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The Internal Revenue Service (IRS) recently extended relief with respect to certain post-death required minimum distributions (RMDs) under Internal Revenue Code Section 401(a)(9).

As background, in Notice 2022-53, the IRS provided that failures to distribute “Specified RMDs” (as defined below) in 2021 and 2022 will not be treated as plan qualification failures or trigger the excise tax on late RMD payments. This relief was intended to address potential confusion regarding the IRS’s interpretation (as expressed in the proposed RMD regulations published in 2022) that the SECURE Act’s 10-year rule for post-death RMDs, as applied to participants receiving RMDs at the time of death, requires continuing RMDs to the beneficiary—and does not allow waiting until the end of the 10-year period to make full payment. (Refer to our prior blog post for more additional background regarding this relief.)

The IRS previously extended the 2022 relief to 2023 Specified RMDs in Notice 2023-54. Now, in Notice 2024-35, the IRS again extended this relief to 2024 Specified RMDs. In this most recent guidance, the IRS also provided that the 2022 proposed RMD regulations, if finalized, will not apply earlier than 2025.

Taking into account all three IRS Notices, a “Specified RMD” is a payment from a defined contribution plan that would be required under the IRS’s proposed regulations for 2021, 2022, 2023, or 2024 for

  • a designated beneficiary of a participant if (1) the participant died in 2020, 2021, 2022, or 2023, (2) the participant died on or after the participant’s required beginning date, and (3) the designated beneficiary is not taking lifetime or life expectancy payments (e.g., a contingent annuitant of a joint and survivor annuity); or
  • a beneficiary of an eligible designated beneficiary if (1) the eligible designated beneficiary died in 2020, 2021, 2022, or 2023 and (2) that eligible designated beneficiary was taking lifetime or life expectancy payments.

The extended relief provides further flexibility for plan sponsors and recordkeepers for 2024. Plan sponsors who have not already done so should work with their recordkeepers and third-party administrators to confirm whether their plans are taking advantage of this relief. They should then consider whether (1) any changes to the plan document are appropriate or necessary to address the plan's administration and (2) changes to summary plan descriptions or other participant communications may be desirable.

If you have any questions about this IRS relief, or about the application of the post-SECURE Act RMD rules to your plans, please contact any of the authors or your regular Morgan Lewis benefits contact.