June 23, 2022

New Death RMD Rules Are Effective Now

The IRS released proposed regulations, REG-105954-20, on February 24, 2022, which make significant changes relating to required minimum distributions (RMDs), including to the death distribution options that apply to beneficiaries of IRA owners who die after 2019 (i.e., in 2020 or later). These regulations update the existing regulations by adapting changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), which is effective starting in 2020.


Proposed Regulations Confusion


There is some confusion among individuals at financial organizations about the impact of these new IRS regulations. Specifically, some individuals think that because these regulations are proposed, they can be ignored until they become final. This thought is wrong.


When the IRS issues regulations, they typically first issue them as proposed regulations. Then, the public and tax professionals are given a chance to comment and ask questions. Sometimes the IRS also holds a public hearing to allow individuals to speak. After the comments are received, then the IRS issues the regulations as final regulations. However, this process may take a while.


New Regulations Are Effective Now


Even though the regulations are currently proposed, they are effective for IRAs starting January 1, 2022. Therefore, they should be used immediately; there isn’t a choice to wait for the final regulations. Accordingly, PMC’s webinars and IRA Reference Manual have been updated to include the new death distribution rules, which are very different from the prior rules. Financial organization personnel will need to be trained on these new rules. Visit www.pmc-corp. com for more updated and reliable information on IRAs.