Bulletin No. 2024–33

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2024–33

August 12, 2024

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS, EXCISE TAX,

INCOME TAX

REG-103529-23, page 512.

These proposed regulations would address various provisions that are reserved in the final regulations under Code

sections 401(a)(9) and 402(c) in Treasury Decision 10001

(TD 10001), which is being published simultaneously with

these proposed regulations. The reserved provisions in TD

10001 which these proposed regulations would address

reflect the following sections of the SECURE 2.0 Act of 2022

(SECURE 2.0 Act), enacted on December 29, 2022, as Division T of the Consolidated Appropriations Act, 2023, Public

Law 117-328, 136 Stat. 4459 (2022), to the extent they

are not addressed in TD 10001: 107 (increase in age for

required beginning date for mandatory distributions), 202

(qualifying longevity annuity contracts), 204 (eliminating a

penalty on partial annuitization of an employee’s individual

account under a defined contribution plan), 302 (reduction

in excise tax on certain accumulations in qualified retirement

plans), 325 (Roth plan distribution rules), and 327 (surviving

spouse election to be treated as employee). In addition,

these proposed regulations would provide guidance relating

to provisions in TD 10001 permitting separate application

of section 401(a)(9) with respect to multiple beneficiaries of

a see-through trust.

T.D. 10001, page 412.

These regulations provide guidance related to section 401

of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted on December

20, 2019, as Division O of the Further Consolidated Appropriations Act of 2019, Pub. L. 116-94, 133 Stat. 2534

(2019), and by section 107 and various other sections of

the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), enacted

on December 29, 2022, as Division T of the Consolidated

Appropriations Act, 2022, Public Law 117-328, 136

Stat. 4459 (2022). Section 107 of the SECURE 2.0 Act

increased the mandatory age by which distributions from

Finding Lists begin on page ii.

a retirement plan are required to begin and section 401 of

the SECURE Act limits the ability of designated beneficiaries to take distributions over their life expectancies unless

they meet certain exceptions. In addition, the regulations

will clarify certain issues related to trusts as beneficiaries

and situations under which a beneficiary is identifiable for

purposes of section 401(a)(9) of the Code. These regulations also provide guidance related to eligible rollover distributions under section 402(c) reflecting statutory changes

to that section since regulations were first issued in 1995.

Many rules in existing final regulations are restated without

change to satisfy Federal Register requirements.

INCOME TAX

REG-102161-23, page 502.

This document contains proposed regulations that would

identify transactions that are the same as, or substantially similar to, certain basket contract transactions as

listed transactions for purposes of §1.6011-4. Material

advisors with respect to and certain participants in these

listed transactions would be required to file disclosures

with the IRS and would be subject to penalties for failure

to disclose.

T.D. 10004, page 489.

This document contains final regulations regarding the treatment of property used to acquire parent stock or securities

in connection with certain triangular reorganizations involving one or more foreign corporations; the consequences

to persons that receive parent stock or securities pursuant

to such reorganizations; and the treatment of certain subsequent inbound nonrecognition transactions following such

reorganizations and certain other transactions. The final regulations affect corporations engaged in certain triangular

reorganizations involving one or more foreign corporations,

certain shareholders of foreign corporations acquired in such

reorganizations, and foreign corporations that participate in

certain inbound nonrecognition transactions.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

August 12, 2024 

Bulletin No. 2024–33

Part I

26 CFR 1.401(a)(9)-0 through 26 CFR 1.401(a)(9)9; 26 CFR 1.402(c)-2; 26 CFR 1.403(b)-6; 26 CFR

1.457-6; 26 CFR 1.408-8; 26 CFR 54.4974-1

T.D. 10001

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Parts 1, 31, and 54

Required Minimum

Distributions

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document sets forth

final regulations relating to required minimum distributions from qualified plans;

section 403(b) annuity contracts, custodial

accounts, and retirement income accounts;

individual retirement accounts and annuities; and certain eligible deferred compensation plans. These regulations affect

administrators of, and participants in,

those plans; owners of individual retirement accounts and annuities; employees

for whom amounts are contributed to section 403(b) annuity contracts, custodial

accounts, or retirement income accounts;

and beneficiaries of those plans, contracts,

accounts, and annuities.

DATES: Effective date: These regulations

are effective on September 17, 2024.

Applicability date: Amended §§1.401(a)

(9)-1 through 1.401(a)(9)-9, 1.403(b)-6(e),

and 1.408-8 apply for purposes of determining required minimum distributions

for calendar years beginning on or after

January 1, 2025. Amended §1.402(c)-2

applies for distributions on or after January 1, 2025. Amended §54.4974-1 applies

for taxable years beginning on or after

January 1, 2025.

FOR FURTHER INFORMATION

CONTACT: Brandon M. Ford at (202)

317-6700 (not a toll-free number).

August 12, 2024

SUPPLEMENTARY INFORMATION:

Background

This document sets forth amendments

to the Income Tax Regulations (26 CFR

Part 1) under section 401(a)(9) of the

Internal Revenue Code of 1986 (Code).

These regulations address the required

minimum distribution requirements for

plans qualified under section 401(a)

and update the regulations to reflect the

amendments made to section 401(a)(9) by

sections 114 and 401 of the Setting Every

Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted

on December 20, 2019, as Division O of

the Further Consolidated Appropriations

Act, 2020, Pub. L. 116-94, 133 Stat. 2534

(2019) and by various sections of the

SECURE 2.0 Act of 2022 (SECURE 2.0

Act), enacted on December 29, 2022, as

Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat.

4459 (2022).

The rules of section 401(a)(9) are

adopted by reference in section 408(a)

(6) and (b)(3) for individual retirement

accounts and individual retirement annuities (collectively, IRAs); section 403(b)

(10) for annuity contracts, custodial

accounts, and retirement income accounts

described in section 403(b) (section

403(b) plans); and section 457(d)(2) for

eligible deferred compensation plans. The

determination of the required minimum

distribution is also relevant for purposes

of the related excise tax under section

4974 and the definition of eligible rollover

distribution in section 402(c). Accordingly, this document also sets forth conforming amendments to the Income Tax

Regulations (26 CFR Part 1) under sections 402(c), 403(b), 408, and 457, and to

the Pension Excise Tax Regulations (26

CFR Part 54) under section 4974.

Section 401(a)(9) — Required Minimum

Distributions

Section 401(a)(9) provides rules for

distributions from a qualified plan during

the life of the employee in section 401(a)

(9)(A) and after the death of the employee

in section 401(a)(9)(B). The rules set forth

412

a required beginning date for distributions

and identify the period over which the

employee’s entire interest must be distributed.

Specifically, section 401(a)(9)(A)

(ii) provides that the entire interest of

an employee in a qualified plan must be

distributed, beginning not later than the

employee’s required beginning date, in

accordance with regulations, over the life

of the employee or over the lives of the

employee and a designated beneficiary (or

over a period not extending beyond the

life expectancy of the employee and a designated beneficiary). Section 401(a)(9)(B)

(i) provides that, if the employee dies after

distributions have begun, the employee’s

remaining interest must be distributed at

least as rapidly as under the distribution

method used by the employee as of the

date of the employee’s death (referred to

in this preamble as the “at least as rapidly”

rule).

Section 401(a)(9)(B)(ii) and (iii) provides that, if the employee dies before

required minimum distributions have

begun, the employee’s interest must either

be: (1) distributed within 5 years after the

death of the employee; or (2) distributed

(in accordance with regulations) over the

life or life expectancy of the designated

beneficiary with the distributions generally beginning not later than 1 year after

the date of the employee’s death.

However, under section 401(a)(9)(B)

(iv) (as amended by section 327 of the

SECURE 2.0 Act), a surviving spouse may

elect to: (1) be treated as if the surviving

spouse were the employee for purposes

of section 401(a)(9)(B)(iii)(II); (2) wait

until the date the employee would have

attained the applicable age (as defined in

section 401(a)(9)(C)(v)) to begin taking

required minimum distributions; and (3)

have the beneficiaries of the surviving

spouse be treated as beneficiaries of the

employee if the surviving spouse dies

before distributions to the spouse begin.

Section 401(a)(9)(C)(i) (as amended

by section 114 of the SECURE Act and

further amended by section 107 of the

SECURE 2.0 Act) defines the required

beginning date for an employee (other

than a 5-percent owner or IRA owner)

as April 1 of the calendar year following

Bulletin No. 2024–33

the later of the calendar year in which the

employee attains the applicable age or

the calendar year in which the employee

retires. Section 401(a)(9)(C)(v)(I) provides that in the case of an individual who

attains age 72 after December 31, 2022,

and age 73 before January 1, 2033, the

applicable age is 73. Section 401(a)(9)(C)

(v)(II) provides that in the case of an individual who attains age 74 after December

31, 2032, the applicable age is 75. For

a 5-percent owner or an IRA owner, the

required beginning date is April 1 of the

calendar year following the calendar year

in which the individual attains the applicable age, even if the individual has not

retired.

Section 401(a)(9)(C)(iii) provides that

certain employees who commence benefits under a defined benefit plan after the

year in which they attain age 70½ must

receive an actuarial increase. However,

section 401(a)(9)(C)(iv) provides that the

actuarial increase requirement does not

apply for a governmental plan or for a

church plan (as defined in section 401(a)

(9)(C)(iv)).

Section 401(a)(9)(D) provides that

(except in the case of a life annuity) the

life expectancy of an employee and the

employee’s spouse (used to measure the

period over which payments must be

made) may be redetermined, but not more

frequently than annually.

Section 401(a)(9)(E)(i) defines the

term designated beneficiary as any individual designated as a beneficiary by

the employee. Section 401(a)(9)(E)(ii)

(which was added to the Code as part of

section 401 of the SECURE Act) defines

the term eligible designated beneficiary,

with respect to any employee, as any designated beneficiary who, as of the date of

the employee’s death, is: (1) the surviving

spouse of the employee; (2) a child of the

employee who has not reached the age

of majority (within the meaning of section 401(a)(9)(F)); (3) disabled (within

the meaning of section 72(m)(7)); (4)

a chronically ill individual (within the

meaning of section 7702B(c)(2), subject

to certain exceptions); or (5) an individual

not described elsewhere in section 401(a)

(9)(E)(ii) who is not more than 10 years

younger than the employee.

Section 401(a)(9)(E)(iii) provides that,

subject to the rule in section 401(a)(9)

(F), the treatment of an employee’s child

as an eligible designated beneficiary ends

when the child attains the age of majority

and that any remaining interest must be

distributed within 10 years of that date.

Section 401(a)(9)(F) provides that, under

regulations, any amount paid to a child is

treated as if it had been paid to the surviving spouse if it will become payable to the

surviving spouse upon that child reaching

the age of majority (or other designated

event permitted under regulations).

Section 401(a)(9)(G) provides that any

distribution required to satisfy the incidental death benefit requirement of section

401(a) is treated as a required minimum

distribution.

Section 401(a)(9)(H) (which was added

to the Code as part of section 401 of the

SECURE Act) provides special rules that

generally apply to the distribution of an

employee’s remaining interest in a defined

contribution plan after the death of that

employee. Specifically, section 401(a)(9)

(H)(i) provides that, except in the case

of a beneficiary who is not a designated

beneficiary, section 401(a)(9)(B)(ii): (1)

is applied by substituting 10 years for 5

years; and (2) applies whether or not distributions of the employee’s interest have

begun in accordance with section 401(a)

(9)(A). Section 401(a)(9)(H)(ii) provides

that section 401(a)(9)(B)(iii) (permitting

payments over the life or life expectancy

of the designated beneficiary as an alternative to the 10-year rule) applies only in

the case of an eligible designated beneficiary. Section 401(a)(9)(H)(iii) provides

that if an eligible designated beneficiary

dies before that individual’s portion of the

employee’s interest in the plan has been

entirely distributed, then section 401(a)(9)

(H)(ii) does not apply to the beneficiary of

the eligible designated beneficiary, and the

remainder of that portion must be distributed within 10 years after the death of the

eligible designated beneficiary.

Section 401(a)(9)(H)(iv) provides that

in the case of an applicable multi-benefi-

ciary trust, if, under the terms of the trust,

it is to be divided immediately upon the

death of the employee into separate trusts

for each beneficiary, then section 401(a)

(9)(H)(ii) is applied separately with

respect to the portion of the employee’s

interest that is payable to any disabled or

chronically ill eligible designated beneficiary. Section 401(a)(9)(H)(iv) (as

amended by section 337 of the SECURE

2.0 Act) also provides that in the case of

an applicable multi-beneficiary trust, if,

under the terms of the trust, no beneficiary (other than an eligible designated

beneficiary who is disabled or chronically

ill) has any right to the employee’s interest in the plan until the death of all of

those disabled or chronically ill eligible

designated beneficiaries with respect to

the trust, then: (1) section 401(a)(9)(B)

(iii) (permitting payments over the life

expectancy of a beneficiary) will apply to

the distribution of the employee’s interest; and (2) any beneficiary who is not

disabled or chronically ill will be treated

as a beneficiary of the eligible designated

beneficiary who is disabled or chronically

ill upon the death of that eligible designated beneficiary.

Section 401(a)(9)(H)(v) (as amended

by section 337 of the SECURE 2.0 Act)

defines the term applicable multi-beneficiary trust as a trust: (1) that has more

than one beneficiary; (2) all of the beneficiaries of which are treated as designated

beneficiaries for purposes of determining

the distribution period pursuant to section 401(a)(9); and (3) at least one of the

beneficiaries of which is an eligible designated beneficiary who is either disabled

or chronically ill. Section 401(a)(9)(H)

(v) also provides that, for purposes of that

definition, in the case of a trust described

in section 401(a)(9)(H)(iv)(II), any beneficiary which is an organization described

in section 408(d)(8)(B)(i) is treated as a

designated beneficiary.

Section 401(a)(9)(H)(vi) provides that,

for purposes of applying section 401(a)(9)

(H), an eligible retirement plan defined in

section 402(c)(8)(B) (other than a defined

benefit plan described in section 402(c)(8)

(B)(iv) or (v)1 or a qualified trust that is a

1

The eligible retirement plans described in sections 402(c)(8)(B)(iv) and (v) are an annuity plan described in section 403(a) and an eligible deferred compensation plan described in section

457(b) that is maintained by an eligible employer described in section 457(e)(1)(A), respectively.

Bulletin No. 2024–33

413

August 12, 2024

part of a defined benefit plan) is treated as

a defined contribution plan.

Section 401(a)(9)(J) (which was added

to the Code by section 201 of the SECURE

2.0 Act) provides that a commercial annuity (within the meaning of section 3405(e)

(6)) that is issued in connection with any

eligible retirement plan (within the meaning of section 402(c)(8)(B), other than a

defined benefit plan) is not prohibited

from making any of the following types

of payments: (1) annuity payments that

increase by a constant percentage, applied

not less frequently than annually, at a rate

that is less than 5 percent per year; (2) certain lump sum payments;2 (3) an amount

which is in the nature of a dividend or similar distribution, provided that the issuer

of the contract determines the amount

using reasonable actuarial methods and

assumptions, as determined in good faith

by the issuer of the contract, when calculating the initial annuity payments and the

issuer’s experience with respect to those

factors; or (4) a final payment upon death

that does not exceed the excess of the

total amount of the consideration paid for

the annuity payments, less the aggregate

amount of prior distributions or payments

from or under the contract.

Effective Date of SECURE Act Section

401

Generally, under section 401(b)(1) of

the SECURE Act, the amendments made

by section 401 of the SECURE Act to

section 401(a)(9)(E) and (H) of the Code

apply to distributions with respect to

employees who die after December 31,

2019.

Section 401(b)(2) of the SECURE Act

provides that in the case of a plan maintained pursuant to one or more collective

bargaining agreements between employee

representatives and one or more employers ratified before December 20, 2019, the

amendments to section 401(a)(9)(E) and

(H) of the Code apply to distributions with

respect to employees who die in calendar

years beginning after December 31, 2021,

or if earlier, the later of: (1) December 31,

2019; and (2) the date on which the last of

the collective bargaining agreements terminated, without regard to any extension

agreed to on or after the date of enactment

of the SECURE Act (December 20, 2019).

