The Department of the Treasury and the Internal Revenue Service (IRS) have released final regulations regarding required minimum distributions (RMDs) from inherited IRAs under the SECURE Act. According to the SECURE Act, all assets in an inherited IRA must be fully withdrawn by the end of the 10th year following the death of the IRA owner. However, there was previously ambiguity about whether beneficiaries were required to take annual distributions within that 10-year period if the original IRA owner had already begun their RMDs.
The final regulations specify that non-spouse beneficiaries must continue annual distributions if the original IRA owner passed away on or after their required beginning date for RMDs. There are exceptions to these requirements for certain beneficiaries, including:
- Minor children (under age 21)
- Disabled or chronically ill individuals
- Beneficiaries who are not more than 10 years younger than the deceased IRA owner
Implementation and Grace Period
These final regulations will be effective starting January 1, 2025. Additionally, a grace period has been provided for affected beneficiaries, exempting them from the requirement to take RMDs for the years 2021 through 2024 if the original IRA owner died before 2024.