Regulations bring more clarity to planning for taxable retirement benefit distributions after a taxpayer’s death. THE IRS HAS RELEASED FINAL REGULATIONS THAT bring significant changes to the rules governing required minimum distributions (RMDs). These updates are crucial for certified public accountants advising clients on retirement planning. Here are key points: CHANGES TO RMD AGE REQUIREMENTS The final regulations adjust the age for the required beginning date for RMDs based on the participant’s birth date: Born before July 1, 1949: Age 70½ Born on or after July 1, 1949, and before Jan. 1, 1951: Age 72 Born on or after Jan. 1, 1951, and before Jan. 1, 1959: Age 73 Born on or after Jan. 1, 1960: Age 75 For multi-employer plans, an employee who is not a 5% owner and retires from one participating employer but continues working for another is not considered “retired” for RMD purposes. COMPLIANCE WITH SECURE ACT PROPOSED REGULATIONS For periods before Jan. 1, 2025, compliance with the Secure Act proposed regulations is deemed a reasonable, good faith interpretation of the statutory changes. CPAs should retain materials from previous years for reference. ELIGIBLE DESIGNATED BENEFICIARIES The final regulations maintain the concept of eligible designated beneficiaries (EDBs), which include: Surviving spouse Account owner’s child under age 21 Disabled beneficiary Chronically ill beneficiary Beneficiary not more than 10 years younger than the account owner Different rules apply to certain EDBs, such as the surviving spouse’s ability to choose between the 10-year rule and life expectancy payments. If the plan lacks specific language, the default rule of life expectancy payments applies. DISAPPOINTMENTS & WELCOME CHANGES Disappointments 1. Annual RMDs are required if the participant dies after the required beginning date. 2. Beneficiaries do not need to make up distributions for 2021-2024 due to IRS reprieves. 3. The 10-year outer limit remains for EDBs after their death. FINAL REGULATION UNDER THE SECURE ACT RELEASED BY KENT ENDACOTT, ENDACOTT TIMMER 14 Nebraska CPA
RkJQdWJsaXNoZXIy MTg3NDExNQ==