Section 401(b)(3) of the SECURE Act

provides that, in the case of a governmental plan (as defined in section 414(d) of the

Code), the amendments to section 401(a)

(9)(E) and (H) apply to distributions

with respect to employees who die after

December 31, 2021.

Section 401(b)(4) of the SECURE Act

provides that the amendments made to

section 401(a)(9)(E) and (H) of the Code

do not apply to a qualified annuity that

is a binding annuity contract in effect on

the date of enactment of the SECURE

Act (December 20, 2019) and at all times

thereafter.3

Section 401(b)(5) of the SECURE Act

provides that if an employee dies before

the effective date of section 401(a)(9)(H)

of the Code for a plan, then, in applying

the amendments made to section 401(a)

(9)(E) and (H) to the employee’s designated beneficiary who dies on or after the

effective date, (1) the amendments apply

to any beneficiary of the designated beneficiary, and (2) the designated beneficiary

is treated as an eligible designated beneficiary for purposes of section 401(a)(9)(H)

(ii).

SECURE 2.0 Act Provisions

Prior to amendment by section 107

of the SECURE 2.0 Act, section 401(a)

(9)(C) of the Code defined the required

beginning date by reference to the calendar year in which the employee attains

age 72. Section 107 of the SECURE 2.0

Act changes the age by reference to which

the required beginning date is determined

from 72 to either 73 or 75 (depending

on an employee’s date of birth). Section

107(e) of the SECURE 2.0 Act provides

that the amendments made by section 107

of the SECURE 2.0 Act apply to distributions required to be made after December

31, 2022, with respect to individuals who

attain age 72 after that date.

Section 202 of the SECURE 2.0 Act

instructs the Secretary of the Treasury (or

that person’s delegate) to make certain

amendments to §1.401(a)(9)-6. Those

amendments are: (1) to eliminate the

requirement that premiums for an individual’s qualifying longevity annuity contracts (QLACs) be limited to 25-percent

of an individual’s account balance; (2) to

increase the dollar limitation on premiums

for an individual’s QLACs from $125,000

to $200,000 (adjusted for inflation); (3) to

provide that, in the case of a QLAC purchased with joint and survivor annuity

benefits for an individual and the individual’s spouse, a divorce occurring after the

original purchase and before the date that

the annuity payments commence under the

contract will not affect the permissibility

of the joint and survivor benefits if certain

conditions related to an associated qualified domestic relations order (or, if applicable, a divorce or separation agreement)

are met; and (4) to provide that a QLAC

may include a provision under which an

employee may rescind the purchase of the

contract within a period not exceeding 90

days from the date of purchase.

Section 204 of the SECURE 2.0 Act

instructs the Secretary of the Treasury (or

that person’s delegate) to amend the sec-

Section 401(a)(9)(J)(ii) provides that the lump sum payment must either: (1) result in a shortening of the payment period with respect to an annuity or a full or partial commutation of the

future annuity payments, provided that such lump sum is determined using reasonable actuarial methods and assumptions, as determined in good faith by the issuer of the contract; or (2)

accelerate the receipt of annuity payments that are scheduled to be received within the ensuing 12 months, regardless of whether the acceleration shortens the payment period with respect to

the annuity, reduces the dollar amount of benefits to be paid under the contract, or results in a suspension of annuity payments during the period being accelerated.

3

Section 401(b)(4)(B) of the SECURE Act provides that the term qualified annuity means, with respect to an employee, an annuity—



(i) which is a commercial annuity (as defined in section 3405(e)(6) of the Internal Revenue Code of 1986);



(ii) under which the annuity payments are made over the life of the employee or over the joint lives of such employee and a designated beneficiary (or over a period not extending beyond

the life expectancy of such employee or the joint life expectancy of such employee and a designated beneficiary) in accordance with the regulations described in section 401(a)(9)(A)(ii) of

such Code (as in effect before such amendments) and which meets the other requirements of section 401(a)(9) of such Code (as so in effect) with respect to such payments; and



(iii) with respect to which—



(I) annuity payments to the employee have begun before the date of enactment of the SECURE Act, and the employee has made an irrevocable election before such date as to the method

and amount of the annuity payments to the employee or any designated beneficiaries; or



(II) if subclause (I) does not apply, the employee has made an irrevocable election before the date of enactment of the SECURE Act as to the method and amount of the annuity payments

to the employee or any designated beneficiaries.

2

August 12, 2024

414

Bulletin No. 2024–33

tion 401(a)(9) regulations to provide that

if an employee’s benefit is in the form

of an individual account under a defined

contribution plan, then the plan may allow

the employee to elect to have the amount

required to be distributed for a calendar

year from that account to be calculated as

the excess of the total required amount for

that year over the annuity amount for that

year. For this purpose, section 204(b)(1)

of the SECURE 2.0 Act defines the total

required amount with respect to a calendar

year as the amount that would be required

to be distributed under §1.401(a)(9)-5 by

including in the balance of that account

the value of all annuity contracts that were

purchased with a portion of that account.

Section 204(b)(2) of the SECURE 2.0 Act

defines the annuity amount with respect to

a calendar year as the total amount distributed in that year from all annuity contracts

purchased with a portion of the employee’s

account under the plan. Section 204(c) of

the SECURE 2.0 Act instructs the Secretary of the Treasury (or that person’s delegate) to make conforming amendments

to the regulations that apply to individual

retirement plans (as defined in section

7701(a)(37) of the Code), section 403(b)

plans, and section 457(b) eligible deferred

compensation plans.

Section 325 of the SECURE 2.0 Act

amended section 402A of the Code (relating to designated Roth accounts) to add a

new paragraph (d)(5) providing that the

rules requiring minimum distributions to

be paid during the employee’s lifetime do

not apply to a designated Roth account.

Section 325(b)(1) of the SECURE 2.0 Act

provides that this amendment applies to

taxable years beginning after December

31, 2023. However, section 325(b)(2) of

the SECURE 2.0 Act provides that the

amendment does not apply to a required

minimum distribution for a year beginning before January 1, 2024, that is permitted to be paid by April 1, 2024.

Section 402(c) — Rollovers

Section 402(c) of the Code provides

rules related to the rollover of a distribution from a qualified plan to another

eligible retirement plan. Prior to being

amended by section 641 of the Economic

Growth and Tax Relief Reconciliation

Act of 2001, Pub. L. 107-16, 115 Stat.

38 (2001) (EGTRRA), section 402(c)

(2) of the Code limited the portion of a

distribution that could be rolled over to

the amount that would have been includible in income in the absence of the

rollover. Section 641 of EGTRRA and

section 411(q) of the Job Creation and

Worker Assistance Act of 2002, Pub. L.

107-147, 116 Stat. 21 (2002), expanded

the rollover rules to permit a rollover to

an IRA of the portion of the distribution

that would have been excluded from

gross income in the absence of the rollover (that is, the portion of the amount

distributed that consists of the employee’s investment in the contract). In addition, that portion may be transferred in

a direct trustee-to-trustee transfer to a

qualified trust or to an annuity contract

described in section 403(b) of the Code,

but only if the trust or annuity contract

separately accounts for the amount that

consists of the employee’s investment in

the contract. If only a portion of an eligible rollover distribution is rolled over or

transferred, then the amount rolled over

or transferred is treated as consisting first

of the portion of the distribution that is

not allocable to the employee’s investment in the contract.

Under section 402(c), any amount

distributed from a qualified plan generally will be excluded from income if it

is transferred to an eligible retirement

plan no later than the 60th day following

the day the distribution is received. Section 402(c)(3)(B) was added to the Code

by section 644 of EGTRRA to provide

that the Secretary may waive the 60-day

rollover requirement in certain circumstances. Section 402(c)(3)(C) was added

to the Code by section 13613 of the Tax

Cuts and Jobs Act, Pub. L. 115-97, 131

Stat. 2054 (2017) (TCJA), to provide an

extended rollover deadline for qualified

plan loan offset (QPLO) amounts.4 Specifically, the deadline for rollover of any portion of a QPLO amount is extended so that

it ends no earlier than the distributee’s tax

filing due date (including extensions) for

the taxable year in which the offset occurs.

Subject to certain exclusions, section

402(c)(4) provides that an eligible rollover distribution means any distribution

to an employee of all or any portion of

the balance to the credit of the employee

in a qualified plan. Section 402(c)(4)(A)

excludes from the definition of an eligible

rollover distribution any distribution that

is one of a series of substantially equal

periodic payments payable for the life (or

life expectancy) of the employee (or the

employee and the employee’s designated

beneficiary), or for a specified period of 10

years or more. Section 402(c)(4)(B) provides that any distribution that is required

under section 401(a)(9) is excluded from

the definition of an eligible rollover distribution. Section 402(c)(4)(C), which was

added to the Code by section 636(b)(1) of

EGTRRA, excludes hardship distributions

from the definition of an eligible rollover

distribution.

Prior to being amended by section 641

of EGTRRA, section 402(c)(8)(B) of the

Code provided that the only type of eligible retirement plan permitted to receive a

rollover from a qualified plan was another

qualified plan or an IRA. Section 641 of

EGTRRA amended section 402(c)(8)(B)

of the Code to expand the list of retirement plans eligible to receive rollovers to

include an annuity contract described in

section 403(b), and an eligible deferred

compensation plan described in section

457(b) that is maintained by an eligible

employer described in section 457(e)(1)

(A). Section 617(c) of EGTRRA amended

section 402(c)(8)(B) of the Code to provide that if any portion of an eligible rollover distribution is attributable to distributions from a designated Roth account

(as defined in section 402A), that portion

may be rolled over only to another designated Roth account or a Roth IRA (as

described in section 408A). Section 641

of EGTRRA also added section 402(c)

(10) to the Code to provide that an eligible

deferred compensation plan described in

section 457(b) maintained by an eligible

employer described in section 457(e)(1)

(A) may accept rollovers from a different

type of eligible retirement plan only if it

separately accounts for the amounts rolled

into the plan.

A QPLO amount is defined in section 402(c)(3)(C)(ii) as a plan loan offset amount that is distributed from a qualified employer plan to a participant or beneficiary solely by reason of (1) the

termination of the qualified employer plan, or (2) the failure to meet the repayment terms of the loan from the plan because of the severance from employment of the participant.

4

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415

August 12, 2024

Section 402(c)(9) provides that, if any

distribution attributable to an employee

is paid to the spouse of the employee

after the employee’s death, then section

402(c) applies to that distribution in the

same manner as if the spouse were the

employee. At the time section 402(c)

(9) was enacted, a surviving spouse was

permitted to roll over an eligible rollover

distribution only to an IRA. However,

section 641 of EGTRRA amended section

402(c)(9) of the Code to expand the type

of eligible retirement plan permitted to

receive a spousal rollover to include not

just an IRA, but also any other eligible

retirement plan.

Section 402(c)(11) was added to the

Code by section 829 of the Pension Protection Act of 2006, Pub. L. 109-280, 120

Stat. 780 (2006) (PPA), to provide that an

individual who is not the surviving spouse

of the employee and who is a designated

beneficiary (as defined by section 401(a)

(9)(E) of the Code) may elect to have

any portion of a distribution made in the

form of a direct trustee-to-trustee transfer to an IRA established for the purpose

of receiving that distribution. If a direct

trustee-to-trustee transfer is made pursuant to section 402(c)(11), then the required

minimum distribution rules applicable to

distributions after the employee’s death

in section 401(a)(9)(B) (other than section 401(a)(9)(B)(iv)) will apply to the

IRA. Section 402(c)(11)(B) provides that

the Secretary may prescribe rules under

which a trust for the benefit of one or more

designated beneficiaries may be treated as

a designated beneficiary for purposes of

section 402(c)(11).

The rollover rules of section 402(c)

also apply to a distribution from a section

403(a) qualified annuity plan, a section

403(b) plan, and an eligible deferred compensation plan described in section 457(b)

maintained by an eligible employer

described in section 457(e)(1)(A). See

sections 403(a)(4)(B), 403(b)(8)(B), and

457(e)(16)(B), respectively.

Sections 403(a), 403(b), 408, and 457 —

Other Arrangements Subject to Section

401(a)(9)

Under section 403(a)(1), a qualified

annuity plan under section 403(a) must

meet the requirements of section 404(a)

August 12, 2024

(2) (which provides that an annuity plan

must satisfy the required minimum distribution rules under section 401(a)(9)). Sections 403(b)(10), 408(a)(6), and 408(b)(3)

provide that a section 403(b) plan, an individual retirement account, and an individual retirement annuity, respectively, must

satisfy rules similar to the requirements of

section 401(a)(9) and the incidental death

benefit requirements of section 401(a).

Under section 457(b)(5) and (d)(2), a plan

is an eligible deferred compensation plan

described in section 457(b) only if it satisfies the minimum distribution requirements of section 401(a)(9).

Section 4974 — Excise Tax on Failure to

Satisfy Section 401(a)(9)

Section 4974(a) (as amended by section 302(a) of the SECURE 2.0 Act) provides that if the amount distributed during

the taxable year of a payee under any

qualified retirement plan (as defined in

section 4974(c)) or any eligible deferred

compensation plan (as defined in section

457(b)) is less than that taxable year’s

minimum required distribution (as defined

in section 4974(b)), then an excise tax is

imposed on the payee equal to 25 percent

of the amount by which the minimum

required distribution for the taxable year

exceeds the amount actually distributed in

that taxable year.

Section 4974(d) provides that if the

taxpayer establishes to the satisfaction of

the Secretary that the failure to distribute

the entire amount required in a taxable

year was due to reasonable error and reasonable steps are being taken to remedy

that shortfall, then the Secretary may

waive the excise tax imposed in section

4974(a) for that taxable year.

Section 4974(e) (as added to the Code

by section 302(b) of the SECURE 2.0 Act)

provides that in the case of a taxpayer

who, by the last day of the correction

window: (1) receives a distribution from

the qualified retirement plan or eligible

deferred compensation plan of the amount

by which the required minimum distribution exceeds the actual amount distributed

during the calendar year from that plan

(the shortfall); and (2) submits a return

reflecting that tax (as modified by section

4974(e)), then the tax imposed under section 4974(a) is 10 percent of the shortfall

416

(in lieu of 25 percent). For this purpose,

the correction window ends on the earliest of: (1) the date a notice of deficiency

under section 6212 with respect to the tax

imposed by section 4974(a) is mailed; (2)

the date on which the tax imposed by section 4974(a) is assessed; or (3) the last day

of the second taxable year that begins after

the end of the taxable year in which the tax

under section 4974(a) is imposed.

Good Faith Compliance Standard for

Governmental Plans

Section 823 of PPA provides that a

governmental plan (as defined in section

414(d) of the Code) is treated as having

complied with section 401(a)(9) if the

plan complies with a reasonable, good

faith interpretation of section 401(a)(9).

2002 Final Regulations and Other

Published Guidance

Final regulations relating to required

minimum distributions from a qualified

plan, an IRA, and a section 403(b) plan

have been subject to a series of amendments and additions since they were published in the Federal Register on April

17, 2002 (67 FR 18834) (referred to in this

preamble as the “2002 final regulations”).

Final regulations relating to required minimum distributions from defined benefit

plans and annuity contracts were published in the Federal Register on June

15, 2004 (69 FR 63288) (referred to in

this preamble as the “2004 final regulations”). Final regulations published in the

Federal Register on September 8, 2009

(74 FR 45993) updated the rules to permit a governmental plan to comply with

the required minimum distribution rules

using a reasonable, good faith interpretation of section 401(a)(9). Final regulations

relating to qualifying longevity annuity

contracts were published in the Federal

Register on July 2, 2014 (79 FR 37633).

Final regulations published in the Federal

Register on November 12, 2020 (85 FR

72472) updated the life expectancy and

distribution period tables for distribution

calendar years that begin on or after January 1, 2022.

