates the rule that payments are considered substan- tially equal periodic payments if they are made in accordance with one of the three methods provided in Q&A-12 of Notice 89-25. Section 2.02(c) of Rev. Rul. 2002- 62 modifies the application of the fixed amortization method and the fixed annu- itization method by providing that the in- terest rate that may be used to apply the fixed amortization method or the fixed annuitization method is any interest rate that is not greater than 120% of the federal mid-term rate (determined in accordance with section 1274(d) for either of the two months immediately preceding the month in which the distribution begins). In addi- tion, section 2.01(c) of Rev. Rul. 2002-62 modifies the application of the fixed an- nuitization method by specifying the mor- tality table that must be used to apply that method. .07 Section 72(q)(1) provides that if a taxpayer receives any amount under a non-qualified annuity contract, the taxpay- er’s income tax is increased by an amount equal to 10% of the amount received from the non-qualified annuity contract that is includible in gross income. Section 72(q) (2) sets forth exceptions to this 10% ad- ditional tax. Under section 72(q)(2)(D), one of the exceptions to the 10% addi- tional tax is for a distribution that is part of a series of substantially equal periodic payments (not less frequently than annu- ally) made for the life (or life expectan- cy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and designated beneficiary. Section 72(q)(3) provides rules that are generally parallel to the rules in section 72(t)(4) and apply if a distribution is excepted from the 10% additional tax because the distribution is part of a series of substantially equal peri- odic payments and that series of payments is subsequently modified. .08 Notice 2004-15 provides that tax- payers may use one of the methods set forth in Notice 89-25, as modified by Rev. Rul. 2002-62, to determine whether a distribution from a non-qualified annuity contract is part of a series of substantial- ly equal periodic payments under section 72(q)(2)(D). .09 Final regulations under section 401(a)(9) issued in 2020 provide new life expectancy tables for determining re- quired minimum distributions that apply for distribution calendar years beginning on or after January 1, 2022. See Treas. Reg. § 1.401(a)(9)-9, issued in T.D. 9930, 85 FR 72427 (Nov. 12, 2020). SECTION 3. METHODS .01 General rule. Payments in a series are considered substantially equal period- ic payments within the meaning of section 72(t)(2)(A)(iv) if they are determined in accordance with one of the three methods described in section 3.01(a) through (c) of this notice (which are based on the three methods described in Rev. Rul. 2002-62). (a) The required minimum distribution method. The annual payment for each dis- tribution year is determined by dividing the account balance for that distribution year by the number of years from the cho- sen life expectancy table in section 3.02(a) of this notice for that distribution year. Under this method, the account balance, the number of years from the chosen life expectancy table, and the resulting annual payments are redetermined for each dis- tribution year. This redetermination of the annual payment is not considered a modi- fication of the series of substantially equal periodic payments, provided that the re- quired minimum distribution method con- tinues to be used and the same life expec- tancy tables continue to be used, except to the extent required in section 3.02(b) of this notice. (b) The fixed amortization method. The annual payment for each distribution year is determined as the amount that will result in the level amortization of the ac- count balance over a specified number of years determined using the chosen life expectancy table under section 3.02(a) of this notice and an interest rate that is permitted pursuant to section 3.02(c) of this notice. Under this method, once the account balance, the number of years from the chosen life expectancy table, and the resulting annual payment are determined for the first distribution year, the annual payment is the same amount in each suc- ceeding distribution year. (c) The fixed annuitization method. The annual payment for each distribution year is determined by dividing the account balance by an annuity factor that is the present value of an annuity of $1 per year beginning at the employee’s age and con- tinuing for the life of the employee (or the joint lives of the employee and designated beneficiary). The annuity factor is derived using the mortality rates in § 1.401(a)(9)- 