The IRS announced its release of final regulations updating the rules for required minimum distributions (RMDs) from individual retirement accounts and annuities and other retirement plans. At the same time, the IRS issued proposed regulations, addressing additional RMD issues under the SECURE 2.0 Act.

The new guidance reflects changes made to Section 401(s)(9) by the SECURE Act, Division O of the Further Consolidated Appropriations Act, 2020, P.L. 116-94, and by the SECURE 2.0 Act, Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328, the Journal of Accountancy reported. These changes affect retirement plan participants, IRA owners, and their beneficiaries.

The final regulations reflect changes made by the SECURE Act and the SECURE 2.0 Act impacting retirement plan participants, IRA owners and their beneficiaries. At the same time, Treasury and IRS issued proposed regulations, addressing additional RMD issues under the SECURE 2.0 Act.

The IRS said that certain changes were made in response to comments received on proposed regulations issued in 2022, but the final regulations generally follow those proposed regulations.

Specifically, the Department of Treasury and the IRS reviewed comments “suggesting that a beneficiary of an individual who has started required annual distributions should not be required to continue those annual distributions if the remaining account balance is fully distributed within 10 years of the individual’s death as required by the SECURE Act. However, Treasury and IRS determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.”

The IRS noted that “the new proposed regulations include provisions for which Treasury and IRS are soliciting public comments, including provisions addressing other changes relating to RMDs made by the SECURE 2.0 Act.” The Journal reported that these include applicable age determinations for employees born in 1959; purchases of annuity contracts with a portion of an employee's individual account; distributions from designated Roth accounts; Section 4974 excise tax waivers; spousal elections under Section 327 of the SECURE 2.0 Act; divorce after the purchase of a qualifying longevity annuity contract; and outright distributions to a trust beneficiary.