IRS extends RMD relief to 2024

The Internal Revenue Service is extending tax relief on required minimum distributions from retirement accounts not made in 2024 after providing similar relief in recent years.

In Notice 2024-35, the IRS said Tuesday such relief was provided with respect to certain RMDs in 2021, 2022 and 2023, and is being extended now to certain RMDs in 2024.

The notice says that if certain requirements are met, a plan won’t fail to be qualified for failing to make a specified RMD in 2024, and a taxpayer won’t be assessed an excise tax for failing to take the RMD. 

The notice also says the final regulations that will be published on RMDs are expected to apply for purposes of determining RMDs for calendar years starting on or after Jan. 1, 2025. 

The notice points to some of the changes in the original SECURE Act that loosened the rules for RMDs. For example, the Setting Every Community Up for Retirement Enhancement Act of 2019 said that if an employee in a defined contribution plan has a designated beneficiary, the five-year period under the five-year rule is lengthened to 10 years, and the 10-year rule applies regardless of whether the employee dies before the required beginning date. 

The Treasury Department and the IRS published proposed regulations regarding RMDs and the 10-year rule in February 2022. In response to comments received on the proposed regs, the Treasury Department and the IRS issued Notice 2022-53, which announced that the final regulations would apply no earlier than the 2023 distribution calendar year and provided guidance regarding certain amounts that were not paid in 2021 or 2022. Notice 2022-53 said a defined contribution plan would not fail to be qualified for failing to make a specified RMD in 2021 or 2022 and the taxpayer who did not take a specified RMD would not be subject to the excise tax for failing to take the specified RMD. The Treasury and the IRS later issued Notice 2023-54, which extended the relief in Notice 2022-53 to specified RMDs for 2023, and announced the final rules would apply no earlier than the 2024 distribution calendar year.