9(e) and an interest rate that is permitted pursuant to section 3.02(c) of this notice. Under this method, once the account bal- ance, the annuity factor, and the resulting annual payment are determined for the first distribution year, the annual payment is the same amount in each succeeding distribution year. .02 Other rules. The following rules apply for purposes of this section 3. (a) Life expectancy tables. The life expectancy tables that can be used to de- termine distribution periods under the required minimum distribution and fixed amortization methods are: (1) the Uniform Lifetime Table in Appendix A of this no- tice; (2) the Single Life Table in § 1.401(a) (9)-9(b); or (3) the Joint and Last Survivor Table in § 1.401(a)(9)-9(d) (which can be used even if the designated beneficiary is not the spouse). The number of years that is used for the required minimum distri- bution method for a distribution year is the entry from the table for the employ- ee’s age on the employee’s birthday in that distribution year. If the Joint and Last Survivor Table is used, the age of the des- ignated beneficiary on the designated ben- eficiary’s birthday in the distribution year is also used. In the case of the required minimum distribution method, except as provided section 3.02(b) or section 4 of this notice, the same life expectancy table that is used for the first distribution year must be used in each following distribu- tion year. Thus, if the employee uses the Single Life Table to apply the required minimum distribution method in the first distribution year, the Single Life Table January 31, 2022 462 Bulletin No. 2022–5 must be used in subsequent distribution years. The number of years that is used to apply the fixed amortization method is the entry from the table for the employee’s age on the employee’s birthday in the first distribution year (and, if applicable, the designated beneficiary’s age on the desig- nated beneficiary’s birthday in that year). (b) Designated beneficiary under the Joint and Last Survivor Table. If the Joint and Last Survivor Table in § 1.401(a)(9)- 9(d) is used to apply the required min- imum distribution method or the fixed amortization method (or if the fixed annu- itization method is applied using an annu- ity factor determined for the joint lives of the employee and designated beneficiary), then the beneficiary whose life expectan- cy or expected mortality is used must be the actual designated beneficiary of the employee with respect to the account for the year of the determination. If the employee has more than one beneficia- ry, the identity and age of the designated beneficiary used for purposes of each of the methods described in section 3.01 of this notice are determined under the rules for determining the designated beneficia- ry for purposes of section 401(a)(9). The designated beneficiary is determined for a distribution year as of January 1 of the distribution year, without regard to chang- es in the designated beneficiary later in that distribution year or designated bene- ficiary determinations in prior distribution years. For example, if an IRA owner starts distributions from an IRA in 2023 at age 50, and applies either the required mini- mum distribution method or fixed amor- tization method using the Joint and Last Survivor Table for the IRA owner and the designated beneficiary, and the ben- eficiaries on January 1, 2023 are 25 and 55 years old, the number of years used to calculate the payment for 2023 would be 40.2 (the entry from the Joint and Last Survivor Table for ages 50 and 55), even if later in 2023 the 55-year-old is eliminat- ed as a designated beneficiary. However, under the required minimum distribution method, if the 55-year-old beneficiary is eliminated or dies in 2023, that individual would not be taken into account in future distribution years (and if there is no des- ignated beneficiary in a future year, the Single Life Table in § 1.401(a)(9)-9(b) is used for that distribution year). (c) Interest rates. The interest rate that may be used to apply the fixed amorti- zation method or the fixed annuitization method is any interest rate that is not more than the greater of (i) 5% or (ii) 120% of the federal mid-term rate (determined in accordance with section 1274(d) for either of the two months immediately preced- ing the month in which the distribution begins). The revenue rulings that include the section 1274(d) federal mid-term rates may be found at https://apps.irs.gov/app/ picklist/list/federalRates.html. (d) Account balance. For purposes of applying the required minimum distri- bution method, the account balance