Final regulations relating to section

402(c) and eligible rollover distributions

were published in the Federal Register on

Bulletin No. 2024–33

September 22, 1995 (60 FR 49199). Since

those regulations were issued, section

402(c) has been amended several times,

and guidance related to those amendments

has generally been issued in the Internal

Revenue Bulletin rather than through the

issuance of new regulations. For example,

Notice 2007-7, 2007-1 CB 395, provided

guidance related to the amendments to section 402(c) made by PPA. However, final

regulations related to the extended period

of time to roll over a QPLO amount under

section 402(c)(3)(C) were published in the

Federal Register on January 6, 2021 (86

FR 464). See §1.402(c)-3.

Proposed Regulations and Enactment of

SECURE 2.0 Act

Proposed regulations under section

401(a)(9) and related statutory provisions

were published in the Federal Register

on February 24, 2022 (87 FR 10504).5

Comments were received on the proposed

regulations, and a public hearing was held

on June 15, 2022. After the close of the

comment period, the SECURE 2.0 Act,

which affected many of the provisions

included in the proposed regulations was

enacted.

After consideration of the comments

and taking into account the enactment of

the SECURE 2.0 Act, the proposed regulations are adopted by this Treasury decision with certain changes described in the

section of this preamble entitled “Summary of Comments and Explanation

of Revisions.” Some of the rules in these

final regulations that reflect provisions of

the SECURE 2.0 Act are a clear application of statutory language for which it is

unnecessary to solicit comments (see 5

U.S.C. 553(b)). Other rules in these final

regulations are the logical outgrowth of

rules in the proposed regulations that take

into account both the comments received

on those proposed rules and the subsequent enactment of the SECURE 2.0 Act.

A notice of proposed rulemaking (REG103529-23) in the Proposed Rules section

of this issue of the Federal Register sets

forth proposed rules that reflect other provisions of the SECURE 2.0 Act relating to

section 401(a)(9) of the Code.

5

Summary of Comments and

Explanation of Revisions

These regulations update several existing regulations under sections 401(a)(9),

402(c), 403(b), 457, and 4974 to reflect

statutory amendments that have been

made since those regulations were last

issued and to clarify certain issues that

have been raised in public comments and

private letter ruling requests. These regulations also replace the question-and-answer format of the existing regulations

under sections 401(a)(9), 402(c), 408, and

4974 with a standard format. Rules under

the 2002 final regulations and the 2004

final regulations that were proposed to be

retained in the updated regulations generally were not discussed in the Explanation

of Provisions that accompanied the proposed regulations. Similarly, rules under

the proposed regulations that are included

in these final regulations without change

generally are not discussed in this Summary of Comments and Explanation of

Revisions.

I. Section 401(a)(9) Regulations

A. Section 1.401(a)(9)-1 — Minimum

distribution requirement in general

1. Statutory Effective Date of the

Limitation on Beneficiary Life

Expectancy Distributions

Section 1.401(a)(9)-1 provides general

rules that apply for all of the regulations

under section 401(a)(9), including rules

addressing application of the effective

date of section 401(a)(9)(H), which was

added to the Code by section 401 of the

SECURE Act to limit which beneficiaries may take distributions over their life

expectancies. Generally, the amendments

made by section 401 of the SECURE Act

apply to distributions with respect to an

employee who dies on or after January 1,

2020 (with a later effective date for certain

collectively bargained plans or governmental plans). In addition, if an employee

in a plan died before the section 401(a)

(9)(H) effective date for that plan, the

employee had only one designated benefi-

ciary, and the employee’s designated beneficiary dies on or after that effective date,

then the amendments made by section 401

of the SECURE Act apply to any beneficiary of the designated beneficiary. In

this situation, the designated beneficiary

is treated as an eligible designated beneficiary for purposes of the 10-year payout required by section 401(a)(9)(H)(iii).

Accordingly, the death of the designated

beneficiary triggers a requirement to complete payment by the end of the calendar

year that includes the tenth anniversary

of the date of the death of that designated

beneficiary. In contrast, if that designated

beneficiary died before that effective date,

then the amendments made by section 401

of the SECURE Act do not apply with

respect to the employee’s interest under

the plan.

Under the proposed regulations, if an

employee in a plan who died before the

section 401(a)(9)(H) effective date for

that plan had more than one designated

beneficiary, whether the amendments

made by section 401 of the SECURE Act

apply depends on when the oldest of those

beneficiaries dies. Thus, for example, if

an employee who died before January 1,

2020, named a see-through trust as the

sole beneficiary of the employee’s interest

in the plan, and the trust has three beneficiaries who are all individuals, then the

amendments made by section 401 of the

SECURE Act will apply with respect to

distributions to the trust upon the death

of the oldest trust beneficiary, but only if

that beneficiary dies on or after the section 401(a)(9)(H) effective date for that

plan. However, if the oldest of the trust

beneficiaries died before that effective

date, then the amendments made by section 401 of the SECURE Act do not apply

with respect to distributions to the trust.

Some commenters asked how these effective date rules apply if the beneficiaries

were using the separate account alternative

(under which section 401(a)(9) is applied

separately to the separate accounts for

each beneficiary). In that case, the separate application of section 401(a)(9) with

respect to the separate account for a beneficiary is used to determine whether section

401(a)(9)(H) applies to that beneficiary.

Correction notices were published in the Federal Register with respect to the proposed regulations on March 21, 2022 (87 FR 15907), and May 20, 2022 (87 FR 39845).

Bulletin No. 2024–33

417

August 12, 2024

The proposed regulations reflected

the exception for a qualified annuity

(that is, an annuity contract for which an

employee made an irrevocable election

as to the method and the amount of the

annuity payments before December 20,

2019) described in section 401(b)(4) of

the SECURE Act. One commenter raised

questions regarding whether the requirements for an irrevocable election as to the

method and amount of annuity payments

under the contract meant that the contract

loses its exception from the application of

section 401(a)(9)(H) merely because the

contract permits additional premiums to

be paid or permits the annuitant to select

when distributions under the contract

commence. The final regulations do not

change the requirement that, in order for

the contract to be excepted from the application of section 401(a)(9)(H), the method

and amount of annuity payments under

the contract be irrevocably selected before

December 20, 2019. For this purpose, the

mere ability to pay an additional premium

or change the commencement date of

benefits under the contract after December 20, 2019, does not cause the contract

to lose its exception from the application

of section 401(a)(9)(H). However, if an

individual paid an additional premium or

changed the commencement date of benefits under the contract after that date, then

the contract would lose its exception.

Commenters also requested that the

final regulations apply the qualified annuity exception to the situation in which the

employee had died and, after the employee’s death, the beneficiary had made an

irrevocable election as to the method

and the amount of the annuity payments

before December 20, 2019. These final

regulations make that change.

2. Applicability Date of Final Regulations

under Section 401(a)(9)

A number of commentators requested

that the applicability date of the final regulations be delayed from the proposed

applicability date of distribution calendar

years beginning on or after January 1,

2022, in order to provide adequate time

for plan administrators and IRA providers to familiarize themselves with the new

rules and to update administrative systems to implement necessary changes. In

response to these comments, the final regulations under section 401(a)(9) apply for

distribution calendar years beginning on

or after January 1, 2025. For earlier distribution calendar years, taxpayers must

apply the 2002 final regulations and 2004

final regulations, but taking into account

a reasonable, good faith interpretation of

the amendments made by sections 114 and

401 of the SECURE Act.6 For the 2023

and 2024 distribution calendar years, taxpayers must also take into account a reasonable, good faith interpretation of the

amendments made by sections 107, 201,

202, 204, and 337 of the SECURE 2.0 Act.

B. Section 1.401(a)(9)-2 — Distributions

commencing during an employee’s

lifetime

Section 1.401(a)(9)-2 provides rules

for determining the required beginning

date for distributions and whether distributions are treated as having begun during

an employee’s lifetime. These rules are

based on the rules in the 2002 final regulations, except that the rules have been

updated to reflect the amendments to the

required beginning date made by section

114 of the SECURE Act and section 107

of the SECURE 2.0 Act.

Specifically, these regulations generally provide that the required beginning

date is April 1 of the calendar year following the later of (1) the calendar year

in which the employee reaches the applicable age, and (2) the calendar year in

which the employee retires from employment with the employer maintaining the

plan. These regulations provide that the

applicable age is determined based on

an employee’s date of birth, as follows:

(1) for employees born before July 1,

1949, the applicable age is 70½; (2) for

employees born on or after July 1, 1949,

but before January 1, 1951, the applicable

age is 72; (3) for employees born on or

after January 1, 1951, but before January

1, 1959, the applicable age is 73; and (4)

for employees born on or after January 1,

1960, the applicable age is 75.7 The final

regulations make conforming changes by

replacing references to age 72 in the proposed regulations (when referring to the

age for determining the required beginning date) with references to the applicable age. The Summary of Comments

and Explanation of Revisions section of

this preamble generally does not describe

those changes.

One commenter asked whether a plan

could provide a uniform required beginning date of April 1 of the calendar year

following the year an employee attains

age 70½ that would apply to all employees in the plan regardless of the employee’s date of birth. While the final regulations do not provide for such an option,

the Department of the Treasury (Treasury

Department) and the IRS note that, subject

to the requirements of section 411(a)(11),

a plan could require benefits to commence

by that date. In addition, in the case of a

defined benefit plan, §1.401(a)(9)-6(k)

provides that if distributions start prior to

the required beginning date in a distribution form that is an annuity under which

distributions are made in accordance with

the requirements of that section, then the

annuity starting date will generally be

treated as the required beginning date for

purposes of applying the rules of section

401(a)(9).

Another commenter asked whether an

employee who is not a 5-percent owner,

has benefits under a plan maintained by

more than one employer, and retires from

employment from any of the employers

participating in the plan is treated as having

retired for purposes of section 401(a)(9)(C)

if that employee is employed by a different

employer participating in the same plan.

The final regulations add language clarifying that the employee is not treated as having retired for purposes of section 401(a)

(9)(C)(i)(II) in this situation.

The preamble to the proposed regulations provided that compliance with the proposed regulations will be treated as a reasonable, good faith interpretation of the amendments made by

sections 114 and 401 of the SECURE Act.

7

Section 107 of the SECURE 2.0 Act includes an ambiguity relating to the definition of applicable age for employees born in 1959 (section 401(a)(9)(C)(v) provides that the applicable age

for those employees is both 73 and 75). Accordingly, these regulations reserve a paragraph that defines the applicable age for employees born in 1959, and that issue is addressed in a notice

of proposed rulemaking (REG-103529-23) in the Proposed Rules section of this issue of the Federal Register.

6

August 12, 2024

418

Bulletin No. 2024–33

C. Section 1.401(a)(9)-3 — Death before

required beginning date

Section 1.401(a)(9)-3 provides rules

for distributions if an employee dies

before the employee’s required beginning

date. These rules are based on the rules in

the 2002 final regulations but are updated

to reflect new section 401(a)(9)(H). For

example, the option for a designated beneficiary of an employee who participates

in a defined contribution plan to elect to

receive distributions over the designated

beneficiary’s life expectancy is limited to

an eligible designated beneficiary. These

regulations are also updated to reflect the

amendment to section 402A(d) made by

section 325 of the SECURE 2.0 Act and

provide that if an employee’s entire interest under a defined contribution plan is in

a designated Roth account, then no distributions are required to be made to the

employee during the employee’s lifetime.

Thus, upon the employee’s death, that

employee is treated as having died before

his or her required beginning date.

The proposed regulations described

satisfaction of the life expectancy rule for

an eligible designated beneficiary of an

employee in a defined contribution plan

by reference to the rules in §1.401(a)(9)5. The final regulations clarify that the

requirement to take an annual distribution

in accordance with the preceding sentence

continues to apply for all subsequent calendar years until the employee’s interest

is fully distributed. Thus, a required minimum distribution is due for the calendar

year of the eligible designated beneficiary’s death, and that amount must be distributed during that calendar year to any

beneficiary of the deceased eligible designated beneficiary to the extent it has not

already been distributed to the eligible

designated beneficiary.

Under the proposed regulations, if the

employee has a designated beneficiary

(who is an eligible designated beneficiary

in the case of a defined contribution plan),

the plan may: (1) provide that the 5-year

rule (in the case of a defined benefit plan)

or 10-year rule (in the case of a defined

contribution plan) applies; (2) provide that

the life expectancy rule applies; or (3) per-

mit the employee or the designated beneficiary to elect between the applicable 5-year

or 10-year rule or the life expectancy rule.8

The proposed regulations also provided

that, if a plan permits an employee or designated beneficiary to elect between the

applicable 5-year or 10-year rule and the life

expectancy rule, then the plan must specify the default that would apply when the

employee or designated beneficiary has not

made an election. Consistent with requests

made by commenters, the final regulations

provide that the requirement to specify a

default applies only if the plan is intended

to be operated using a default different

than the default that would apply under the

regulations if the employee or designated

beneficiary did not make an affirmative

election. Thus, for example, if the intended

operation in the absence of an election is

that a surviving spouse who is the sole

beneficiary is to wait to begin distributions

until the employee would have reached the

applicable age, then the plan is not required

to provide for a default (because that is the

rule that would apply under the regulations

if the surviving spouse did not make an

affirmative election).

In addition, consistent with requests

made by commenters, the final regulations

clarify that a defined contribution plan

may provide that a particular distribution

method will apply to certain categories of

eligible designated beneficiaries or that an

election as to which distribution method

applies is available only for certain categories of eligible designated beneficiaries.

Thus, for example, a plan may provide

that only an employee’s surviving spouse

may elect between the 10-year rule and

life expectancy payments.

D. Section 1.401(a)(9)-4 —

Determination of the designated

beneficiary

Section 1.401(a)(9)-4 provides rules

addressing the determination of the

employee’s beneficiary for purposes of

section 401(a)(9), including the definition of eligible designated beneficiary in

section 401(a)(9)(E)(ii). Section 1.401(a)

(9)-4 also provides rules addressing the

treatment of trust beneficiaries as desig-

nated beneficiaries when a trust is named

as the beneficiary of an employee’s interest in a plan.

1. Eligible Designated Beneficiaries

Under section 401(a)(9)(E)(ii), an eligible designated beneficiary is a designated beneficiary who, as of the date of

the employee’s death, is (1) the surviving

spouse of the employee, (2) a child of the

employee who has not yet reached the age

of majority, (3) disabled, (4) chronically

ill, or (5) not more than 10 years younger

than the employee.

a. Definition of child

Under section 401(9)(E)(ii)(III), one

of the categories of eligible designated

beneficiary is a child of the employee who

has not yet reached the age of majority.

Consistent with requests made by commenters, the final regulations clarify that

the definition of child in section 152(f)(1)

applies for this purpose (so that the definition includes a stepchild, an adopted child,

and an eligible foster child).

b. Definition of disability

The regulations provide rules for the

determination of whether an individual

is disabled for purposes of section 401(a)

(9). Section 401(a)(9)(E)(ii)(III) applies

the definition of disability under section

72(m)(7) for purposes of section 401(a)

(9). Section 72(m)(7) provides a standard

of disability based on whether an individual is unable to engage in substantial gainful activity. However, that standard may be

difficult to apply for individuals under age

18. Accordingly, if, as of the date of the

employee’s death, a beneficiary is younger

than age 18, then the regulations apply a

comparable standard that requires the beneficiary to have a medically determinable

physical or mental impairment that results

in marked and severe functional limitations, and that can be expected to result in

death or to be of long-continued and indefinite duration.

These regulations also provide a safe

harbor for the determination of whether

If a defined contribution plan does not include either the provision that applies the 10-year rule or the provision under which a beneficiary can elect between the 10-year rule and the life

expectancy rule, then the plan must provide that the life expectancy rule applies for an eligible designated beneficiary.

