The IRS has once again delayed enforcement of Required Minimum Distributions (RMDs) for certain inherited IRAs that fall under the 10-year payout rule introduced by the SECURE Act. IRS Notice 2024-35 will excuse RMDs missed in 2024 that were required for non-eligible designated beneficiaries who inherited IRAs after the SECURE Act took effect on January 1, 2020. The SECURE Act eliminated the “stretch IRA” provision for most non-spouse beneficiaries, requiring them to withdraw the entire inherited IRA balance within 10 years of the original account owner’s death.
However, the act carved out exceptions for five classes of Eligible Designated Beneficiaries (EDBs) who can still stretch out distributions over their life expectancy:
- Surviving spouse
- Disabled or chronically ill individual
- Non-spouse beneficiary less than 10 years younger than the deceased
- Minor child of the deceased
- Certain qualifying trusts
The delayed enforcement under IRS Notice 2024-35 does not apply to these EDBs, who must still take their required 2024 RMDs based on their life expectancy.
Additionally, IRAs inherited before 2020 are not affected by this notice and remain subject to the pre-SECURE Act rules that allowed stretching distributions over the beneficiary’s lifetime.