New guidance on required minimum distributions, reflecting SECURE 2.0 changes

The IRS had originally indicated it would mandate that RMDs be taken for each of the 10 years starting in 2022 if the original participant had already begun taking RMDs, but postponed through 2024 to reassess.

“The final regulations reflect changes made by the SECURE Act and the SECURE 2.0 Act impacting retirement plan participants, IRA owners and their beneficiaries,” the IRS said in a statement. “At the same time, Treasury and IRS issued proposed regulations, addressing additional RMD issues under the SECURE 2.0 Act.”

Beginning in 2024, SECURE 2.0 allows a beneficiary to elect to be treated as the “employee” for RMD purposes. Prior, the beneficiary could either roll over the IRA into their own or could take it in an inherited IRA.

“Specifically, Treasury and IRS reviewed comments suggesting that a beneficiary of an individual who has started required annual distributions should not be required to continue those annual distributions if the remaining account balance is fully distributed within 10 years of the individual’s death as required by the SECURE Act,” said the IRS. “However, Treasury and IRS determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.”

Eligible beneficiaries are a participant’s spouse, someone disabled or another beneficiary10 years younger. A partial exception from the 10-year rule is made for heirs younger than 21: Their 10-year clock does not start until they turn 21.