8

Bulletin No. 2024–33

419

August 12, 2024

a beneficiary is disabled. Specifically, if,

as of the date of the employee’s death,

the Commissioner of Social Security has

determined that the individual is disabled

within the meaning of 42 U.S.C. 1382c(a)

(3), then that individual will be deemed to

be disabled for purposes of section 401(a)

(9) of the Code. The final regulations clarify that this alternative is merely a safe

harbor and that a beneficiary who does not

have a Social Security determination of

disability can apply the general standards

described in the preceding paragraph.

Several commenters asked for additional safe harbors for the determination

of whether a beneficiary is disabled. For

example, one commenter requested that

the final regulations include a safe harbor

under which a beneficiary is considered to

be a disabled individual if a State court has

determined that the beneficiary is incapacitated for purposes of State guardianship

proceedings. Another commentor asked

for a safe harbor under which an individual is treated as disabled or chronically

ill if that individual is an eligible individual with respect to an ABLE account

as described in section 529A(e)(1). The

regulations do not provide for those safe

harbors because the standards required for

a State law guardianship proceeding or to

be an eligible individual with respect to an

ABLE account could be broader than the

definition of disability in section 72(m)

(7).

c. Documentation requirements for

disabled or chronically ill status

The regulations provide that, with

respect to a beneficiary who is disabled

or chronically ill as of the date of the

employee’s death, documentation of the

disability or chronic illness must be provided to the plan administrator no later

than October 31 of the calendar year following the calendar year of the employee’s death. If the designated beneficiary is

chronically ill under any of the definitions

in section 7702B(c)(2)(A) as of the date of

the employee’s death, the documentation

must include a certification by a licensed

health care practitioner (as defined in section 7702B(c)(4)) that the designated beneficiary is chronically ill. Additionally, in

accordance with section 401(a)(9)(E)(ii)

(IV), if the beneficiary is chronically ill

August 12, 2024

under the definition in section 7702B(c)

(2)(A)(i), then the documentation also

must include a certification from a

licensed health care practitioner that, as of

the date of the certification, the individual

is unable to perform (without substantial

assistance from another individual) at

least 2 activities of daily living and the

period of that inability is an indefinite one

that is reasonably expected to be lengthy

in nature.

For a designated beneficiary who is an

eligible designated beneficiary because,

at the time of the employee’s death, the

designated beneficiary is the employee’s

minor child and that child also is disabled

or chronically ill within the meaning of the

regulations, the designated beneficiary will

continue to be treated as an eligible designated beneficiary after reaching the age of

majority (on account of being disabled or

chronically ill) only if these documentation

requirements are timely met with respect

to that designated beneficiary. Similarly,

if the employee’s designated beneficiary is

the employee’s surviving spouse and that

spouse also is disabled or chronically ill at

the time of the employee’s death, then the

surviving spouse will be treated as disabled

or chronically ill for purposes of the applicable multi-beneficiary trust rules only if

the documentation requirements are timely

met with respect to the surviving spouse.

One commenter requested that the final

regulations replace the October 31 deadline for providing documentation reflecting a designated beneficiary’s disability

or chronic illness and instead provide that

the deadline be before a full distribution

would be required if the beneficiary was

not disabled. The regulations do not make

that change because of the need for a medical assessment of the designated beneficiary’s disability or chronic illness as of

the date of the employee’s death. Allowing

a 10-year delay before making this medical assessment (or an even further delay

in the case of a child of the employee who

had not reached the age of majority as of

the date of the employee’s death) could

result in a less reliable assessment that the

beneficiary was disabled or chronically ill

as of the date of the employee’s death than

an assessment made within a short period

after that date.

Several commenters requested that

plan administrators be permitted to rely on

420

self-certifications from a designated beneficiary (or, in the case of a see-through

trust, the trustee of that trust) that the

beneficiary is disabled or chronically ill

within the meaning of §1.401(a)(9)-4(d).

The commenters argued that plan administrators and IRA custodians should not be

required to review personal health records

or similar documents to determine whether

a beneficiary is disabled or chronically ill

and that the self-certification process has

already been established for other areas of

plan administration, including in the case

of coronavirus-related distributions pursuant to Notice 2020-50, 2020-28 IRB 35.

The Treasury Department and the IRS

generally disagree with the commenters’

request that plan administrators should be

able to rely on a beneficiary’s self-certification of disability or chronic illness. This

documentation requirement is different

than that of coronavirus-related distributions because there is the potential for a

delay of distributions of the employee’s

account for long periods if the beneficiary

meets the disabled or chronically ill standard in the Code. As a result, plans should

require documentation from a licensed

health care practitioner (rather than rely

on a certification by the beneficiary).

While the final regulations do not eliminate the deadline to provide documentation to a plan administrator, an example

illustrating this rule has been modified to

show that the required documentation need

not be overly detailed. Under the example, the licensed health care practitioner

merely certifies that, as of a specified date,

the designated beneficiary is unable to

engage in any substantial gainful activity

by reason of a physical impairment that

can be expected to be of long-continued

and indefinite duration. In addition, the

regulations include a transition rule for the

documentation deadline in the case of an

employee who died in 2020, 2021, 2022,

or 2023. In that case, the documentation

of the designated beneficiary’s disability or chronic illness does not need to be

furnished to the plan administrator until

October 31, 2025. Finally, as described

in section IV of this Summary of Comments and Explanation of Revisions,

the final regulations provide that there is

no requirement to provide documentation

of a designated beneficiary’s disability or

chronic illness to an IRA custodian.

Bulletin No. 2024–33

2. Trust as Beneficiary

The final regulations retain the seethrough trust concept in the 2002 final

regulations under which certain beneficiaries of a trust are treated as beneficiaries of

the employee if the trust meets specified

requirements. Specifically, to be a seethrough trust, the trust must meet the following requirements: (1) the trust is valid

under State law or would be valid but for

the fact that there is no corpus; (2) the

trust is irrevocable or will, by its terms,

become irrevocable upon the death of the

employee; (3) the beneficiaries of the trust

who are beneficiaries with respect to the

trust’s interest in the employee’s benefit

are identifiable; and (4) the specified documentation requirements are satisfied.

a. Determining which see-through trust

beneficiaries are treated as beneficiaries

of the employee

1. See-through trust beneficiaries taken

into account

Generally, the regulations provide that

a beneficiary of a see-through trust is

treated as a beneficiary of the employee

if the beneficiary could receive amounts

in the trust representing the employee’s

interest in the plan that are neither contingent upon nor delayed until the death

of another trust beneficiary who does not

predecease (and who is not treated as having predeceased)9 the employee. A beneficiary described in the preceding sentence

is referred to as a primary beneficiary in

this Summary of Comments and Explanation of Revisions. One commenter

requested that the final regulations provide a uniform simultaneous death provision for determining whether one beneficiary predeceases another beneficiary. The

final regulations do not adopt this request

because the disposition of property interests is governed by State law rather than

by these regulations.

Whether any other see-through trust

beneficiary also is treated as a beneficiary

of the employee depends upon whether

the see-through trust is a conduit trust or

an accumulation trust. A conduit trust is

defined in the regulations as a see-through

trust, the terms of which provide that all

plan distributions will, upon receipt by the

trustee, be paid directly to, or for the benefit of, primary beneficiaries during their

lifetimes. For example, if an employee

names a see-through trust as the beneficiary of the employee’s interest in a plan

and the trust terms provide that all distributions from the plan to the trust during

the surviving spouse’s life will, upon

receipt by the trustee, be paid directly to

that surviving spouse, then the trust is a

conduit trust and the surviving spouse is

treated as a beneficiary of the employee

because the surviving spouse could

receive amounts in the trust with respect

to the deceased employee’s interest in the

plan that are neither contingent upon nor

delayed until the death of another trust

beneficiary. In this case, any beneficiary

who could receive distributions from the

trust with respect to the deceased employee’s interest in the plan after the surviving

spouse’s death is not treated as a beneficiary of the employee.

An accumulation trust is any seethrough trust that is not a conduit trust,

and under an accumulation trust, there are

potentially more beneficiaries. A beneficiary of an accumulation trust is treated as

a beneficiary of the employee if that beneficiary could receive amounts accumulated

in the trust representing the employee’s

interest in the plan that were not distributed to other beneficiaries during their

lifetimes (unless that beneficiary is disregarded pursuant to the rules described

in section II.D.2.a.2 of this Summary of

Comments and Explanation of Revisions). A beneficiary described in the preceding sentence is referred to as a residual

beneficiary in this Summary of Comments and Explanation of Revisions.

As an illustration of the rule in the preceding paragraph, assume an employee

designates a see-through trust as the sole

beneficiary of the employee’s interest in

the plan. The terms of the see-through

trust provide that the trustee is to pay

specified amounts from the trust to the

employee’s surviving spouse, but do not

provide that all plan distributions made to

the trust will, upon receipt by the trustee,

be paid directly to, or for the benefit of,

the spouse. Upon the spouse’s death, the

see-through trust will terminate and the

amounts remaining in the trust will be

paid to the employee’s brother. The surviving spouse is treated as a beneficiary

of the employee (because the surviving

spouse could receive amounts in the seethrough trust representing the deceased

employee’s interest in the plan that are

neither contingent upon nor delayed until

the death of another trust beneficiary).

Moreover, because not all distributions

from the plan to the see-through trust are

required, upon receipt by the trustee, to be

paid directly to, or for the benefit of, a trust

beneficiary, the trust is an accumulation

trust. As a result, the employee’s brother

is treated as a beneficiary of the employee

because he is the residual beneficiary of

an accumulation trust (unless the employee’s brother is disregarded pursuant to the

rules described in section II.D.2.a.2 of this

Summary of Comments and Explanation of Revisions).

One commenter requested that the

final regulations provide that a seethrough trust can still be a conduit trust

if it includes certain trust terms. Specifically, the commenter requested that final

regulations provide that a see-through

trust will not fail to be treated as a conduit

trust merely because that trust does not

provide that, with respect to the deceased

employee’s interest in the plan, all distributions will, upon receipt by the trustee,

be paid directly to a specified beneficiary provided that the beneficiary has a

unilateral withdrawal right with respect

to those amounts. The final regulations

do not include this change because the

Treasury Department and the IRS are

concerned that if a trust merely provides

a beneficiary with this type of unilateral

withdrawal right (rather than providing

that any distribution from the plan, upon

receipt by the trustee, be paid directly to

that beneficiary), then there could be an

accumulation within the trust of amounts

representing the employee’s interest in

the plan that could be paid to a different

For purposes of this rule, a beneficiary is treated as having predeceased the employee if the beneficiary is treated as predeceasing the employee pursuant to a simultaneous death provision

under applicable State law or a qualified disclaimer satisfying section 2518 that applies to the entire interest to which the beneficiary is entitled.

9

Bulletin No. 2024–33

421

August 12, 2024

trust beneficiary. In those cases, the trust

beneficiaries who could benefit from that

accumulation should also be treated as

beneficiaries of the employee for purposes

of section 401(a)(9) (without regard to the

taxability of the distribution).

Commenters requested that the regulations clarify the see-through trust rules

in the case of payments that are not made

directly to the trust beneficiary but are

made indirectly for the benefit of the trust

beneficiary (such as payments to a custodial account for the benefit of a minor

child). In response to those comments,

these regulations provide that a trust beneficiary will be treated as if that beneficiary could receive amounts in the trust

representing the employee’s interest in the

plan regardless of whether those amounts

could be paid directly to that beneficiary

or indirectly for the benefit of that beneficiary.

2. Disregarded beneficiaries of seethrough trusts

The regulations provide for certain

beneficiaries of a see-through trust to

be disregarded as beneficiaries of the

employee for purposes of section 401(a)

(9). Specifically, a beneficiary of a seethrough trust is not treated as a beneficiary

of the employee if that trust beneficiary

could receive payments from the trust that

represent the employee’s interest in the

plan only after the death of another trust

beneficiary who is a residual beneficiary

(and is not also a primary beneficiary)

who did not predecease (and is not treated

as having predeceased) the employee.

One commenter requested that the disregard described in the preceding paragraph should not be affected by a trustee’s

ability to make sprinkling distributions

to a residual beneficiary (that is, distributions for the health, support, or maintenance of that residual beneficiary) during

the lifetime of a primary beneficiary. The

Treasury Department and the IRS disagree

with this request because of the potential

for the primary beneficiary to be entitled

to only a nominal amount (so that the

residual beneficiary entitled to sprinkling

distributions is effectively the primary

beneficiary). In that case, the beneficiary

who is entitled to amounts representing

the employee’s interest in the plan after

August 12, 2024

the death of the residual beneficiary has

a significant interest in amounts accumulated in the trust representing the employee’s interest in the plan and should be

treated as a beneficiary of the employee.

The regulations provide another exception under which a see-through trust beneficiary with a residual interest is disregarded as a beneficiary of the employee.

Specifically, the regulations provide that if

the see-through trust terms require a full

distribution of amounts in the trust representing the employee’s interest in the

plan to a specified trust beneficiary by the

later of: (1) the calendar year following

the calendar year of the employee’s death;

and (2) the end of the calendar year that

includes the tenth anniversary of the date

the designated beneficiary reaches the age

of majority, then any other beneficiary

whose sole entitlement to distributions is

conditioned on the specified trust beneficiary’s death before the full distribution is

required is disregarded as a beneficiary of

the employee.

One commenter requested that the

final regulations also disregard beneficiaries who have a contingent interest in the

employee’s benefit under the plan if the

likelihood of that contingency occurring

is remote (for example, the probability

of that contingency occurring is less than

5 percent). The final regulations do not

adopt this broad disregard because it is

too difficult to determine the likelihood of

a stated event occurring prior to a specified date in cases other than an individual

reaching a particular age or a residual beneficiary predeceasing another designated

beneficiary entitled to amounts in the trust.

b. Documentation requirements for seethrough trusts

The proposed regulations adopted the

see-through trust documentation requirements described in the 2002 final regulations. The documentation requirements

in the proposed regulations generally

provided that the plan administrator must

timely receive either (1) a copy of the

actual trust instrument, or (2) a list of all

the trust beneficiaries, including contingent beneficiaries, with a description of

the conditions on their entitlement sufficient to establish who are the beneficiaries.

422

Commenters noted that plan administrators and IRA custodians are not experts

in the intricacies of various State trust

laws and thus, are not qualified to read

through complex trust instruments to

determine who the beneficiaries are for

purposes of section 401(a)(9). The commenters requested that final regulations

allow for a certification from the trustee of

the trust as to the beneficiaries who are to

be treated as beneficiaries of the employee

for purposes of section 401(a)(9). The

final regulations do not permit a trustee to

certify to a plan administrator the list of

beneficiaries to be treated as beneficiaries

of the employee because plan administrators are better suited to determine how

section 401(a)(9) applies with respect to

an employee.

As an alternative to allowing a plan

administrator to rely on the trustee’s certification of the trust beneficiaries who

are to be treated as the employee’s beneficiaries for purposes of section 401(a)

(9), the commenters requested that final

regulations allow for a plan administrator

to specify that a list of the trust beneficiaries with a description of the conditions

on their entitlement must be provided

(rather than the actual trust document).

The final regulations clarify that a plan

administrator may choose which of the

two alternatives will be accepted. Thus,

the plan administrator may require the

trustee to provide a list of trust beneficiaries with a description of the conditions

on their entitlement in lieu of the actual

trust document. In addition, as described

in section IV of this Summary of Comments and Explanation of Revisions, the

regulations provide that a trustee of a seethrough trust is not required to provide the

trust documentation to an IRA custodian,

trustee, or issuer.

c. Applicable multi-beneficiary trusts

The proposed regulations provided

guidance on a particular type of seethrough trust defined in section 401(a)(9)

(H)(v) as an applicable multi-beneficiary

trust. Specifically, the proposed regulations defined two types of applicable

multi-beneficiary trusts. A type I applicable multi-beneficiary trust is a trust with

at least one beneficiary who is disabled

or chronically ill, the terms of which pro-

Bulletin No. 2024–33

vide that the trust is to be divided immediately upon the death of the employee

into separate trusts for each beneficiary

(as described in section 401(a)(9)(H)(iv)

(I)). A type II applicable multi-beneficiary

trust is an applicable multi-beneficiary

trust, the terms of which provide that no

individual other than a disabled or chronically ill eligible designated beneficiary

has any right to the employee’s interest in

the plan until the death of all such eligible

designated beneficiaries with respect to

the trust (as described in section 401(a)(9)

(H)(iv)(II)).

