Dear Valued Clients and Friends of the Firm,
As part of our commitment to keeping you informed about important tax and financial regulations, we wanted to update you on the recent IRS finalized and proposed regulations concerning Required Minimum Distributions (RMDs), trust beneficiaries, and other related topics.
Key Highlights:
- 10-Year Rule for Non-Eligible Designated Beneficiaries: The IRS has confirmed that Non-Eligible Designated Beneficiaries must fully distribute inherited retirement accounts by the end of the 10th year following the original account owner’s death. This regulation applies if the original owner had begun RMDs before their passing.
- Annual RMD Requirements: For accounts inherited from individuals who had started taking RMDs, beneficiaries must continue to take annual RMDs throughout the 10-year period. The IRS has provided relief for missed RMDs from 2021-2024, with requirements resuming in 2025.
- Rules for Trust Beneficiaries: The new regulations clarify the treatment of beneficiaries under See-Through Trusts, including definitions of eligible and non-eligible beneficiaries. Some trusts can now be divided into separate trusts for each beneficiary, allowing for more tailored distribution strategies.
- Surviving Spouse Provisions: Surviving spouses have been provided new options for handling inherited IRAs, including a “Hypothetical RMD” rule for those who initially opt for the 10-Year Rule but later decide to treat the inherited account as their own.
- Roth Accounts and Annuities: Special provisions have been made for Roth accounts and annuities within retirement plans, impacting how RMDs are calculated and distributed.
Action Steps:
Given the complexity of these new regulations, we encourage you to reach out to us with any questions or concerns you may have about how these changes might impact your retirement accounts and financial planning strategies.
Thank you for your continued trust in our services. We look forward to assisting you in understanding and navigating these important regulatory changes.
Sincerely,
Abeles and Hoffman, P.C.
