IRS Issues Guidance on Certain 2024 RMDs

Published April 17, 2024

The Internal Revenue Service (IRS) issued Notice 2024-35 containing guidance on certain required minimum distributions (RMDs) for 2024. The notice also announces that the final regulations that the Department of the Treasury and IRS intend to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning on or after January 1, 2025.

According to the notice:
  • A defined contribution (DC) plan that failed to make a specified RMD, as defined by the notice, will not be treated as having failed to satisfy Internal Revenue Code (IRC) Section 401(a)(9) merely because it did not make that distribution.
  • To the extent a taxpayer did not take a specified RMD, as defined by the notice, IRS will not assert that an excise tax is due under IRC Section 4974. 
For purposes of the notice, a specified RMD is any distribution that—in accordance with the proposed regulations—would be required to be made under IRC Section 401(a)(9) in 2024 under a DC plan or IRA that is subject to the rules of IRC Section 401(a)(9)(H) for the year in which the employee (or designated beneficiary) died. 

That applies if that payment would be required to be made to:
  • A designated beneficiary of an employee under the plan (or the IRA owner) if the employee (or IRA owner) died in 2020, 2021, 2022, or 2023, and on or after the employee’s (or IRA owner’s) required beginning date, and the designated beneficiary is not using the lifetime or life expectancy payments exception under IRC Section 401(a)(9)(B)(iii); or
  • A beneficiary of an eligible designated beneficiary (including a designated beneficiary who is treated as an eligible designated beneficiary under Section 401(b)(5) of the SECURE Act) if the eligible designated beneficiary died in 2020, 2021, 2022, or 2023, and that eligible designated beneficiary was using the lifetime or life expectancy payments exception under IRC Section 401(a)(9)(B)(iii). 
Final regulations regarding RMDs under § 401(a)(9) and related provisions are anticipated to apply for determining RMDs for calendar years beginning on or after January 1, 2025.