The proposed regulations permitted

section 401(a)(9) to be applied separately

with respect to the separate interests of

the beneficiaries reflected in the separate

trusts of a type I applicable multi-beneficiary trust. However, the final regulations do not include a definition of a

type I applicable multi-beneficiary trust.

This is because, as described in section

I.H of this Summary of Comments and

Explanation of Revisions, the final regulations include a broader rule that permits

separate application of section 401(a)(9)

with respect to the separate interests of

the beneficiaries reflected in a trust if that

trust is to be divided immediately upon

the death of the employee into separate

trusts for each beneficiary, without regard

to whether any of the beneficiaries are disabled or chronically ill.

With respect to the definition of a type

II applicable multi-beneficiary trust, one

commenter requested that the final regulations provide that the trust be permitted to

include beneficiaries that are not individuals (such as a charity) that are entitled to

distributions after the death of the disabled

or chronically ill beneficiary. Section

337(b) of the SECURE 2.0 Act amended

section 401(a)(9)(H)(v) of the Code to

provide a modified version of that request.

Accordingly, these regulations adopt a

modified version of the definition of a type

II applicable multi-beneficiary trust from

the proposed regulations. Under that modification, certain organizations described

in section 170(b)(1)(A) to which charitable contributions may be made are treated

as designated beneficiaries.10

In addition, one commenter requested

clarification in the case of a trust that provides for a disabled or chronically ill eligible designated beneficiary’s interest in the

trust to be terminated if necessary to preserve eligibility for certain public benefits.

These regulations continue to require that

no trust beneficiary other than the disabled

or chronically ill beneficiary may receive

payments from the trust prior to the death

of that beneficiary in order for the trust to

be treated as an applicable multi-beneficiary trust. However, if the trust provides

that the other trust beneficiaries cannot

receive any amounts from the trust until

the death of the disabled or chronically ill

beneficiary notwithstanding whether that

beneficiary’s interest in the trust is terminated, then the termination provision will

not cause the trust to fail to be treated as

an applicable multi-beneficiary trust. In

this case, if the disabled or chronically ill

beneficiary’s interest is terminated pursuant to that trust provision after September

30 of the calendar year following the calendar year of the employee’s death, then

the trust is treated as having been modified

to add those other beneficiaries as of the

date the termination occurred.

E. Section 1.401(a)(9)-5 — Required

minimum distributions from defined

contribution plans

1. In General

Like the proposed regulations, these

final regulations retain the general method

in the 2002 final regulations by which a

required minimum distribution from a

defined contribution plan is calculated in

any calendar year when an employee dies

on or after the required beginning date or

when an employee’s eligible designated

beneficiary is taking annual life expectancy payments after an employee dies

before the required beginning date. Specifically, the required minimum distribution for a calendar year is determined by

dividing the employee’s account balance

as of the end of the prior calendar year by

the applicable denominator. In addition to

the requirement to take annual required

minimum distributions, the regulations

implement the amendments made by section 401 of the SECURE Act by requiring

that a full distribution of the employee’s

remaining interest be taken in certain circumstances.

2. Purchase of Annuity Contract with

Portion of Employee’s Individual

Account

The 2002 final regulations provided a

special bifurcation rule in the case of an

employee with an individual account who

used a portion of that account to purchase

an annuity contract. In that case, those regulations provided that payments from the

annuity contract were required to satisfy

the rules of §1.401(a)(9)-6 and payments

of the remaining account balance were

required to satisfy the rules of §1.401(a)

(9)-5. In addition, because the required

minimum distribution for a calendar year

is determined based on the account balance as of the end of the previous calendar

year, the 2002 final regulations provided

that, for the calendar year in which the

annuity contract is purchased, payments

made under the contract are treated as distributions from the individual account for

purposes of determining whether section

401(a)(9) has been satisfied with respect

to that account. The proposed regulations

generally retained these rules.

In accordance with section 204 of the

SECURE 2.0 Act, these regulations provide that a plan may allow the employee

to elect to have the amount required to

be distributed for a calendar year from

an individual account to be calculated as

the excess of the total required amount

(as defined in section 204(b)(1) of the

SECURE 2.0 Act) for that year over the

annuity amount (as defined in section

204(b)(2) of the SECURE 2.0 Act) for

that year. Accordingly, these final regulations provide an alternative to the bifurcation rule described in the preceding

paragraph. Under this rule, in lieu of satisfying section 401(a)(9) separately with

respect to the annuity contract and the

remaining account balance, a plan may

permit an employee to elect to satisfy sec-

The final regulations also reflect the change to section 401(a)(9)(H)(iv)(II) of the Code made by section 337 of the SECURE 2.0 Act. Under this change, the restriction on payments from a

type II applicable multi-beneficiary trust prior to the death of the disabled or chronically ill individual applies to any other beneficiary (rather than applying to any other individual).

10

Bulletin No. 2024–33

423

August 12, 2024

tion 401(a)(9) for the annuity contract and

that account balance in the aggregate by

adding the fair market value of the contract to the remaining account balance

and treating payments under the annuity

contract as distributions from the individual account. These regulations reserve

a paragraph for rules of operation with

respect to this alternative, including guidance related to the determination of the

fair market value of the annuity contract.

These rules are included in a notice of proposed rulemaking (REG-103529-23) in the

Proposed Rules section of this issue of the

Federal Register.

3. Distributions After the Employee’s

Death

a. Requirement to satisfy both section

401(a)(9)(B)(i) and (ii) in the case of

an employee who dies on or after the

required beginning date

Section 401(a)(9)(B)(i) provides rules

that apply if an employee dies after benefits have commenced. While the 5-year

rule under section 401(a)(9)(B)(ii) generally applies if an employee dies before

the employee’s required beginning date,

section 401(a)(9)(H)(i) provides that section 401(a)(9)(B)(ii) applies in certain

cases by substituting 10 years for 5 years

and applies whether or not the employee

dies before or after the employee’s

required beginning date. Accordingly, if

an employee dies after the required beginning date, distributions to the employee’s

beneficiary for calendar years after the

calendar year in which the employee died

must satisfy section 401(a)(9)(B)(i) as

well as section 401(a)(9)(B)(ii). In order

to satisfy both of these requirements, the

regulations provide for the same calculation of the annual required minimum

distribution that was adopted in the 2002

final regulations but with an additional

requirement that a full distribution of

the employee’s entire interest in the plan

be made upon the occurrence of certain

designated events (discussed in section

I.E.3.c of this Summary of Comments

and Explanation of Revisions).

Several commenters requested that the

final regulations eliminate the requirement

for continued annual distributions if an

employee dies on or after the employee’s

required beginning date. The commenters set

forth an interpretation of section 401(a)(9)

(H) under which, if an employee dies on or

after the employee’s required beginning date,

the 10‑year rule described in section 401(a)

(9)(B)(ii) (as modified by section 401(a)(9)

(H)(i)) applies in lieu of the “at least as rapidly” rule described in section 401(a)(9)(B)

(i). Commenters also asserted that requiring

continued annual distributions adds complexity to the regulations (in that the beneficiary would have to know whether the

employee died before or after the employee’s

required beginning date to apply this rule).

The final regulations do not eliminate

the requirement for continued annual distributions if an employee dies on or after the

employee’s required beginning date. The

Treasury Department and the IRS do not

think that the commenters’ interpretation is

consistent with a plain reading of the statute. Instead, the Treasury Department and

the IRS have determined that section 401(a)

(9)(B)(i) and (ii) both apply if an employee

dies after the employee’s required beginning date (unless the designated beneficiary

is an eligible designated beneficiary taking

life expectancy payments under section

401(a)(9)(B)(iii)). Read together, those

provisions generally require annual distributions to continue while also requiring full

distribution of the employee’s interest in

the plan by the end of the calendar year that

includes the tenth anniversary of the date of

the employee’s death.

The Treasury Department and the IRS

have also concluded that the overarching

policy of section 401(a)(9) and the amendments made by section 401 of the SECURE

Act support the interpretation in these regulations. Since it was first added to the Code,

section 401(a)(9) has always included the

concept of a required beginning date, under

which, once required minimum distributions began to either an employee or designated beneficiary, they were required to

continue until the employee’s entire interest under the plan was fully distributed,

and these regulations retain this require-

ment. There is little indication in section

401 of the SECURE Act to suggest that

Congress intended to allow distributions

of an employee’s account to temporarily

cease for up to 9 years once annual required

minimum distributions have begun. Moreover, the requirement to continue annual

distributions does not increase complexity

(in that this requirement merely retains the

rules that were in place before the addition

of section 401(a)(9)(H), but subject to the

full distribution requirement described in

section I.E.3.c of this Summary of Comments and Explanation of Revisions).

The proposed regulations provided a

similar requirement to continue annual

distributions for 10 years if an eligible designated beneficiary who was taking life

expectancy payments dies or if an eligible

designated beneficiary who is a minor child

of the employee and who was taking life

expectancy payments reaches the age of

majority. Commenters raised similar concerns regarding this requirement. For the

reasons described in the preceding paragraph, these regulations retain this requirement for continued annual distributions

for up to 10 years after: (1) the death of an

eligible designated beneficiary who was

taking life expectancy payments; or (2) the

attainment of the age of majority (in the

case of an eligible designated beneficiary

who was a minor child of the employee

taking life expectancy payments).

While the final regulations do not

eliminate the annual distribution requirement in cases in which annual life expectancy payments have begun, the Treasury

Department and the IRS issued Notice

2022-53, 2022‑45 IRB 437, Notice 202354, 2023-31 IRB 382, and Notice 202435, 2024-19 IRB 1051, in response to

comments requesting transition relief for

this requirement. Under those notices, if

a distribution would have been required

to be made to certain beneficiaries under

these regulations had they applied before

January 1, 2025, then: (1) a plan will not

fail to be qualified for failing to make that

distribution in 2021, 2022, 2023, or 2024;

and (2) the taxpayer who failed to take

the distribution will not be assessed an

excise tax for failing to do so.11 This relief

This relief does not require taxpayers to make up missed required minimum distributions nor does it permit taxpayers to extend the 10-year deadline by which a full distribution is required

to be made. For example, if an employee died in 2020, then in 2025, there are six years remaining in the 10-year period without regard to whether the designated beneficiary took distributions

in 2021, 2022, 2023, or 2024. In 2030, the designated beneficiary must take a distribution of the remaining account balance.

11

August 12, 2024

424

Bulletin No. 2024–33

applies with respect to a beneficiary who

is a designated beneficiary of an employee

who died in 2020, 2021, 2022, or 2023,

and after the employee’s required beginning date, provided that the beneficiary

was not an eligible designated beneficiary

who used the lifetime or life expectancy

payments exception under section 401(a)

(9)(B)(iii). Those notices also provided

comparable relief for the case in which an

eligible designated beneficiary who was

taking annual life expectancy payments

died in 2020, 2021, 2022, or 2023, and

that beneficiary’s successor beneficiary

failed to take a distribution in 2021, 2022,

2023, or 2024.

b. Determination of applicable

denominator

If an employee died on or after the

required beginning date (or the employee

died before the required beginning date

and the employee’s eligible designated

beneficiary is taking life expectancy distributions in accordance with section 401(a)

(9)(B)(iii) and these regulations), then for

calendar years after the calendar year in

which the employee died, the applicable

denominator generally is the remaining

life expectancy of the designated beneficiary.12 The beneficiary’s remaining life

expectancy generally is calculated using

the age of the beneficiary in the year following the calendar year of the employee’s

death, reduced by one for each subsequent

calendar year.

However, as an exception to these general rules, if the employee’s spouse is the

employee’s sole beneficiary, then the applicable denominator during the spouse’s

lifetime is the spouse’s life expectancy

(which reflects an annual recalculation in

accordance with section 401(a)(9)(D)).

The final regulations clarify that in this

case, for calendar years after the calendar

year in which the spouse died, in determining the required minimum distribution

to the spouse’s beneficiary, the applicable

denominator is the spouse’s life expectancy calculated using the spouse’s age

as of the spouse’s birthday in the calendar

year in which the spouse died, reduced by

one for each subsequent calendar year.

The final regulations reflect the amendments made to section 401(a)(9)(B)(iv) by

section 327 of the SECURE 2.0 Act under

which a surviving spouse who is the sole

beneficiary of the employee may elect to

be treated as the employee for certain purposes. However, the rules relating to this

election are reserved in these final regulations and included in a notice of proposed

rulemaking (REG-103529-23) in the Proposed Rules section of this issue of the

Federal Register.

c. Full distribution required in certain

circumstances

Under the proposed regulations, if an

employee’s interest is in a defined contribution plan to which section 401(a)(9)(H)

applies, in order to satisfy the 5-year rule

of section 401(a)(9)(B)(ii) (or, if applicable, the exception to that rule in section

401(a)(9)(B)(iii), taking into account section 401(a)(9)(E)(iii) and (H)), then the

employee’s entire interest in the plan must

be distributed by the earliest of the following dates:

(1) The end of the tenth calendar year

following the calendar year in which the

employee died if the employee’s designated beneficiary is not an eligible designated beneficiary;

(2) The end of the tenth calendar year

following the calendar year in which the

designated beneficiary died if the employee’s designated beneficiary was an eligible

designated beneficiary;

(3) The end of the tenth calendar year

following the calendar year in which the

beneficiary reaches the age of majority if

the employee’s designated beneficiary is

the child of the employee who had not yet

reached the age of majority as of the date

of the employee’s death; or

(4) The end of the calendar year in

which the applicable denominator would

have been less than or equal to one if

it were determined using the beneficiary’s remaining life expectancy, if the

employee’s designated beneficiary is

an eligible designated beneficiary, and

if the applicable denominator is determined using the employee’s remaining

life expectancy.

The final regulations generally retain

these full distribution requirements (with

minor language changes clarifying those

requirements). However, consistent with

requests made by commenters, the regulations remove the requirement for a full

distribution by the end of the calendar

year in which the applicable denominator would have been less than or equal

to one if it were determined using the

beneficiary’s remaining life expectancy

(which would have applied in the case of

a designated beneficiary who was older

than the employee). Accordingly, in the

case of an eligible designated beneficiary

who was born before the employee, if that

beneficiary is taking distributions over the

employee’s remaining life expectancy,

then a full distribution is not required until

the calendar year in which the applicable

denominator is less than or equal to one.

d. Multiple designated beneficiaries

The proposed regulations provided that

if the employee has more than one designated beneficiary then the applicable

denominator is determined using the life

expectancy of the oldest designated beneficiary. Under the proposed regulations,

whether a full distribution is required also

generally is determined using the oldest of

the designated beneficiaries.

The proposed regulations provided

certain exceptions to these general rules

for multiple designated beneficiaries.

Under one exception, if the employee’s

beneficiary is an applicable multi-beneficiary trust, then only the disabled and

chronically ill beneficiaries of the trust

are taken into account in determining the

oldest designated beneficiary. Under a

second exception, if any of the employee’s designated beneficiaries was a child

of the employee who had not yet reached

the age of majority as of the date of the

employee’s death, then, in applying the

requirement to make a full distribution

by the tenth year following the death of

the oldest eligible designated beneficiary,

only the employee’s children who are designated beneficiaries and who are under

the age of majority as of the employee’s

date of death were taken into account.

In the case of an employee who died on or after the employee’s required beginning date, the designated beneficiary may use the employee’s remaining life expectancy if it is longer than

the beneficiary’s remaining life expectancy.