for a distribution year is determined under § 1.401(a)(9)-5. For the fixed amortiza- tion and fixed annuitization methods, the account balance must be determined in a reasonable manner based on the facts and circumstances. The account balance will be treated as determined in a reasonable manner if it is the account balance on any date within the period that begins on De- cember 31 of the year prior to the date of the first distribution and ends on the date of the first distribution. (e) Changes to account balance. Un- der all three methods, substantially equal periodic payments are first calculated with respect to an account balance as of the first valuation date selected as de- scribed in section 3.02(d) of this notice. A modification to the series of payments will occur if, after such date, there is (1) any addition to the account balance other than by reason of investment experience, (2) any transfer of a portion of the ac- count balance to another retirement plan, or (3) a rollover of the amount received by the employee. (f) Distributions from an IRA. In the case of distributions from an IRA, the IRA owner is treated as an employee for pur- poses of applying this notice. .03 Special rules. The following spe- cial rules may apply. (a) Complete depletion of assets. If, as a result of following a method of determin- ing substantially equal periodic payments that qualifies for the exception of section 72(t)(2)(A)(iv), an individual’s assets in an individual account plan or an IRA are exhausted, any resulting reduction in the amount of the final payment (and the subsequent cessation of payments) is not a modification within the meaning of sec- tion 72(t)(4). Accordingly, the recapture tax described in section 72(t)(4)(A) will not apply in this case. (b) One-time change from fixed amor- tization method or fixed annuitization method to required minimum distribution method. An individual who begins distri- butions using either the fixed amortization method or the fixed annuitization method is permitted in any subsequent distribution year to switch to the required minimum distribution method to determine the pay- ment for the distribution year of the switch and all subsequent distribution years, and this change in method will not be treated as a modification within the meaning of section 72(t)(4). Once a change is made under this paragraph, any subsequent change from the required minimum distri- bution method will be a modification for purposes of section 72(t)(4). .04 Application to section 72(q). Tax- payers may use one of the methods set forth in section 3.01 of this notice (apply- ing the rules in section 3.02 of this notice) to determine whether a distribution from a non-qualified annuity contract is part of a series of substantially equal periodic pay- ments under section 72(q)(2)(D). Taxpay- ers may use the principles of section 3.03 of this notice to determine whether a change in substantially equal periodic payments will be treated as a modification under section 72(q)(3). SECTION 4. EFFECTIVE DATE AND TRANSITION RULES The guidance in this notice replaces the guidance in Rev. Rul. 2002-62 and Notice 2004-15 for any series of payments com- mencing on or after January 1, 2023, and it may be used for a series of payments commencing in 2022. In the case of a se- ries of payments commencing in a year prior to 2023 using the required minimum distribution method, if the payments in the series are calculated by substituting the Single Life Table, the Joint and Last Survivor Table, or the Uniform Lifetime Table described in section 3.02(a) of this notice for the corresponding table that was used under Rev. Rul. 2002-62, then the substitution will not be treated as a modifi- cation within the meaning of section 72(t) (4) or section 72(q)(3). Bulletin No. 2022–5 463 January 31, 2022 SECTION 5. EFFECT ON OTHER DOCUMENTS Rev. Rul. 2002-62 and Notice 2004-15 are modified and superseded. DRAFTING INFORMATION The principal authors of this notice are Arslan Malik and Linda S.F. Marshall of the Office of the Associate Chief Counsel (Employee Benefits, Exempt Organiza- tions, and Employment Taxes). For further information regarding this notice, contact Arslan Malik or Linda S.F. Marshall at (202) 317-6700 (not a toll-free number). Appendix A to Notice 2022-6 Uniform Lifetime Table Taxpayer's AgeLife Expectancy 1088.2 1187.2 1286.2 1385.2 1484.2 1583.2 1682.2 1781.2 1880.2 1979.2 2078.2 2177.2 2276.2 2375.2 2474.2 2573.3 2672.3 2771.3 2870.3 2969.3 3068.3 3167.3 3266.3 3365.3 3464.3 3563.3 3662.3 3761.3 3860.3 3959.4 4058.4 4157.4 4256.4 4355.4 4454.4 4553.4 4652.4 January 31, 2022 464 