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IRS Waives 2024 RMDs for IRA Beneficiaries Subject to the 10-Year Rule

IRS Waives 2024 RMDs for IRA Beneficiaries Subject to the 10-Year Rule

April 24, 2024

IRS Waives 2024 RMDs for IRA Beneficiaries Subject to the 10-Year Rule

Late Tuesday afternoon (April 16, 2024), the IRS issued Notice 2024-35 which provides relief for 2024 missed required minimum distributions (RMDs) for IRA beneficiaries subject to annual RMDs within the 10-year payout period.

 The new relief builds on previous IRS relief for 2021 and 2022 annual RMDs (in Notice 2022-53) and for 2023 RMDs (in Notice 2023-54). Notice 2024-35 adds another year of relief by excusing 2024 missed RMDs for non-eligible designated beneficiaries (NEDBs) of IRA owners who died in 2020, 2021 or 2022 after the required beginning date. It also relieves missed 2024 RMDs for NEDBs of owners who died in 2023 after the required beginning date. The Notice does notaffect lifetime RMDs, RMDs from inherited IRAs by eligible designated beneficiaries, or RMDs by beneficiaries who inherited before 2020. It only applies to those beneficiaries with annual RMDs within the 10-year period.

Planning Note: This is the fourth year in a row for which the IRS has waived annual RMDs for beneficiary clients subject to the 10-year rule. Even though 2021-2024 RMDs are not required, advisors may still want to have clients in this group voluntarily withdraw from their IRAs while federal tax rates remain low. (Unless Congress acts, rates will go back up in 2026.) Putting off distributions also could mean these clients will face a larger tax bill at the end of the 10-year period.

 In Notice 2024-35, the IRS also says that it expects to finalize its proposed SECURE Act regulations, issued in February 2022, so they will be effective starting in 2025.

This means that it is possible these final regulations will be issued later in 2024.

Copyright © 2024, Ed Slott and Company, LLC Reprinted from The Slott Report, 4/17/24, with permission.  Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.