The IRS on April 16 issued guidance on certain specified required minimum distributions (RMDs) for 2024. It adds that the final regulations it plans to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning on or after Jan. 1, 2025.
The guidance is contained in Notice 2024-35.
Previous Guidance
The IRS in February 2022 had issued a proposed rule addressing the RMD requirements for plans qualified under Internal Revenue Code Section (IRC) Section 401(a) that updated applicable regulations to reflect provisions of the SECURE Act.
Later in 2022, in Notice 2022-53 the IRS said that a defined contribution plan that failed to make a specified RMD would not be treated as having failed to satisfy IRC Section 401(a)(9) because it did not make that distribution. More specifically, the IRS provided guidance for DC plans and certain taxpayers who did not take a specified RMD for 2021 and 2022 and said it intended to issue final regulations related to RMDs under IRC Section 401(a)(9) that would apply no earlier than the 2023 distribution calendar year.
And in Notice 2023-54, the IRS extended the relief provided under Notice 2022-53 to specified RMDs for 2023, and announced that the final regulations would apply no earlier than the 2024 distribution calendar year.
RMDs for 2024
Notice 2024-35 says the following.
- A DC plan that failed to make a specified RMD, as defined by the notice, will not be treated as having failed to satisfy IRC Section 401(a)(9) merely because it did not make that distribution.
- To the extent a taxpayer did not take a specified RMD, as defined by the notice, the IRS will not assert that an excise tax is due under IRC Section 4974.
For purposes of Notice 2024-35, a specified RMD is any distribution that—in accordance with the proposed regulations—would be required to be made under IRC Section 401(a)(9) in 2024 under a DC plan or IRA that is subject to the rules of IRC Section 401(a)(9)(H) for the year in which the employee (or designated beneficiary) died.
That applies if that payment would be required to be made to:
- a designated beneficiary of an employee under the plan, or the IRA owner, if:
- the employee (or IRA owner) died in 2020, 2021, 2022, or 2023, and on or after the employee’s (or IRA owner’s) required beginning date, and
- the designated beneficiary is not using the lifetime or life expectancy payments exception under IRC Section 401(a)(9)(B)(iii); or
- a beneficiary of an eligible designated beneficiary (including a designated beneficiary who is treated as an eligible designated beneficiary under Section 401(b)(5) of the SECURE Act) if:
- the eligible designated beneficiary died in 2020, 2021, 2022, or 2023, and
- that eligible designated beneficiary was using the lifetime or life expectancy payments exception under IRC Section 401(a)(9)(B)(iii).
Application of Upcoming Final Regs
Notice 2024-35 also says that the final regulations regarding RMDs under IRC Section 401(a)(9) and related provisions are anticipated to apply for determining RMDs for calendar years beginning on or after Jan. 1, 2025.
