IRS Provides Further RMD Transition Relief Under the SECURE Act

The IRS has issued Notice 2024-35 to provide additional transition relief for certain specified RMDs for 2024.

Specified RMDs for 2024

This guidance is similar to relief announced for previous specified periods under IRS Notice 2022-53 and Notice 2023-54. Proposed RMD rules, released in February 2022, state that if an account owner dies on or after the required beginning date (RBD), beneficiaries who are subject to the 10-year rule must take annual life expectancy payments during the first nine years.

Defined contribution plans that failed to make life expectancy payments under the 10-year rule to designated beneficiaries will not be treated as failing to satisfy the RMD requirement and the IRS will not enforce the IRC Sec. 4974 excess accumulation penalty tax for designated beneficiaries who do not take their life expectancy payments under the 10-year rule. This additional specified relief is limited to distributions required to be made in 2024 under the proposed regulations in a defined contribution plan or IRA for a designated beneficiary if

  • the account owner died on or after the RBD in 2020, 2021, 2022, or 2023, and
  • the designated beneficiary is not taking lifetime or life expectancy payments.

This specified relief also applies to successor beneficiaries of an eligible designated beneficiary if

  • the eligible designated beneficiary died in 2020, 2021, or 2022, or 2023, and
  • that eligible designated beneficiary was taking lifetime or life expectancy payments.

Final RMD Regulations to be Issued

The IRS intends to issue final RMD regulations that will apply for calendar years beginning no earlier than 2025. The IRS has also previously indicated that new proposed rules for SECURE 2.0 RMD updates will be released in conjunction with the forthcoming RMD final rules.