IRS Notice 2024-35 was issued April 16, 2024, providing transition relief from excess accumulation penalties for certain beneficiary RMDs.
On Tuesday, April 16, 2024, the IRS issued Notice 2024-35 providing transition relief from excess accumulation penalties for certain beneficiary required minimum distributions (RMDs). The relief provided in Notice 2024-35 relates to the required distribution changes brought about by the SECURE Act of 2019.
Relief of the Excess Accumulation Penalty for Certain Beneficiaries
Under the relief issued in Notice 2024-35 (which is an extension of penalty relief originally provided in Notice 2022-53 and Notice 2023-54), the IRS has provided exemption from the excess accumulation penalty for
- beneficiaries who are subject to the 10-Year Rule in scenarios where an IRA owner dies on/after their required beginning date in 2020, 2021, 2022, and 2023, and
- successor beneficiaries who are required to take annual distributions in addition to depleting the account with 10 years following the death of the Eligible Designated Beneficiary.
The relief is applicable to beneficiary RMDs for calendar years 2021, 2022, 2023, and 2024. The relief does not include, however, required beneficiary distributions related to year-of-death RMD amounts not taken by the IRA owner prior to their death.
Final Regulations Intended to be Applicable for 2025
In addition to the penalty relief, the Department of the Treasury and the IRS also announced in the notice its intention to issue final RMD regulations that would apply for purposes of determining RMDs for 2025.