IRS delays implementation of coming RMD rules to 2026

The IRS has announced that it plans to delay the anticipated applicability date for regulations on required minimum distribution (RMD) that are expected to be finalized this year. The proposed regulations issued in July 2024 (89 FR 58644) were initially proposed to be effective in 2025, but the IRS has now said the final regulations will not apply any earlier than the 2026 distribution calendar year.

The RMD rules generally require distributions from certain tax-favored retirement plans (e.g., Section 401(k) plans, Section 403(b) plans, individual retirement accounts (IRAs) and eligible Section 457(b) plans) after an employee/account owner reaches a specific age and after death. The rules set forth a required beginning date (RBD) for distributions and identify the period over which the employee’s or account owner’s entire interest must be distributed.

In July 2024, the IRS issued final regulations (TD 10001) implementing legislative changes to the RMD rules pursuant to both the SECURE Act of 2019 and the SECURE 2.0 Act of 2022. The IRS also issued proposed regulations for various provisions that were reserved in the 2024 final regulations primarily involving certain changes made by the SECURE 2.0 Act of 2022, including:

• 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
• Outright distributions to a trust beneficiary

The 2024 proposed regulations were proposed to apply for calendar years beginning on or after Jan. 1, 2025, which was the same general applicability date for the regulations that were finalized on the same day. The IRS explained that it was extending the anticipated applicability date of the future final regulations because commenters on the 2024 proposed RMD regulations have raised issues regarding some of the proposed provisions which would make it difficult to implement many of those provisions in a timely manner pending resolution of those issues if the Jan. 1, 2025, applicability date was retained in the future final regulations.

In the announcement, the IRS also indicated that, for periods before the final applicability date of the proposed regulations, taxpayers should apply a reasonable, good-faith interpretation of the statutory provisions underlying the amendments to the RMD rules.

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