IRS Extends RMD Tax Relief for 2024: The IRS has some good news for beneficiaries who inherited individual retirement accounts (IRAs). In Notice 2024-35, the agency announced an extension of tax relief on required minimum distributions (RMDs) for 2024.
This applies to inherited IRAs where the original owner was already subject to RMDs before they passed away.
This is the fourth year in a row the IRS has offered this relief. It provides beneficiaries with more time to adjust to the distribution requirements under the SECURE Act’s 10-year payout rule.
What are RMDs and why the relief?
RMDs are the minimum amounts that owners of traditional IRAs must withdraw and pay taxes on annually after reaching a certain age (usually 72).
The SECURE Act, passed in 2019, changed the rules for inherited IRAs.
Generally, beneficiaries now must withdraw all funds from the inherited IRA within 10 years of the original owner’s death.
The initial confusion surrounding the new 10-year rule led the IRS to provide relief for missed RMDs in 2021, 2022, and 2023. This extension for 2024 ensures beneficiaries have additional time to understand and comply with the new distribution requirements.
What does this mean for you?
If you inherited an IRA in 2023 from someone who was already taking RMDs, you are not penalized for missing the 2024 RMD deadline.
However, it’s important to consult with a financial advisor to understand your options and develop a distribution plan that meets your needs and complies with IRS regulations.
Notice 2024-35
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Key Takeaway: IRS Extends RMD Tax Relief for 2024
The IRS tax relief offers beneficiaries of inherited IRAs some breathing room. It’s still crucial to be aware of your RMD requirements and consult with a financial professional to ensure you are on track for future distributions.
- Good news for beneficiaries:Â This applies to inherited IRAs where the original owner was already taking RMDs before they passed away.
- Fourth year of relief:Â The IRS has offered this tax relief for missed RMDs in 2021, 2022, 2023 and now 2024.
- Reason for relief:Â Beneficiaries have more time to adjust to the 10-year payout rule under the SECURE Act.
- Inherited IRA Relief:Â Beneficiaries get a break for 2024 RMDs.
- 10-Year Rule on Hold:Â No penalty for missing 2024 distribution on inherited IRAs under the SECURE Act.
- SECURE Act changes:Â Beneficiaries typically need to withdraw all funds from inherited IRAs within 10 years.
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