A Review of IRS Notice 2024-35, Certain Required Minimum Distributions for 2024

By Rick Allen, CPA-East Texas

 

Notice 2024-35 is a detailed analysis and explanation of what the final regulations will say regarding required minimum distributions (RMDs) related to retirement accounts of decedents who died after 2019. The IRS seems to be giving taxpayers one more year of not taking RMDs without assessing an excise tax … that being 2024. So, taxpayers are protected if they did not take post death RMDs for 2021 (the first year they would have been required to take an RMD under the IRS interpretation), 2022, 2023 or 2024. 

 

It appears as if the relief will stop there. RMDs will be required to be made beginning in 2025. The notice seems to be silent about whether distributions which (in the IRS’ view) should have been made in 2021, 2022, 2023 or 2024 will need to all be made in 2025 or if the taxpayer can just begin taking normal RMDs in 2025.

 

The analysis is thorough, but I am unsure whether the IRS properly tied the RMD rules to the five-year rule (now changed to the 10-year rule) correctly.

 

I think TXCPA Federal Tax Policy Committee’s efforts in pushing back against the IRS regarding their late roll-out of the RMD rules bought taxpayers four years of free space not being required to take RMDs on inherited retirement accounts, and correspondingly, helped CPAs in working with these clients.

 

Taxpayers with illiquid retirement assets and other reasons to delay taking distributions have benefited by the delay and should be prepared to start taking RMDs in 2025. Texas CPAs should work to notify clients impacted by these rules accordingly.

 

Notice 2024-35: Relief with respect to certain required - KPMG United States

Comments

[Shirley Grigsby]

Can you please clarify how this applies to inherited Roth IRAs? I understand that they are subject to the 10-year rule, but are they also subject to RMD requirements?