The IRS on Thursday issued final regulations (T.D. 10001) that update the rules for required minimum distributions (RMDs) from qualified plans; Sec. 403(b) annuity contracts, custodial accounts, and retirement income accounts; individual retirement accounts and annuities (IRAs); and certain eligible deferred compensation plans.

The final regulations reflect changes made to Sec. 401(s)(9) by the SECURE Act, Division O of the Further Consolidated Appropriations Act, 2020, P.L. 116-94, and the SECURE 2.0 Act, Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328. These changes affect retirement plan participants, IRA owners, and their beneficiaries.

The final regulations generally follow proposed regulations issued in 2022 (REG-105954-20) with a few changes in response to comments, the IRS said in a news release. For example, in response to commenters' requests, the final regulations apply the qualified annuity exception when an employee had died and, after the employee's death, the beneficiary made an irrevocable election as to the method and the amount of the annuity payments before Dec. 20, 2019. In addition, in response to comments, the applicability date in the proposed regulations of distribution calendar years beginning on or after Jan. 1, 2022, has been changed to distribution calendar years beginning on or after Jan. 1, 2025.

Also on Thursday, the IRS issued proposed regulations (REG-103529-23) addressing additional RMD issues under the SECURE 2.0 Act. These include 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; Sec. 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; and outright distributions to a trust beneficiary.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.