Wolters Kluwer:

What: The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted on December 20, 2019, as part of the Further Consolidated Appropriations Act of 2019, included several tax changes to help taxpayers save for retirement. The SECURE Act included several changes with respect to required minimum distributions (RMDs). On February 24, 2022, over two years after enactment of the SECURE Act, the Internal Revenue Service (IRS) has released proposed regulations with respect to those changes to RMDs.

Why: The proposed regulations provide greater clarity on many of these SECURE Act provisions, while also including some unexpected interpretations of the statute.

  • RMD Commencement Age. The SECURE Act extended the RMD commencement age from 70 ½ to 72
  • Age Change Effective Date. The proposed regulations provide helpful clarification in regard to whom the age change applies
  • Beneficiary Distribution Period. The SECURE Act prohibited designated beneficiaries inheriting a retirement plan or an IRA from taking distributions over the beneficiary’s lifetime unless they were eligible designated beneficiaries
  • Eligible Designated Beneficiary. The proposed regulations clarify who qualifies as an eligible designated beneficiary and can still take distributions from inherited retirement accounts over their lifetimes
  • Age of Majority. The proposed regulations clarify when a child is considered to reach the age of majority
  • Disability. The proposed regulations clarify who is considered disabled and the required documentation, as well as create a safe harbor for determination of disability
  • Trusts. The proposed regulations discuss the various types of trust beneficiaries
  • Distribution Requirements. The SECURE Act specifies that beneficiaries who are not eligible designated beneficiaries must take distributions within a ten-year period
  • Distributions that Had Commenced at or prior to Death. The proposed regulations specify that distributions that had commenced to the participant prior to death must continue annually to an ineligible designated beneficiary in years one through nine following the participants death and be completed in year ten
  • Annual Distribution Requirement. Many tax practitioners had interpreted the SECURE Act and prior IRS guidance as permitting distributions all in year ten without the requirement for annual distributions

Who: Tax expert Mark Luscombe, JD LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help sort through the various rules with respect to required minimum distributions.

PLEASE NOTE: These materials are designed to provide accurate and authoritative information in regard to the subject matter covered. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting, or other professional services.

Contact: To arrange interviews with Mark Luscombe and other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.