What’s In, What’s Out This Year: Some Regulations About Retirement Plan RMDs are Delayed Until 2026

Published on January 21, 2025

Final regulations, proposed regulations and how they may affect taxpayers with retirement plans this year and next.

When financial legislation is proposed and before final rules are enacted, there is a period of public comment. The passage of the SECURE Act and SECURE Act 2.0 gave the Internal Revenue Service, the U.S. Department of the Treasury, tax professionals and taxpayers plenty to talk about regarding proposals that affect retirement plans—both employer-sponsored and individual retirement accounts.

Background: updated RMD rules

Updated rules about required minimum distributions (RMDs) from retirement plans were passed as part of the SECURE Act of 2019 and further revised under SECURE Act 2.0 (in 2022). Back in July 2024, the agencies compared the original and subsequent revisions and decided to enact some of them as part of the final regulations while others would be addressed in new proposals. Both categories of changes—the 2024 proposed regulations and 2024 final regulations—were to take effect together on January 1, 2025 so that they would all start applying at the same time.

Commenters pushed back in September 2024, airing concerns about the implementation of the final RMD regulations; retirement plan sponsors and recordkeepers said they’d need more time to implement the changes. The agencies listened and announced in December that several aspects of the RMD rules will not apply until 2026, extending the anticipated effective date of a handful of proposed RMD regulations until January 1, 2026.

Regulations that are delayed until 2026

The covered regulations are included in the Internal Revenue Code sections 1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6 and relate to defined contribution plans, defined benefit plans, and annuity contracts.

The proposed regulations affected by this delayed implementation comprise aspects of spousal election, partial annuity, Roth accounts, corrective distributions (for defined benefit and defined contribution plans), and qualified longevity annuity contracts.

Postponed changes at a glance

The following changes are delayed until distribution year 2026, giving plan and IRA sponsors and recordkeepers an extra year to finalize their implementation as they related specifically to these issues.

• Spousal election (1.401(a)(9)-4, -5) – Provides details regarding the special spousal election in which the spouse may elect to be treated as the participant; this includes extending distribution commencement until the participant would have reached their required beginning date according to the Uniform Lifetime Table.
• Roth accounts (1.401(a)(9)-5) – Addresses 1) the treatment of a Roth account after death when the participant has both pre-tax and Roth balances, and 2) distributions from designated Roth accounts that are not subject to lifetime RMD payments.
• Corrective distributions (1.401(a)(9)-5, 1.408-8) – Clarifies the treatment of corrective distributions of missed RMD payments.
• Partial annuity (1.401(a)(9)-5) – Clarifies the calculation of the optional partial annuity aggregation rule in which an annuity can be converted into an account balance and annuity payments can offset the RMDs.
• QLAC (1.401(a)(9)-6) – Addresses the effects of divorce after a qualified longevity annuity contract is purchased.

Regulations that took effect on January 1, 2025

• Required start date of RMDs (1.401(a)(9)-2) – Now age 73 for anyone born before 1960 and age 75 for people born in 1960 or later.
• Uniform Lifetime Table (1.401(a)(9)-9) – This is used by owners and beneficiaries of retirement plans to calculate (RMDs); the IRS has updated this for the first time since 2022.
• Eligible rollover distributions (1.402(c)-2) – Rollover rules for distribution of designated Roth accounts and hypothetical RMDs for certain spousal rollovers.
• Corrective distributions (1.408-8) – Clarifies the treatment of corrective distributions of missed RMD payments from IRAs, including SEP and SIMPLE IRAs.
• Trust beneficiary (1.401(a)(9)-8) – For see-through trusts that get divided immediately upon death into separate interests for each beneficiary, outright distributions to the trust beneficiary are now permitted.

NOTE: Given the complex revenue codes and myriad sections contained in each of the codes, taxpayers are wise to consult a trusted advisor or tax professional about how any of these may affect one’s overall financial plan and taxation scenario.

As always, the helpful professionals at Next Generation Trust Company are here to answer your questions related to self-directed IRAs and other plans in which funds may be invested in alternative assets.