The Internal Revenue Service and Treasury Department have released final regulations updating required minimum distribution (RMD) rules for beneficiaries under the 10-year rule.
These regulations, stemming from the SECURE and SECURE 2.0 Acts, confirm that nearly all IRA beneficiaries must take distributions annually over the 10-year period following the account holder’s death, in step with thinkadvisor.
Key points from the final word regulations include:
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Non-eligible designated beneficiaries subject to the 10-year rule must take RMDs every 12 months.
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Beneficiaries of people that began required annual distributions must proceed these distributions, even when the account balance is fully distributed inside 10 years.
Ben Henry-Moreland, senior financial planning nerd at Kitces.com, notes that while these rules aren’t game-changing for planning, they make retirement accounts “way more insanely complicated.” As an illustration, spousal beneficiaries now have three different options for treating their deceased spouse’s retirement account, each with its own RMD calculation.
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Jeff Levine, lead financial planning nerd at Kitces.com, highlights that annual distributions in the middle of the 10-year rule are required if death occurred on or after the required starting date (RBD). Nonetheless, due to previous IRS notices, this rule won’t apply until 2025.
The IRS and Treasury also issued proposed regulations addressing additional RMD issues under the SECURE 2.0 Act. They’re soliciting public comments on these proposed rules, which cover other changes related to RMDs.
Experts note that while these regulations clarify many issues, as well as they add complexity to retirement account management. Advisors might need to stay informed about these intricate rules to produce invaluable guidance to clients navigating retirement planning and inherited accounts.
The financial planning community is now anticipating further guidance on other SECURE 2.0 provisions, resembling rollovers of unused 529 plan funds to Roth IRAs.
These latest regulations underscore the evolving landscape of retirement planning and the increasing importance of specialized knowledge in navigating complex tax rules for retirement accounts.
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This text IRS Finalizes 10-Yr Rule For Retirement Withdrawals, Making Things ‘Even More Insanely Complicated’ originally appeared on Benzinga.com