Internal Revenue Service sign at the IRS Building in Washington, DC.
The Internal Revenue Service (IRS) and the Treasury issued an announcement stating that several aspects of required minimum distribution (RMD) rules, reflecting changes by SECURE 2.0 that impact retirement plan participants, IRA owners and their beneficiaries, will not apply until 2026, said the IRS in Announcement 2025-02 on Dec. 18.
The Treasury Department and the IRS published proposed regulations regarding RMDs in 2022, which reflected changes made by the SECURE 2.0. The new legislation raised the RMD age (when account owners must begin taking RMDs) to 73 in 2024, from 72. In 2033, the RMD age would be extended to 75 to allow workers to keep saving for longer should they so choose.
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In July, the IRS and the Treasury issued final regulations updating the RMD rules, since the passage of SECURE 2.0 in 2023. However, at a public hearing in September, commenters said it would be difficult to implement many of the provisions of the future final regulations in a timely manner if Jan. 1, 2025 was the effective date.
Also, in October, the American Retirement Association (ARA) asked for the effective date to be pushed back until 18 months after publication of the final rule, in a letter sent to the IRS.
“Nearly all plan sponsors rely on service providers to monitor and calculate RMDs," said the ARA letter. "These service providers will need to process the final regulations and then program their recordkeeping systems to account for the final regulations. Our recordkeeping members regularly report that a period of 18 months is the minimum amount of time necessary to build out system updates. Providing adequate time to ensure proper implementation will promote tax compliance and sound administration.”
Related: IRS: New guidance on required minimum distributions, reflecting SECURE 2.0 changes
The IRS responded yesterday by pushing the anticipated applicability date for the future final RMD regulations back to Jan. 1, 2026, or later.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