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Thus, in a situation involving one or more

designated beneficiaries who are children

of the employee under the age of majority

as of the date of the employee’s death and

one or more older designated beneficiaries, the death of an older designated beneficiary would not result in a requirement

to pay a full distribution before the oldest

of those children attains the age of majority plus 10 years.13

One commenter raised the concern

that, if two of the employee’s children are

eligible designated beneficiaries, the rules

in the proposed regulations would result

in a requirement to pay the balance of the

employee’s account upon the attainment

of the age of majority plus 10 years by the

older of those children. To address this situation, the final regulations provide that,

in the case described in this paragraph, a

full distribution is not required until ten

years after the youngest of the employee’s

children who are designated beneficiaries

attains the age of majority (or, if earlier,

ten years after the last of those minor children dies).

4. Treatment of Designated Roth

Accounts

These final regulations provide that,

in accordance with section 325 of the

SECURE 2.0 Act, when determining the

account balance subject to section 401(a)

(9) of the Code for distribution calendar

years up to and including the calendar

year including the employee’s date of

death, amounts held by the employee in

a designated Roth account (as described

in section 402A(b)(2)) are not taken into

account. These regulations reserve a paragraph for rules regarding how distributions from a designated Roth account are

treated for purposes of section 401(a)(9)

that are included in a notice of proposed

rulemaking (REG-103529-23) in the Proposed Rules section of this issue of the

Federal Register.

5. Disregard of Certain Distributions

The proposed regulations updated

the list of amounts of distributions and

deemed distributions that are not taken

into account in determining whether the

required minimum distribution has been

made for a calendar year. Under the proposed regulations, that list was implemented by a cross-reference to a list of

amounts in proposed §1.402(c)-2(c)(3)

(relating to amounts that are not treated as

eligible rollover distributions). The effect

of the new cross-reference was to add the

following items to the list of amounts that

are disregarded for purposes of determining whether the required minimum distribution has been made from a defined

contribution plan: prohibited allocations

that are treated as deemed distributions

pursuant to section 409(p); distributions

of premiums for health and accident insurance under §1.402(a)-1(e)(1)(i); amounts

treated as distributed with respect to collectibles pursuant to section 408(m); and

distributions that are permissible withdrawals from an eligible automatic contribution arrangement within the meaning of

section 414(w).

These exclusions are reflected in the

final regulations with minor language

changes. However, consistent with

requests made by commenters, the final

regulations clarify that the disregard for

a distribution of premiums for health and

accident insurance does not include a distribution described in section 402(l) (that

is, certain distributions with respect to

eligible retired public safety officers from

governmental plans that are used to pay

qualified health insurance premiums).

The final regulations reserve a paragraph for the treatment of a corrective

distribution under section 4974(e) (that

is, a distribution of a prior year’s missed

required minimum distribution within the

statutory correction window that results

in a reduction in the excise tax rate for

the missed required minimum distribution) or §54.4974-1(g)(2) (relating to the

automatic waiver of the excise tax for a

missed required minimum distribution for

the year of an individual’s death). These

rules are included in a notice of proposed

rulemaking (REG-103529-23) in the Proposed Rules section of this issue of the

Federal Register.

F. Section 1.401(a)(9)-6 — Required

minimum distributions from defined

benefit plans and annuity contracts

Section 1.401(a)(9)-6 provides rules

for required minimum distributions from

defined benefit plans and from annuity

contracts (including annuity contracts

that are used to pay benefits under a

defined contribution plan). These rules

are based on the 2004 final regulations

and are updated to reflect the amendments

to section 401(a)(9) of the Code made by

various provisions of the SECURE 2.0

Act.

1. Rules Applicable to Defined Benefit

Plans

The proposed regulations, like the 2004

final regulations, reflected the exceptions

from the requirements of section 401(a)

(9)(C)(ii) and (iii) provided under section

401(a)(9)(C)(iv) for governmental plans

and church plans. Section 401(a)(9)(C)

(iv) specifies that for purposes of these

exceptions, a church plan is a plan maintained by a church for church employees,

and the term church means any church

as defined in section 3121(w)(3)(A) or

any qualified church-controlled organization as defined in section 3121(w)(3)

(B). The proposed regulations provided

that, for this purpose, the determination of whether an employee is a church

employee is made without regard to section 414(e)(3)(B).

One commenter requested that the

final regulations provide that the rules

under section 414(e)(3)(B) that treat certain individuals as employees of a church

apply generally for the purposes of determining whether a plan is maintained for

church employees under section 401(a)

(9)(C)(iv). The Treasury Department

and the IRS determined that such a rule

would yield an inappropriate result in the

case of a plan for employees of a tax-exempt organization that is associated with

a church unless the organization is a

qualified church-controlled organization.

However, it would be appropriate to treat

a plan for self-employed individuals who

This rule works in conjunction with the rule in §1.401(a)(9)-4(e)(2)(ii), which provides that if any of the employee’s designated beneficiaries is an eligible designated beneficiary because the

beneficiary is the child of the employee who had not reached the age of majority at the time of the employee’s death, then the employee is treated as having an eligible designated beneficiary

even if the employee has other designated beneficiaries who are not eligible designated beneficiaries. Thus, if the employee has both an eligible designated beneficiary who is a minor child

of the employee and an older designated beneficiary, annual distributions may continue until the minor child reaches the age of majority plus 10 years.

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are licensed ministers of a church as a plan

maintained by a church for employees of

a church. Accordingly, these regulations

provide that the determination of whether

an individual is an employee of a church

or qualified church-controlled organization is made in accordance with the rules

of section 414(e)(3)(B) other than section

414(e)(3)(B)(ii). Thus, a licensed minister who is self-employed but is treated

as an employee of a church under section

414(e)(3)(B)(i) is considered an employee

of a church for purposes of section 401(a)

(9)(C)(iv).

The commenter also requested that the

exception apply to a multiple employer

plan covering employees of a church

or a qualified church-controlled organization that also covers other employees. These regulations do not adopt that

rule. Instead, they provide that a plan

is excepted from the actuarial increase

requirement only if at least 85 percent

of the individuals covered by the plan

are employees of a church or a qualified

church-controlled organization. Thus, if

the employees in the plan who are not

employees of a church or a qualified

church-controlled organization constitute more than 15 percent of the covered

employees, then the plan is not treated

as a church plan that is exempted from

the requirement under section 401(a)(9)

(C)(iii) to provide an actuarial increase.

However, these regulations provide that

this actuarial increase requirement does

not apply to benefits accrued by an individual that are attributable to service

the individual performs as an employee

of a church or a qualified church-controlled organization (including service

performed as an employee described in

section 414(e)(3)(B)(i)).

Another commenter asked whether

the requirement to apply an actuarial

increase applies to benefits that are not

vested. These regulations provide that

the actuarial increase applies to benefits

that are accrued but treat benefits that are

not vested as accruing when they become

vested. Accordingly, benefits that are not

vested are not required to be actuarially

increased until they become vested.

2. Applicability of Section 401(a)(9)(H)

to Annuity Contracts

One commentor noted that the language in §1.401(a)(9)-5(a)(5) of the proposed regulations requiring that an annuity contract purchased under a defined

contribution plan satisfy the requirements

of §1.401(a)(9)-5(e) (implementing the

requirements of section 401(a)(9)(E)(iii),

(H)(ii) and (iii) that the employee’s entire

interest be distributed by the end of a

specified calendar year) was not clear (in

that the rule in §1.401(a)(9)-5(e) of the

proposed regulations referred to the situation in which an employee’s benefit is

in the form of an individual account). The

final regulations clarify that, if an annuity

contract is purchased under a defined contribution plan, or the annuity contract is

otherwise subject to section 401(a)(9)(H),

then payments under that annuity contract

are not permitted to extend past the calendar year described in §1.401(a)(9)-5(e).14

Several commenters observed that,

as of the annuity starting date, a participant may have elected to receive a joint

and survivor annuity benefit under an

annuity contract with the spouse as survivor annuitant, and that the participant

and spouse may divorce after the annuity

starting date. Commenters asserted that,

in such a case, there should be no change

in the terms of the annuity contract on

account of the divorce (as would have

been required under the proposed regulations if the former spouse were no longer

considered to be a spouse and were not an

alternate payee under a qualified domestic

relations order (QDRO) issued in accordance with section 414(p) specifying

that the former spouse is to be treated as

the surviving spouse for purposes of the

annuity contract). Consistent with these

comments, the final regulations provide

that, for a designated beneficiary who is

a contingent annuitant under an annuity

contract, the determination of whether that

beneficiary is an eligible designated beneficiary is made as of the annuity starting

date. Thus, if the employee elects a joint

and survivor annuity with the employee’s spouse as the contingent annuitant,

and they divorce after the annuity starting date, then the former spouse who is a

designated beneficiary and the contingent

annuitant under the contract is treated as

an eligible designated beneficiary without

regard to whether there is a QDRO. This

approach is consistent with the requirements of rules of sections 401(a)(11) and

417, and §1.401(a)-20, Q&A‑25(b)(3),

under which the spouse as of the annuity starting date continues to be entitled

to a qualified joint and survivor annuity

elected under the plan if the participant

and the spouse divorce after the annuity

starting date.

3. Increasing Payments

Similar to the 2004 final regulations,

the proposed regulations provided that all

payments under a defined benefit plan or

annuity contract must be nonincreasing,

subject to a number of exceptions. The

proposed regulations retained the exceptions in the 2004 final regulations and

added further exceptions under which

annuity payments under a defined benefit plan or annuity contract may increase.

Under the proposed regulations, the permitted increases in annuity payments

were different for defined benefit plans

and annuity contracts issued by insurance

carriers. In the case of an annuity contract,

certain of the exceptions to the nonincreasing rule in the proposed regulations

applied only if the total future expected

payments under the contract exceed the

total value being annuitized (that is, the

value of the employee’s entire interest

being annuitized).

One commenter requested that each of

the annuity payment increases permitted

under a defined benefit plan (such as a

fixed percentage increase in annuity payments that is less than 5 percent) be permitted for annuity contracts without regard to

the condition that the total future expected

payments exceed the total value being

annuitized. Consistent with this comment,

and in accordance with section 401(a)(9)

(J)(i) (as added to the Code by section 201

of the SECURE 2.0 Act), these regulations provide that the permitted increases

One commenter asked for clarification of whether section 401(a)(9)(H) applies in the case of an annuity provided under a defined benefit plan that is attributable to a direct rollover from a

defined contribution plan (as described in Rev. Rul. 2012-4, 2012-8 IRB 386). In that case, because the annuity is provided under a defined benefit plan, it is not subject to section 401(a)(9)(H).

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in annuity payments under a defined benefit plan generally are also available under

an annuity contract and eliminate the

condition on increases under an annuity

contract that the total future expected payments under the contract exceed the total

value being annuitized. Thus, the permitted increases in annuity payments under

an annuity contract are expanded under

the regulations to include increases by a

constant percentage, applied not less frequently than annually, at a rate that is less

than 5 percent per year. However, consistent with the simplification of the permitted annuity increases under section 401(a)

(9)(J), an increase of 5 percent or more per

year is not permitted for an annuity contract under the final regulations, even if

the annuity payments could have met the

condition for that increase under the 2004

regulations.

These regulations also include modifications to the permitted increases for

annuity contracts to reflect the addition

of section 401(a)(9)(J)(ii) through (iv) to

the Code. Thus, the following increases

in annuity payments are permitted: (1)

an increase as a result of the shortening

of the payment period with respect to

the annuity or a full or partial commutation of the future annuity payments,

provided that the amount of the payment

pursuant to the commutation is determined using reasonable actuarial methods and assumptions, as determined in

good faith by the issuer of the contract;15

(2) a payment of an amount that is in the

nature of a dividend, provided that the

issuer of the contract uses reasonable

actuarial methods and assumptions, as

determined in good faith, when calculating the initial annuity payments, the

issuer’s experience with respect to those

factors, and the amount of the dividend

or similar payment; and (3) a final payment upon death that does not exceed

the amount by which the total consideration paid for the contract exceeds the

aggregate amount of prior distributions

under the contract.

In addition, these regulations provide

rules that apply if the annuity contract

purchased under a defined benefit plan

is merely providing the same benefits

that would have been payable under the

defined benefit plan if an annuity contract

had not been purchased.16 In that case, the

annuity contract is permitted to have the

same increases in annuity payments as

under the qualified defined benefit rules.

This could occur, for example, if an annuity contract is purchased under a terminating defined benefit plan.

One commenter requested additional

guidance as to whether section 401(a)(9)

prohibits a plan from offering a period

of time during which a participant or

beneficiary may elect to receive a lump

sum payment instead of future annuity payments. These regulations do not

address this issue. As described in Notice

2019-18, 2019-13 IRB 915, the Treasury

Department and the IRS will continue to

study the issue of retiree lump sum windows. This study will take into account the

enactment of section 342 of the SECURE

2.0 Act.

4. Qualifying Longevity Annuity

Contracts

In 2014, the Treasury Department and

the IRS amended the regulations under

section 401(a)(9) to provide special rules

that apply if a deferred annuity that commences annuity payments at an advanced

age is purchased with a portion of the

employee’s interest under a defined contribution plan. See 79 FR 37633. Under

those rules, if the annuity contract satisfies

certain requirements, then the contract is

a QLAC and the value of that QLAC is

excluded from the account balance under

the plan. Those requirements include that:

(1) distributions commence not later than

age 85; (2) the premiums paid with respect

to all contracts intended to be QLACs not

exceed an inflation-adjusted $125,000

(dollar limitation) or 25 percent of the

employee’s account balance (percentage

limitation); and (3) the contract not make

available any commutation benefit, cash

surrender value, or other similar feature.

The proposed regulations retained

these premium limitations for QLAC

status. However, in accordance with section 202(a)(1) and (2) of the SECURE

2.0 Act, the final regulations eliminate

the percentage limitation and increase

the initial amount of the inflation-adjusted dollar limitation from $125,000 to

$200,000. These higher limits apply to

an annuity contract that was purchased

before December 29, 2022, and that satisfied the requirements to be a QLAC as

of that date. Thus, the contract need not be

exchanged for another annuity contract on

or after that date in order for the employee

to take advantage of the higher premium

limits under section 202(a)(1) and (2) of

the SECURE 2.0 Act.

The proposed regulations included an

exception to the requirement that the contract not include any commutation benefit,

cash surrender value, or similar feature

by permitting such a feature before the

required beginning date. This change was

proposed so that if a plan’s investment

options include a series of target date

funds to which the relief under Notice

2014-66, 2014-46 IRB 820, applies,17

those target date funds could include

QLACs among their assets. Commenters

observed that some State laws prohibit the

purchase of an annuity contract that does

not provide for a right to rescind the contract within a specified short period of time

and requested that such a rescission right

be accommodated for a QLAC. Consistent with this comment and as instructed

by section 202(a)(4) of the SECURE 2.0

Act, the final regulations add an exception

under which the contract may provide a

right to rescind the contract within a period

not exceeding 90 days after purchase.

One commenter asked how an issuer

of a QLAC should report that a taxpayer

utilized the option to commute a contract

before the required beginning date. The

final regulations do not modify the report-

This commutation may be needed to comply with the requirement that, if the employee’s designated beneficiary is not an eligible designated beneficiary, then payments under the annuity

contract may not extend beyond the calendar year that includes the tenth anniversary of the date of the employee’s death.

16

The final regulations also make a change to §1.401(a)(9)-6(d) to broaden the applicability of the annuity rules by removing the requirement that an annuity be purchased with the employee’s

benefit under the plan.

17

Notice 2014-66 provides relief under section 401(a)(4) of the Code to enable plans to provide lifetime income by offering, as investment options, a series of target date funds that include

deferred annuities among their assets, even if some of the target date funds within the series are available only to older participants.

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ing required under §1.6047-2 and do not

provide for a reversal of any premiums

previously paid for a contract that is commuted prior to the required beginning date

or rescinded within a short period after

purchase. This is because the purpose of

these exceptions is to accommodate the

possibility that the contract will permit

the commutation or recission and not to

accommodate an employee who chooses

to commute or rescind the contract and

later decides to purchase another QLAC.

