The SECURE 2.0 Act and 2022 SECURE Act proposed regs changed some of the rules related to Required Minimum Distributions both during your lifetime and after death. The IRS has again delayed the applicability date of final required minimum distribution (RMD) regulations for inherited retirement accounts, including IRAs (Notice 2024-35).
The SECURE Act Proposed Regulations
Proposed regs issued early in 2022 changed the RMD rules on inherited retirement accounts, including IRAs. The regs require those who are subject to the 10-year distribution period to take lifetime payouts during the 10-year distribution period. Everyone initially thought you could wait until the end of the 10th year to take any distributions.
Both 2022 and 2023 notices were issued delaying the effective date of the final RMD regs until the 2024 distribution year and provided penalty relief for any inherited IRA lifetime RMDs not taken in 2021, 2022 or 2023. On April 16, 2024, the IRS issued Notice 2024-35, which further delays the applicable date of final regulations to the 2025 distribution year and adds 2024 to the penalty relief. This time though the notice indicates that penalties are expected to apply to any missed inherited retirement account RMDs starting in 2025. For further details, click here.
None of the notices specifically come out and say you don’t have to take RMDs during those years from an inherited IRA for those subject to the 10-year rule. However, it waives penalties if you don’t take them.
Note that this delay doesn’t extend the 10-year distribution out further. It just means there is a shorter window over which RMDs need to be taken before you get to the end of the 10th year. You can take more out during the 10-year period, but just can’t take any less. This is where tax planning comes in to see what makes sense for your tax situation.
The Bonadio Group’s Estate & Trust team has years of advisory and tax experience. Please do not hesitate to reach out to our trusted experts to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
