The IRS has issued final regulations updating the required minimum distribution (RMD) rules. (TD 10001; RIN 1545-BP82) The 260 pages of final regulations (including explanations) adopt most of the regulations as proposed in 2022, including the regulations that address the distribution rules for inherited IRAs.
The inherited IRA rules implementing changes made by the SECURE Act require designated beneficiaries to continue taking RMDs each year during their 10-year distribution period, ensuring that the entire account balance is distributed by the end of the 10-year period if:
- The deceased account owner had reached their required beginning date for taking RMDs at the time of their death; and
- The account beneficiaries are not one of the five types of eligible designated beneficiaries (surviving spouse, minor child, a person 10 years younger than the decedent, or a person who is disabled or chronically ill).
This rule applies to accounts inherited from decedents who passed away after 2019. However, the IRS provided transitional relief that postponed the RMD requirement prior to 2025. The final regulations make clear that that this transitional relief did not extend the 10-year deadline. This means, for example, that accounts inherited from a decedent who passed away in 2020 must be fully distributed prior to 2031.
We will be providing details on this new guidance in upcoming issues of Spidell’s Federal Taxletter® and our Tax Update Webinars.
The regulations are available at:
https://public-inspection.federalregister.gov/2024-14542.pdf
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