The proposed regulations provided

that, for purposes of applying the limitation on premiums used to purchase

a QLAC, if another insurance contract

is exchanged for a QLAC then the fair

market value of the exchanged contract

will be treated as a premium paid for the

QLAC. One commenter suggested that if

an insurance contract is surrendered for its

cash surrender value, the surrender extinguishes all benefits and other characteristics of the contract, and the cash is used

to purchase a QLAC, then only the cash

from the surrendered contract should be

treated as a premium paid for the QLAC.

These regulations include that modification to the rule.

One commenter asked for continued

treatment of a former spouse as a spouse

if the participant and spouse divorce after

the QLAC is purchased but before the

annuity starting date in the absence of a

QDRO providing for this treatment. Consistent with this comment and as instructed

in section 202(a)(3) of the SECURE 2.0

Act, these final regulations provide that

the payment of survivor benefits to the

employee’s former spouse under an annuity contract will not cause the contract

to fail to satisfy the requirements to be

treated as a QLAC merely because the

divorce between the employee and that

former spouse occurred after the contract

is purchased, provided that a QDRO satisfying certain requirements has been issued

in connection with the divorce.

Specifically, the QDRO must: (1) provide that the former spouse is entitled to

the survivor benefits under the contract;

(2) provide that the former spouse is

treated as a surviving spouse for purposes

of the contract; (3) not modify the treatment of the former spouse as the beneficiary under the contract who is entitled to

the survivor benefits; or (4) not modify the

treatment of the former spouse as the measuring life for the survivor benefits under

the contract.18

Section 202(a)(3) of the SECURE 2.0

Act provides for a comparable rule in the

case of a plan not subject to the QDRO

rules of section 414(p) of the Code or section 206(d) of the Employee Retirement

Income Security Act of 1974, Pub. L.

93-406, 88 Stat. 829, as amended (ERISA).

These regulations reserve a paragraph for

this comparable rule, which is included in

a notice of proposed rulemaking (REG103529-23) in the Proposed Rules section

of this issue of the Federal Register.

G. Section 1.401(a)(9)-7 — Rollovers and

transfers

As was the case for the proposed regulations, §1.401(a)(9)-7 retains the rollover

and transfer rules that are in the 2002 final

regulations.

H. Section 1.401(a)(9)-8 — Special rules

Section 1.401(a)(9)-8 provides special

rules applicable to satisfying the minimum distribution requirement.

The proposed regulations retained the

rules from the 2002 final regulations under

which section 401(a)(9) may be applied

separately with respect to the separate

interests of each of the employee’s beneficiaries under a plan. The final regulations

clarify that the separate application of

section 401(a)(9) only applies for calendar years after the death of the employee

(and thus, does not apply for the calendar

year of the employee’s death) and adds

expenses to the list of items that must be

allocated in a reasonable and consistent

manner among the separate accounts.

The final regulations also restore flexibility from §1.401(a)(9)-5 in the 2002

final regulations relating to the required

minimum distribution for the calendar

year of the employee’s death by providing

that a required minimum distribution must

be paid to “any beneficiary” in the year

of death rather than to “the beneficiary.”

Thus, for example, if an employee who is

required to take a distribution in a calendar

year dies before taking that distribution

and has named more than one designated

beneficiary, then any of those beneficiaries

can satisfy the employee’s requirement to

take a distribution in that calendar year (as

opposed to each of the beneficiaries being

required to take a proportional share of the

unpaid amount).

The proposed regulations generally

retained the separate account rules applicable to beneficiaries after the death of

the employee that were adopted in the

2002 final regulations, including the rule

that prohibits separate application of section 401(a)(9) to separate interests in a

trust. However, in light of the enactment

of special rules that apply to an applicable multi-beneficiary trust described in

section 401(a)(9)(H)(iv)(I) (a trust with

at least one disabled or chronically ill

beneficiary that provides that it is to be

immediately divided upon the death of

the employee into separate trusts for each

beneficiary), the proposed regulations

provided an exception to that prohibition

that would permit separate application of

section 401(a)(9) to those separate trusts.

Consistent with requests made by commenters, the final regulations expand the

exception in the proposed regulations

to permit separate application of section 401(a)(9) to the separate interests

of beneficiaries of a see-through trust if

certain requirements are met. This exception applies to the separate interests of

beneficiaries of a see-through trust if the

terms of that trust provide that it is to be

divided immediately upon the death of the

employee into separate shares for one or

more trust beneficiaries (without regard to

whether any of the beneficiaries are disabled or chronically ill).

For this purpose, the final regulations

provide that a trust is divided immediately

upon the death of the employee into separate shares for one or more trust beneficiaries only if the trust is terminated, the

separate interests of the trust beneficiaries

are held in separate trusts, and there is no

The Treasury Department and the IRS remind taxpayers that in the case of a QDRO that does not provide that either the former spouse is entitled to the survivor benefits under the contract

or that the former spouse is treated as a surviving spouse for purposes of the contract, there is a risk that the spousal rights rules of sections 401(a)(11) and 417 will be violated if the employee

remarries.

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discretion as to the extent to which the

separate trusts will be entitled to receive

post-death distributions attributable to the

employee’s interest in the plan. In addition,

the final regulations clarify that a trust does

not fail to be divided immediately upon

the death of the employee merely because

there are administrative delays between

the date of the employee’s death and the

date on which the trust actually is divided

and terminated provided that any amounts

received by the trust during this period are

allocated as if the trust had been divided on

the date of the employee’s death.

II. Section 402(c) Regulations

The proposed regulations provided

updates to existing rules of §1.402(c)-2

that reflect certain statutory amendments

made to section 402(c) since the regulations were issued in 1995. Those amendments are described in the Background

section of this preamble under the heading

Section 402(c) — Rollovers.

A. Special Rule for Certain Distributions

to Surviving Spouses

The proposed regulations provided a

new rule to limit the ability of a surviving

spouse to use the 5-year rule or the 10-year

rule to defer distributions beyond the calendar year that annual distributions would

have been required to commence and then,

after that calendar year, commence annual

distributions. This rule, which applied in

limited circumstances, would have been

used to determine, with respect to a distribution to the employee’s surviving spouse

to whom the 5-year rule or 10-year rule

applies, the portion of that distribution

that is treated as a required minimum distribution under section 401(a)(9) (and thus

is not an eligible rollover distribution).

This special rule, which treated a portion

of a distribution made before the last year

of the 5-year or 10-year period (whichever

applies to the spouse) as a required minimum distribution, applied if: (1) the distribution was made in or after the calendar

year the surviving spouse attains age 72;

and (2) the surviving spouse rolled over

some or all of the distribution to an eligible retirement plan under which the surviving spouse is not treated as the beneficiary of the employee.

Under this special rule, the portion of

the distribution that is treated as a required

minimum distribution was the cumulative

total, over a span of years, of the hypothetical required minimum distribution

for each year had the life expectancy rule

applied (or, in the case of a defined benefit plan, had the annuity payment rule

applied), reduced by any amounts actually

distributed to the surviving spouse during

that span of years. The span of years began

with the first applicable year (defined as

the later of the calendar year in which

the surviving spouse reaches age 72 and

the calendar year in which the employee

would have reached age 72) and ended in

the year of distribution.

In calculating the hypothetical required

minimum distributions from a defined

contribution plan for a calendar year under

this special rule (the determination year),

the proposed regulations provided that an

adjusted account balance would be used.

The adjusted account balance for a calendar year was determined by reducing the

account balance that normally would be

used to determine the required minimum

distribution for that determination year by

the excess (if any) of: (1) the sum of the

hypothetical required minimum distributions beginning with the first applicable

year and ending with the calendar year

preceding the calendar year of the determination, over (2) the distributions actually made to the surviving spouse during

those calendar years.

Several commenters requested that the

final regulations eliminate the special rule

for distributions to surviving spouses. In

support of that request, commenters point

to the absence of a similar rule in the statute (both pre- and post-SECURE Act).

Commenters also argued that in the case

of an individual with no financial advisor,

determining the amount of the hypothetical required minimum distribution that is

ineligible for rollover would be difficult

because it requires complex calculations

based on amounts actually distributed in

prior years and reduced account balances

for each year past what would have been

the spouse’s required beginning date that

are based on the current account balance. Other commenters argued that plan

administrators would not have the knowledge of whether a beneficiary was rolling

over a distribution to their own IRA or to

a beneficiary IRA and accordingly, what

portion of that distribution is an eligible

rollover distribution. As a result, the plan

administrator would not know the proper

withholding amount for the distribution.

The final regulations do not eliminate

this special rule. The Treasury Department

and the IRS concluded that this rule will

prevent a spouse who will be taking annual

distributions from effectively delaying the

commencement of those distributions for

a number of years beyond the spouse’s

required beginning date (or, if later, the

year in which the employee would have

reached the applicable age). The regulations accomplish this result by requiring

the spouse to catch up on distributions that

would have been made had the spouse been

taking annual life expectancy payments

starting in the year the spouse reached

the applicable age (or, if later, the year in

which the employee would have reached

the applicable age). While there was no

similar rule in effect prior to the enactment

of section 401(a)(9)(H), the potential number of years that the commencement of life

expectancy distributions may be delayed is

much higher as a result of the expansion of

the 5-year rule into a 10-year rule.

Although this special rule is not eliminated, to reflect that it is intended only to

prevent the lengthened delay in commencement that resulted from the expansion of

the 5-year rule into a 10-year rule, the final

regulations provide that this rule does not

apply in the case of a surviving spouse who

is subject to the 5-year rule. Accordingly,

this rule will apply only in the case of surviving spouse who is the beneficiary of an

employee in a defined contribution plan. In

addition, the final regulations provide that

the hypothetical required minimum distribution is calculated assuming that the election described in §1.401(a)(9)-5(g)(3)(i) is

in effect for that spouse.19

Commenters requested an expansion of the numerical example of the application of the rules for determining the amount of a surviving spouse’s distribution that is a required minimum distribution and therefore cannot be rolled over that were included in proposed §1.402(c)-2(j)(3)(iii) Because of the change to the calculation of the hypothetical required minimum distributions

to assume that §1.401(a)(9)-5(g)(3)(i) is in effect for the surviving spouse, a paragraph is reserved for the example in these regulations, and the numerical example is included in a notice of

proposed rulemaking (REG-103529-23) in the Proposed Rules section of this issue of the Federal Register.

19

August 12, 2024

430

Bulletin No. 2024–33

The final regulations also provide that

plan administrators may make reasonable assumptions related to distributions

to the surviving spouse. Specifically, a

plan administrator may assume that a surviving spouse to whom this special rule

applies will roll over only the portion of

the distribution that is eligible for rollover (in accordance with this rule) to an

eligible retirement plan under which that

spouse is not treated as the beneficiary of

the employee. Thus, a plan administrator

may treat that portion of the distribution

as an eligible rollover distribution for purposes of sections 401(a)(31) and 3405(c).

However, pursuant to §1.402(c)-2(k)(2), a

surviving spouse may roll over the entire

distribution to an individual retirement

plan under which that spouse is treated as

the beneficiary of the employee.

provide that the distribution described in

the preceding sentence is generally still

subject to 20-percent withholding under

section 3405(c) (which sets forth the withholding requirements for eligible rollover

distributions as defined in section 402(f)

(2)(A)). In this case, 20-percent withholding is required because section 402(f)(2)

(A) specifies that the term “eligible rollover distribution” has the same meaning

as in section 402(c)(4) but also includes

a distribution to a non-spouse designated

beneficiary that would be treated as an eligible rollover distribution if the requirements of section 402(c)(11) were satisfied. Under this definition, the amount that

would be an eligible rollover distribution

if the requirements of section 402(c)(11)

were satisfied excludes amounts treated as

a required minimum distribution.

mining required minimum distributions

for calendar years beginning on or after

January 1, 2025.

In the preamble to the proposed regulations, the Treasury Department and

the IRS requested comments on possible

changes to the required minimum distribution rules for section 403(b) plans, so

that they would more closely follow the

required minimum distribution rules for

qualified plans (as opposed to IRAs).

Commenters made various suggestions in

response to this request and requested that

any of those changes not be implemented

in these final regulations. The Treasury

Department and IRS are considering these

comments, and any further changes relating to the required minimum distribution

rules for section 403(b) plans will be set

forth in separate guidance.

B. Distributions to non-spousal

beneficiaries

III. Section 403(b) Regulations

IV. Section 1.408-8 — Distribution

Requirements for IRAs

Like the proposed regulations, these

regulations provide that a designated beneficiary who is not a spouse may elect,

under section 402(c)(11), to have any

portion of a distribution that fits within

the definition of an eligible rollover distribution transferred via a direct trustee-totrustee transfer to an IRA established for

the purpose of receiving that distribution.

If that transfer is made pursuant to section 402(c)(11), the distribution is treated

as an eligible rollover distribution; the

IRA is treated as an inherited account or

annuity (as defined in section 408(d)(3)

(C), so that distributions from the inherited IRA are not eligible to be rolled over);

and the IRA is subject to section 401(a)

(9)(B) (other than section 401(a)(9)(B)

(iv)). Consistent with a request from a

commenter, these regulations clarify that a

see-through trust may be treated as a designated beneficiary for purposes of section

402(c)(11)(A).

If the distribution is made directly to

a beneficiary who is not the surviving

spouse of the employee (instead of a direct

trustee-to-trustee transfer to an inherited

IRA), then these regulations provide that

the distribution is not an eligible rollover

distribution for purposes of section 402(c)

(4) (that is, it cannot be rolled over). However, in response to comments requesting clarity on the issue, these regulations

Bulletin No. 2024–33

The final regulations regarding section

403(b) plans are the same as proposed,

except for a few changes. The final regulations clarify that the rule under which

the minimum distribution requirements

of section 401(a)(9) are applied to section

403(b) contracts in accordance with the

provisions in §1.408-8 refers to the provisions in §1.408-8 that apply to an IRA that

is not a Roth IRA. With respect to a designated Roth account in a section 403(b)

contract, the final regulations reflect the

provisions of section 325 of the SECURE

2.0 Act under which no required minimum distributions are due from a designated Roth account during the lifetime of

the employee. Under the final regulations,

the rules of §1.401(a)(9)-3(a)(2) (which

provides that if an employee’s entire

interest under a defined contribution plan

is in a designated Roth account, then the

employee is treated as having died before

the required beginning date), §1.401(a)

(9)-5(b)(3) (which excludes amounts

held in a designated Roth account from

the employee’s account balance during

the employee’s lifetime), and §1.401(a)

(9)-5(g)(2)(iii) (treatment of distributions

from designated Roth accounts, which

is reserved in these regulations) apply,

rather than the rules of §1.408-8(b)(1)(ii)

that apply to a Roth IRA. Lastly, the final

regulations provide that the changes to

§1.403(b)-6 apply for purposes of deter-

431

These regulations amend §1.408-8

(which sets forth the required minimum

distribution rules for IRAs) to implement

the changes made to section 401(a)(9)

under the SECURE Act and the SECURE

2.0 Act. Generally, the minimum distribution required from an individual retirement

account is determined in accordance with

the rules of §1.401(a)(9)‑5 and the minimum distribution required from an individual retirement annuity is determined

in accordance with the rules of §1.401(a)

(9)‑6 (including §1.401(a)(9)‑6(d)(2)).

Like the proposed regulations, these

final regulations retain the rules from the

2002 regulations under which the required

minimum distribution from one IRA is

permitted to be distributed from another

IRA in order to satisfy section 401(a)(9),

subject to the certain restrictions involving

inherited IRAs and Roth IRAs. To implement the statutory instruction under section 204(c) of the SECURE 2.0 Act, these

final regulations provide that, subject to

the same limitations that apply to aggregation of IRAs generally, an individual who

holds an IRA that is an annuity contract

described in section 408(b) may elect to

aggregate that IRA with one or more IRAs

with account balances that the individual

holds and apply the optional aggregation

rule of §1.401(a)(9)-5(a)(5)(iv) (described

in section I.E.2 of this Summary of Com-

August 12, 2024

ments and Explanation of Revisions)

with respect to the annuity contract and

the account balances under those IRAs as

if the account balances were the remaining

account balances following the purchase

of the annuity contract with a portion of

those account balances.

