3689 / How are the minimum distribution requirements met when an IRA owner dies on or after the required beginning date?

2024 Final RMD Regulations

Post-SECURE Act, most non-spouse account beneficiaries will be required to take distributions over a 10-year period unless they are classified as an eligible designated beneficiary (see Q ).¹ The law did not change the rules applicable to surviving spouse beneficiaries.

Under regulations finalized in 2024, designated beneficiaries will be required to take annual RMDs throughout the ten-year distribution period if the original account owner died after the required beginning date (it was originally expected that the beneficiary could elect to deplete the entire account in year ten if desired). The IRS provided relief and waived the annual RMD requirements for 2021, 2022, 2023 and 2024.

Planning Point: Many clients took advantage of this relief to avoid increasing their 2024 taxable income given the uncertainty over the way the SECURE Act was drafted. However, in the final regulations, the IRS did not extend the original ten-year distribution period.  Clients must empty the account by year ten regardless of whether they took advantage of relief in years one-four. While retroactive RMDs are not required, those clients will end up with higher distributions (and increased tax liability) in years five-ten.

Pre-SECURE Act Rules