Untitled Document

April 2024

2024 IRS Extends RMD Relief To 2024 For Certain IRA and Pension Beneficiaries IRS Notice 2024-35

The IRS initially granted tax relief to certain beneficiaries for certain missed RMDs for 2021 and/or 2022. This relief was granted in Notice 2022-54.

This relief was granted to a non-EDB beneficiary of an IRA accountholder who had died after 2019 and who had died after their required beginning date. Such a beneficiary was required to continue the distribution schedule (but modified) being used by the deceased IRA accountholder and the beneficiary had to close the inherited IRA under the 10-year rule. There have been beneficiaries who did not do so because they thought the 10-year rule applied. Technically, these beneficiaries owed the RMD tax.

In 2023 the IRS issued Notice 2023-53 and extended this RMD relief for 2023.
The IRS states its relief as follows, “To the extent a taxpayer did not take a specified RMD, the IRS will not assert that the taxpayer owes the RMD excise tax.”

And now in Notice 2024-35 the IRS again extends this relief to 2024. The IRS also uses this Notice 2024-35 to furnish additional information about the RMD rules.

The notice provides, “Final regulations regarding RMDs under section 401(a)(9) and related provisions are anticipated to apply for determining RMDs for calendar years beginning on or after January 1, 2025.” Note the IRS is not stating that the final regulations will be finished or adopted in 2024. These regulations could be finished sometime in 2025 with a retroactive effective date of January 1, 2025.

The IRS clarifies that if the beneficiary is an eligible designated beneficiary that he or she uses the standard life distribution rule and that the 10-year rule does not apply to this beneficiary. Once this EDB dies, the next beneficiary must continue the same distribution schedule, and the 10-year rule applies to him or her.

We have asked the IRS to clarify that the missed or skipped RMDs for 2021-2024 will not need to be withdrawn in 2025. They must be withdrawn by the applicable 10-year deadline, if applicable. The general tax rule is – an RMD exists until it is withdrawn.

The IRS issuance of additional tax relief is certainly good news to those beneficiaries who need it or for those who want to take advantage of an opportunity to skip taking their 2024 RMD.