Bulletin No. 2022–5 Taxpayer's AgeLife Expectancy 4751.5 4850.5 4949.5 5048.5 5147.5 5246.5 5345.6 5444.6 5543.6 5642.6 5741.6 5840.7 5939.7 6038.7 6137.7 6236.8 6335.8 6434.9 6533.9 6633.0 6732.0 6831.1 6930.1 7029.2 7128.3 7227.4 7326.5 7425.5 7524.6 7623.7 7722.9 7822.0 7921.1 8020.2 8119.4 8218.5 8317.7 8416.8 8516.0 8615.2 8714.4 8813.7 8912.9 9012.2 Bulletin No. 2022–5 465 January 31, 2022 Taxpayer's AgeLife Expectancy 9111.5 9210.8 9310.1 949.5 958.9 968.4 977.8 987.3 996.8 1006.4 1016.0 1025.6 1035.2 1044.9 1054.6 1064.3 1074.1 1083.9 1093.7 1103.5 1113.4 1123.3 1133.1 1143.0 1152.9 1162.8 1172.7 1182.5 1192.3 120+2.0 Bulletin No. 2022–5 i January 31, 2022 Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect: Amplified describes a situation where no change is being made in a prior pub- lished position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle ap- plied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below). Clarified is used in those instances where the language in a prior ruling is be- ing made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior rul- ing is being changed. Distinguished describes a situation where a ruling mentions a previously pub- lished ruling and points out an essential difference between them. Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above). Obsoleted describes a previously pub- lished ruling that is not considered deter- minative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted. Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling. Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the sub- stance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previous- ly published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded. Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rul- ings in the series. Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cas- es in litigation, or the outcome of a Ser- vice study. Abbreviations The following abbreviations in current use and formerly used will appear in material published in the Bulletin. A—Individual. Acq.—Acquiescence. B—Individual. BE—Beneficiary. BK—Bank. B.T.A.—Board of Tax Appeals. C—Individual. C.B.—Cumulative Bulletin. CFR—Code of Federal Regulations. CI —City. COOP—Cooperative. Ct.D.—Court Decision. CY—County. D—Decedent. DC—Dummy Corporation. DE—Donee. Del. Order—Delegation Order. DISC—Domestic International Sales Corporation. DR—Donor. E—Estate. EE—Employee. E.O.—Executive Order. ER—Employer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduciary. FC—Foreign Country. FICA—Federal Insurance Contributions Act. FISC—Foreign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Federal Unemployment Tax Act. FX—Foreign corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grantee. GP—General Partner. GR—Grantor. IC—Insurance Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—Nonacquiescence. O—Organization. P—Parent Corporation. PHC—Personal Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Partnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Real Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsidiary. S.P.R.—Statement of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Transferee. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpayer. TR—Trust. TT—Trustee. U.S.C.—United States Code. X—Corporation. Y—Corporation. Z—Corporation. January 31, 2022 ii Bulletin No. 2022–5 Numerical Finding List 1 Bulletin 2022–5 Notices: 2022-1, 2022-02 I.R.B. 304 2022-2, 2022-02 I.R.B. 304 2022-3, 2022-02 I.R.B. 308 2022-4, 2022-02 I.R.B. 309 2022-5, 2022-05 I.R.B. 457 2022-6, 2022-05 I.R.B. 460 Revenue Procedures: 2022-1, 2022-01 I.R.B. 1 2022-2, 2022-01 I.R.B. 120 2022-3, 2022-01 I.R.B. 144 2022-4, 2022-01 I.R.B. 161 2022-5, 2022-01 I.R.B. 256 2022-7, 2022-01 I.R.B. 297 2022-9, 2022-02 I.R.B. 310 2022-11, 2022-03 I.R.B. 449 2022-8, 2022-04 I.R.B. 451 Revenue Rulings: 2022-1, 2022-02 I.R.B. 301 2022-2, 2022-04 I.R.B. 451 Treasury Decisions: 9959, 2022-03 I.R.B. 328 9961, 2022-03 I.R.B. 430 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin 2020–52, dated December 27, 2021. Bulletin No. 2022–5 iii January 31, 2022 Finding List of Current Actions on Previously Published Items 1 Bulletin 2022–5 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin 2020–52, dated December 27, 2021. Internal Revenue Service Washington, DC 20224 Official Business Penalty for Private Use, $300 INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/. We Welcome Comments About the Internal Revenue Bulletin If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave. NW, IR-6230 Washington, DC 20224.
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