The IRS released Notice 2024-35 that once again provides transition relief from required minimum distributions (RMDs) and changed the applicability date of final RMD regulations. The notice states that the final regs that the IRS intends to issue regarding RMDs and related provisions will apply for determining RMDs for calendar years beginning on or after January 1, 2025.
In addition, the notice provides that:
- A defined contribution plan that failed to make a specified RMD will not be treated as having failed to satisfy §401(a)(9) solely because it did not make that distribution, and
- Taxpayers who did not take a specified RMD will not be subject to the excise tax under §4974.
According to the guidance, a specified RMD is any distribution that would be required to be made in 2024 for the year in which the employee (or designated beneficiary) died if that payment would be required to be made to:
- An employee’s designated beneficiary because the employee or IRA owner (account owner) died in 2020, 2021, 2022, or 2023 on or after the account owner’s required beginning date, and the beneficiary is not using the lifetime or life expectancy payments exception, or
- A beneficiary of an eligible designated beneficiary who died in 2020, 2021, 2022, or 2023, and that eligible designated beneficiary was using the lifetime or life expectancy payments exception.