The Internal Revenue Service (IRS) and the Department of the Treasury on Wednesday issued an announcement stating that several aspects of required minimum distribution (RMD) rules will not apply until 2026.
Background
The Treasury Department and the IRS first published proposed regulations on RMDs on February 24, 2022, following changes made in the SECURE Act of 2019. After SECURE 2.0 was passed in late 2022, both agencies reviewed comments made in response to the proposed regulations and compared it to revisions brought on by SECURE 2.0, ultimately deciding that some changes would be included in final regulations while others who be addressed in new proposals.
On July 19, 2024, the Treasury Department and the IRS published final regulations regarding RMDs under section 401(a)(9) and related provisions in the Federal Register (89 FR 58886) and published proposed regulations under section 401(a)(9) and related provisions (89 FR 58644).
According to the notice, with the exception of proposed § 1.401(a)(9)-5(a)(5)(v), which relates to the valuation of an annuity contract under the partial annuitization option provided for in section 204 of the SECURE 2.0 Act, the IRS propositioned that 2024 proposed regulations would start on or after January 1, 2025—so that they would begin to apply at the same time as the 2024 final regulations.
However, in written comments and at the public hearing held on September 25, commenters raised concerns in implementing several of the provisions of the future final regulations before the January 1, 2025, applicability date.
Commenters were also concerned with the challenges of implementing the final regulations to be adopted pursuant to the proposed amendments to §§ 1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6.
Applicability date
In response to concerns raised by commenters, the notice states that provisions of future final regulations amending §§ 1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6 to be issued pursuant to the 2024 proposed regulations will apply beginning in the 2026 distribution calendar year.
For periods before the applicability date of these amendments, the IRS and Treasury Department says, “taxpayers must apply a reasonable, good-faith interpretation of the statutory provisions underlying the amendments.”
More information on Announcement 2025-02 can be found here.
SEE ALSO:
IRS Issues Reminder on RMD Deadlines
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
