The IRS has finally issued its long-awaited Final Rule implementing the “SECURE 2.0” legislation governing distributions to non-spouse designated beneficiaries of IRAs, 401(k) plans, and similar retirement vehicles. Although this release affects a number of finalized regulations, one of the most important for IRA owners and their families involves the long-uncertain question of whether required minimum distributions (RMDs) will be needed during the 10-year period that applies to “non-eligible designated beneficiaries.” The IRS’s final answer is: If the owner of the account had reached his Required Beginning Date (which usually means he has started taking required distributions), then those distributions must continue during the 10-year period. If he had not, then no RMDs are needed.
These RMDs will be based on the owner’s life expectancy, not that of the beneficary(ies), under the statutory rule that the distributions must continue “as least as rapidly” as they had been before the death of the owner.
Recall our earlier posting advising that many non-eligible designated beneficiaries can benefit from a shortened period (six years or so) rather than trying to plan distributions over the entire 10-year period.
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