In addition, whether a designated

beneficiary of an IRA owner is an eligible designated beneficiary and whether

the beneficiaries of a trust are treated as

beneficiaries of the IRA owner is generally determined in accordance with

§1.401(a)(9)‑4. Consistent with requests

made by commenters, these regulations

provide that, in determining whether

an IRA owner’s designated beneficiary

is disabled or chronically ill within the

meaning of §§1.401(a)(9)‑4(e)(4) and (5),

respectively, or whether the beneficiaries

of a trust are treated as beneficiaries of

the IRA owner, the required documentation described in §1.401(a)(9)-4(e)(7), or

§1.401(a)(9)-4(h), respectively, need not

be provided to the IRA custodian, issuer,

or trustee.

The proposed regulations generally

incorporated the rules in Notice 20077, Q&As-17 and 19 (relating to the carryover of the method of determining

required minimum distributions from a

plan to a receiving IRA when a beneficiary is making a transfer described in

section 402(c)(11)) and extended those

rules to provide comparable treatment to

a surviving spouse. These rules relating

to the distribution method of the receiving IRA did not apply to a surviving

spouse when that spouse is rolling over a

distribution to the spouse’s own account

in a qualified plan or to the spouse’s own

IRA (because distributions would then be

made in accordance with section 401(a)

(9)(A) instead of section 401(a)(9)(B)).

In that case, the proposed regulations

provided that the amount of the distribution treated as a required minimum

distribution, and thus not eligible to be

rolled over, is determined in accordance

with §1.402(c)-2(j) (including the rule

under which in certain circumstances

a spouse who elects the 10-year rule is

required to treat a portion of any distribution as a required minimum distribution

as described in section II.A of this Summary of Comments and Explanation of

Revisions).

August 12, 2024

To coordinate with the rules in

§1.402(c)-2(j), the proposed regulations

added a deadline for the election under

which a surviving spouse may elect to

treat a decedent’s IRA as the spouse’s

own. Specifically, a surviving spouse

must make that election by the later of (1)

the end of the calendar year in which the

surviving spouse reaches age 72, and (2)

the end of the calendar year following the

calendar year of the IRA owner’s death.

Under the proposed regulations, if the

surviving spouse were to miss that deadline, the surviving spouse still would be

permitted to roll over distributions to the

spouse’s own IRA but would be subject to

the special rule on the catch-up of hypothetical required minimum distributions

described in section II of this Summary

of Comments and Explanation of Revisions.

Consistent with requests made by commenters, the final regulations eliminate

the deadline described in the preceding

paragraph. Instead, these regulations provide a timing rule that applies on a yearly

basis and only if the special rule on the

catch-up of hypothetical required minimum distributions would apply to the IRA

owner’s surviving spouse had a distribution been made directly to the surviving

spouse in the calendar year. In addition,

these regulations provide that, even if

the timing rule otherwise applies, a surviving spouse may still make an election

to treat an IRA as the surviving spouse’s

own IRA, but only if that election does not

apply to amounts in the IRA that would

be treated as required minimum distributions pursuant to §1.402(c)-2(j)(4)(ii) had

they been distributed in that calendar year.

Thus, the election can be made only in a

calendar year after the amounts treated

as required minimum distributions under

§1.402(c)-2(j)(4)(ii) for that calendar year

have been distributed from the IRA.

These regulations also clarify the rules

for the beneficiaries of an owner of multiple IRAs that are aggregated for purposes

of satisfying the required minimum distribution rules. The new rules apply in the

case of an IRA owner who dies before

taking the total required minimum distribution in a calendar year (that is, there is

a shortfall) if the beneficiary designations

with respect to all of those IRAs are not

identical. In that case, each of the owner’s

432

IRAs is subject to a requirement to distribute a proportionate share of the shortfall to

a beneficiary of that IRA. This allocation

of the proportionate share of the shortfall to a particular IRA is made without

regard to whether some of the required

minimum distribution for the calendar

year was already made to the IRA owner

from that IRA. Similar rules apply in the

case of a beneficiary of multiple IRAs that

are aggregated for purposes of satisfying

the required minimum distribution rules

if a required minimum distribution is due

for the calendar year of the beneficiary’s

death to the extent that the amount was not

distributed to the beneficiary.

The proposed regulations provided

that amounts that are treated as distributed pursuant to section 408(e) (relating

to the loss of tax exemption when an IRA

owner engages in a prohibited transaction

or borrows any money under an individual retirement annuity, and the deemed

distribution of amounts when an individual uses a portion of an individual retirement account as security for a loan) or

amounts that are deemed to be distributed

with respect to collectibles pursuant to

section 408(m) may not be used to satisfy

the required minimum distribution for a

calendar year. Several commenters argued

that final regulations should not exclude

amounts treated as distributed under those

sections for purposes of determining

whether section 401(a)(9) has been satisfied. The commenters asserted that in this

case, the IRA account balance could be

zero and without any assets from which to

take a required minimum distribution, the

IRA owner would be required to pay an

excise tax.

The final regulations retain the rules

from the proposed regulations with minor

changes. However, the Treasury Department and the IRS remind taxpayers that,

pursuant to §1.401(a)(9)‑5(a)(1), the

required minimum distribution amount

will never exceed the entire account

balance on the date of the distribution.

Accordingly, because section 408(e)

(2)(B) and (3) reduces an IRA owner’s

account balance to zero as of the first day

of the taxable year, the required minimum

distribution for that calendar year would

also be zero. By contrast, section 408(e)

(4) and (m) does not reduce an IRA owner’s account balance by the deemed distri-

Bulletin No. 2024–33

bution and accordingly, the amount of the

required minimum distribution for a calendar year is not affected by the deemed

distribution. In that case, allowing the

deemed distribution that results from the

use of the IRA to secure a loan or to purchase a collectible to be used to satisfy the

requirement to take a minimum distribution would reduce the deterrent effect of

the statutorily specified tax consequence

of those actions.

The proposed regulations provided

that the limitation on premiums paid for

a QLAC purchased under an IRA is the

lesser of a dollar limitation and a percentage limitation. The percentage limitation

in the proposed regulations was 25-percent

of the total of all IRA account balances

that an individual holds as the IRA owner

(other than Roth IRAs) as of December

31 of the calendar year preceding the date

the premium payment is made. Several

commenters requested changes that would

address the issue of the percentage limitation in the case of a taxpayer who has no

IRAs other than a newly established IRA

that received a rollover from a qualified

plan (because, in such a case, the IRA did

not have an account balance as of December 31 of the prior calendar year and thus,

the taxpayer would not be permitted to

purchase a QLAC with the assets of the

IRA until the year after the year of the rollover). However, section 202(a)(1) of the

SECURE 2.0 Act eliminated the percentage limitation. Accordingly, these final

regulations provide that the limitation on

premiums is the dollar limitation provided

for in section 202(a)(2) of the SECURE

2.0 Act ($200,000, adjusted for inflation).

V. Section 1.457-6(d) — Minimum

Required Distributions for Eligible Plans

Several comments were received asking whether the rules of section 401(a)(9)

(H) apply to an eligible deferred compensation plan of a tax-exempt entity. Section

401(a)(9)(H)(vi) provides that all eligible

retirement plans (as defined in section

402(c)(8)(B) (other than certain defined

benefit plans)) are treated as defined contribution plans for purposes of applying

the rules of section 401(a)(9)(H). This

provision does not provide an exhaustive

list of the plans that are treated as defined

contribution plans for purposes of apply-

Bulletin No. 2024–33

ing the rules of section 401(a)(9)(H).

Accordingly, the final regulations clarify

that, if an eligible deferred compensation

plan is subject to the rules of §1.401(a)

(9)‑5, then the plan must also satisfy the

rules of section 401(a)(9)(H) (without

regard to whether the plan is maintained

by a tax-exempt entity).

VI. Section 54.4974-1 — Excise Tax on

Accumulations in Qualified Retirement

Plans

The proposed regulations provided for

an automatic waiver of the excise tax that

applies in the case of an individual who

had a minimum distribution requirement

in a calendar year and died in that calendar year before satisfying that minimum

distribution requirement. In this situation,

a beneficiary of the individual must satisfy

the minimum distribution requirement by

the end of that calendar year. However, if

that beneficiary fails to satisfy the minimum distribution requirement in that calendar year, then the proposed regulations

provided that the excise tax for that failure is automatically waived provided that

the beneficiary takes the missed required

minimum distribution no later than the

tax filing deadline (including extensions

thereof) for the taxable year of that beneficiary that begins with or within that calendar year. Consistent with requests made by

commenters, the final regulations extend

the deadline for the beneficiary to take

the missed required minimum distribution

and be eligible for the automatic waiver.

The new deadline is the later of the tax

filing deadline for the taxable year of the

beneficiary that begins with or within the

calendar year in which the individual died

and the end of the following calendar year.

These regulations also reflect the

amendments made to section 4974 by

section 302(a) of the SECURE 2.0 Act

effective for taxable years beginning after

December 29, 2022. In accordance with

section 302(a) of the SECURE 2.0 Act,

these regulations provide that the tax

imposed by section 4974(a) of the Code

generally is equal to 25 percent of the

amount by which the required minimum

distribution exceeds the actual amount

distributed during the calendar year. In

addition, these regulations reflect section

4974(e) (which was added to the Code by

433

section 302(b) of the SECURE 2.0 Act)

and provide that the excise tax is reduced

to 10 percent in the case of a taxpayer who,

by the last day of the correction window,

receives a corrective distribution from

the qualified retirement plan or eligible

deferred compensation plan of the amount

by which the required minimum distribution exceeds the actual amount distributed

during the calendar year from that plan

and submits a return reflecting the excise

tax. For purposes of these regulations,

the correction window ends on the earliest of: (1) the date a notice of deficiency

under section 6212 with respect to the tax

imposed by section 4974(a) is mailed; (2)

the date on which the tax imposed by section 4974(a) is assessed; or (3) the last day

of the second taxable year that begins after

the end of the taxable year in which the tax

under section 4974(a) is imposed.

In addition, these final regulations provide that if the minimum distribution was

required to be paid from a particular qualified retirement plan or eligible deferred

compensation plan, then the corrective

distribution must be made from that particular qualified retirement plan or eligible

deferred compensation plan. However, if

the requirement to take a minimum distribution could have been satisfied by a payment from any one of a number of qualified retirement plans (such as an individual

retirement account under section 408(a) or

a section 403(b) plan), then the corrective

distribution may be made from any one of

those qualified retirement plans.

Applicability Dates

Amended §§1.401(a)(9)-1 through

1.401(a)(9)-9, 1.403(b)-6(e), and 1.408-8

apply for purposes of determining

required minimum distributions for calendar years beginning on or after January

1, 2025. Amended §1.402(c)-2 applies for

distributions made on or after January 1,

2025. Amended §54.4974-1 applies for

taxable years beginning on or after January 1, 2025. For earlier years, taxpayers

must apply the preexisting final regulations, but taking into account a reasonable,

good faith interpretation of the amendments made by sections 114 and 401 of

the SECURE Act. Compliance with the

proposed regulations will satisfy that

requirement. For the 2023 and 2024 distri-

August 12, 2024

bution calendar years, taxpayers must also

take into account a reasonable, good faith

interpretation of the amendments made by

sections 107, 201, 202, 204, and 337 of

the SECURE 2.0 Act.

Special Analyses

I. Regulatory Planning and Review

Pursuant to the Memorandum of

Agreement, Review of Treasury Regulations under Executive Order 12866 (June

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

II. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501–3520) generally requires

that a Federal agency obtain the approval

of the Office of Management and Budget (OMB) before collecting information

from the public, whether such collection

of information is mandatory, voluntary,

or required to obtain or retain a benefit.

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

control number.

These regulations include third-party

disclosures and recordkeeping requirements, in §§1.401(a)(9)-3(b)(4)(iii) and (c)

(5)(iii), 1.401(a)(9)-4(e)(7), and 1.401(a)

(9)-4(h), that are required to determine

whether a beneficiary is an eligible designated beneficiary entitled to distributions

over the beneficiary’s life expectancy and

to record the names of the taxpayer’s beneficiaries under the trust. These collections

of information would generally be used

by the IRS for tax compliance purposes

and by plan administrators to facilitate

compliance with the required minimum

distribution requirements under section

401(a)(9). The likely respondents to these

collections are beneficiaries of employees

participating in retirement plans (and, in

limited circumstances, the participating

employees).

Sections 1.401(a)(9)-3(b)(4)(iii) and

(c)(5)(iii) allow a plan to permit an eligible designated beneficiary in that plan to

August 12, 2024

elect between the 5-year rule (or 10-year

rule, if applicable) and life expectancy

rule in the case of an employee who dies

before the employee’s required beginning

date. This election only arises in the context of a plan (and not an IRA) because

the plan administrator will need that information to satisfy the required minimum

distribution requirements with respect

to the beneficiary. An IRA custodian has

no obligation to ensure compliance with

the required minimum distribution rules,

so there is no need for a beneficiary of an

IRA to file any type of election with the

custodian. Although the plan may provide

that the employee may make this election, it is expected that more commonly,

the employee’s beneficiary will be the

individual making the election. Moreover, the plan will have specified a default

method of payment to the beneficiary in

the absence of an election (so that the beneficiaries will not be required to make an

election).

Section 1.401(a)(9)-4(e)(7) requires a

beneficiary to provide documentation to a

plan administrator showing that the beneficiary was disabled or chronically ill as

of the date of the employee’s death. Typically, this requirement will be satisfied by

having a licensed health care practitioner

certify that the beneficiary was disabled or

chronically ill in a statement that is provided to the plan administrator.

Section 1.401(a)(9)-4(h) permits an

employee who wants to name a trust as a

beneficiary to treat the underlying beneficiaries of the trust as designated beneficiaries of the employee’s benefit under

a retirement plan if the employee (or the

trustee of the trust) either: (1) provides a

copy of the trust instrument to the plan

administrator or (2) provides a list of all

the beneficiaries of the trust, certifies that,

to the best of the employee’s (or trustee’s) knowledge, this list is correct and

complete, and agrees to provide a copy

of the trust instrument upon demand. If

the trust instrument is amended at any

time in the future, the employee (or

trustee) must, within a reasonable time,

provide a copy of each such amendment,

or provide corrected certifications to the

extent that the amendment changes the

information previously certified. This

requirement must generally be satisfied

no later than October 31 of the calendar

434

year following the calendar year of the

employee’s death.

The collections of information contained in this notice of final rulemaking have been submitted to the Office of

Management and Budget for review in

accordance with the Paperwork Reduction Act. The Treasury Department and

the IRS solicited public comments during

the proposed rulemaking at 87 FR 10504

on February 24, 2022. During the public

comment period, the Treasury Department

and the IRS did not receive any comments

on the collections of information. Several

commenters requested that plan administrators be permitted to rely on self-certifications from a designated beneficiary

(or, in the case of a see-through trust, the

trustee of that trust) that the beneficiary

is disabled or chronically ill within the

meaning of §1.401(a)(9)-4(d). These final

regulations do not adopt that rule for the

reasons described in section I.D.1.c of

the Summary of Comments and Explanation of Revisions. Commenters also

requested that final regulations allow for a

certification from the trustee of the trust as

to the beneficiaries who are to be treated

as beneficiaries of the employee for purposes of section 401(a)(9). These final

regulations do not adopt that rule for the

reasons described in section I.D.2.b of the

Summary of Comments and Explanation of Revisions.

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), it is hereby certified that the regulations will not have a

significant economic impact on a substantial number of small entities. These regulations affect certain plan administrators and

participants, owners of individual retirement accounts and annuities; employees

for whom amoun

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