On July 18th, the Internal Revenue Service released final regulations regarding required minimum distributions (RMDs) from retirement accounts. The final regulations reflect changes to the Internal Revenue Code made by the SECURE Act (in 2019) and SECURE 2.0 (in 2022). They largely adopt the regulations as proposed in 2022, with some modifications. The final regulations are generally effective on or after January 1, 2025.

At the same time, the IRS issued proposed regulations under SECURE 2.0 on topics that were initially reserved in the aforementioned final regulations.

Many clients have accumulated significant wealth in their retirement accounts during their lives. These accounts are incredibly beneficial to clients during their lifetime and present a straightforward way to benefit from tax deferral or even tax-free growth on these assets. Clients are sometimes surprised, however, that traditional retirement vehicles are potentially subject to both estate and income tax after the account holder’s death and don’t properly plan for a tax-efficient disposition of these assets. It is important that clients and their advisors familiarize themselves with the final regulations so they can plan accordingly.

A link to the final regulations can be found here: 2024-14542.pdf (federalregister.gov).

A link to the proposed regulations can be found here: 2024-14543.pdf (federalregister.gov).