Untangling the IRS’s New Finalized (and Proposed) Regulations on RMDs: The 10-Year Rule, Trust Beneficiaries, Spousal Beneficiaries, Annuities, and More!
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In 2019, the SECURE Act significantly altered the tax treatment of post-death distributions from qualified retirement accounts. As you may recall, one key change was the elimination of the "stretch" provision for non-spouse beneficiaries, requiring them to fully distribute inherited accounts within 10 years. In early 2022, the IRS proposed that these beneficiaries must also take annual Required Minimum Distributions (RMDs) if the original account owner had been taking RMDs.
READ THE ARTICLEWhat to know now: The Final Regulations issued on July 18, 2024, confirmed the annual RMD requirement for Non-Eligible Designated Beneficiaries starting in 2025, with no penalties for missed distributions from 2021–2024. Other provisions include the handling of undistributed RMDs at an account owner's death, rules for surviving spouses, specific rules for Roth accounts, and more. The IRS also released new Proposed Regulations for the SECURE 2.0 Act, clarifying the RMD age for those born in 1959 and rules for surviving spouses electing to be treated as decedent.
Key takeaway: You might find that these regulations add complexity to your tax strategy when it comes to inherited retirement accounts. If you’re looking for clarity or need guidance, we’re here to help.