IRS Extends Transition Relief for Certain RMDs Through 2024
With its release of Notice 2024-35 on April 16, 2024, the IRS has extended previously issued temporary relief through 2024 for certain required minimum distributions (“RMDs”) related to the SECURE Act’s 10-year distribution rule. This notice mirrors prior guidance provided by the IRS in Notice 2022-53 and Notice 2023-54 for earlier periods and extends transition relief for plan administrators, payers, plan participants, IRA owners, and beneficiaries in connection with the change in the required beginning date for RMDs under Section 401(a)(9).
Specifically, Notice 2024-35 provides that a defined contribution plan that failed to make a specified RMD will not be treated as having failed to satisfy Section 401(a)(9) merely because it did not make that distribution. To the extent a taxpayer did not take a specified RMD, the IRS will also not assert that an excise tax is due under Section 4974.
Significantly, this RMD waiver only applies to beneficiaries who utilize the 10-year rule and does not apply to eligible designated beneficiaries using the life expectancy rule under Section 401(a)(9)(B)(iii), which requires an employee’s interest in a qualified plan be distributed over the life or life expectancy of the designated non-spouse beneficiary with distributions beginning no later than one year after the employee’s death.
The IRS continues to work on finalizing proposed RMD regulations (REG-105954-20) and anticipates that the final regulations will apply for calendar years beginning on or after January 1, 2025.
If you have questions about this notice or RMD requirements generally, please contact Gary Remer at Maddin Hauser.