Bulletin No. 2022–11

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–11

March 14, 2022

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.

ADMINISTRATIVE

Announcement 2022-5, page 825.

The Office of Professional Responsibility (OPR) announces recent disciplinary sanctions involving attorneys,

certified public accountants, enrolled agents, enrolled

actuaries, enrolled retirement plan agents, and appraisers. These individuals are subject to the regulations

governing practice before the Internal Revenue Service

(IRS), which are set out in Title 31, Code of Federal

Regulations, Part 10, and which are published in pamphlet form as Treasury Department Circular No. 230.

The regulations prescribe the duties and restrictions

relating to such practice and prescribe the disciplinary

sanctions for violating the regulations.

T.D. 9962, page 823.

This guidance contains T.D. 9962, final regulations relating to the user fees for the special enrollment examinations for enrolled agents and enrolled retirement

plan agents, the EA SEE and ERPA SEE, respectively.

In accordance with the guidelines in OMB Circular A-25,

the IRS has re-calculated its cost of overseeing the EA

SEE and determined that the full cost has increased

to $99 per part, plus an amount payable directly to

a third-party contractor. The IRS no longer offers new

enrollment as an ERPA or the ERPA SEE. Therefore, the

regulations increase the amount of the user fee for the

EA SEE from $81 to $99 per part and remove the user

fee for the ERPA SEE.

REG-114209-21, page 898.

This guidance contains proposed amendments to the

regulations relating to user fees for enrolled agents

and enrolled retirement plan agents. In accordance

with the guidelines in OMB Circular A-25, the IRS has

Finding Lists begin on page ii.

re-calculated its cost of overseeing the enrollment and

renewal program and determined that the full cost for

overseeing the renewal of enrolled retirement plan

agents has increased from $67 to $140. In addition,

the cost for overseeing both the enrollment and renewal of enrolled agents has increased from $67 to $140.

Therefore, the proposed regulations increase the renewal user fee for enrolled retirement plan agents from

$67 to $140. In addition, the proposed regulations increase both the enrollment and renewal user fee for

enrolled agents from $67 to $140.

EMPLOYEE PLANS, EXCISE TAX,

INCOME TAX

REG-105954-20, page 828.

These proposed regulations provide guidance related

to the 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

of 2019, Pub. L. 116-94, 133 Stat. 2534 (2019). Section 114 of the SECURE Act increased the mandatory

age by which distributions from a retirement plan are

required to begin from 70½ to 72, 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 seek to 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 proposed 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.

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.

March 14, 2022 

Bulletin No. 2022–11

Part I

26 CFR 300.0 (amended), 300.4 (amended),

300.9 (removed), and 300.10 through 300.13

(redesignated)

T.D. 9962

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 300

User Fees Relating

to the Enrolled Agent

Special Enrollment

Examination and the

Enrolled Retirement Plan

Agent Special Enrollment

Examination

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: These final regulations

amend existing regulations relating to the

user fees for the special enrollment examinations for enrolled agents and enrolled retirement plan agents. The final regulations

increase the amount of the user fee for each

part of the special enrollment examination

for enrolled agents (EA SEE). The final

regulations also remove the user fee for

the special enrollment examination for enrolled retirement plan agents (ERPA SEE)

because the IRS no longer offers the ERPA

SEE or new enrollment as an enrolled retirement plan agent. The final regulations

affect individuals taking the EA SEE. The

Independent Offices Appropriation Act of

1952 authorizes charging user fees.

DATES:

Effective date: These regulations are

effective March 31, 2022.

Applicability date: For the date of applicability, see § 300.4(d).

FOR FURTHER INFORMATION CONTACT: Karen Wozniak at (202) 317-5129

(not a toll-free number).

Bulletin No. 2022–11

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments

to 26 CFR part 300 regarding user fees.

On September 29, 2021, a notice of proposed rulemaking (REG-100718-21) and

notice of public hearing was published

in the Federal Register (86 FR 53893).

The notice proposed amending the regulations relating to the user fees for the EA

SEE and ERPA SEE. The notice proposed

increasing the amount of the user fee for

each part of the EA SEE from $81, plus an

amount payable to a third-party contractor, to $99, plus an amount payable to a

third-party contractor. The notice also proposed removing the user fee for the ERPA

SEE. The notice contains a detailed explanation regarding the amendments to these

regulations.

Two comments responding to the notice were received. There were no requests

to speak at the scheduled public hearing.

Consequently, the public hearing was cancelled (86 FR 66496). After consideration

of the written comments, the Department

of the Treasury (Treasury Department)

and the IRS have decided to adopt without

modification the regulations proposed by

the notice.

Summary of Comments

The two comments submitted in response to the notice of proposed rulemaking are available at www.regulations.gov

or upon request.

The two commenters expressed concern that the proposed EA SEE user fee

would be used to fund the program for

enrollment and renewal of enrolled agents

in addition to recovering the IRS’s cost of

overseeing the EA SEE. One commenter

stated that the program for enrollment and

renewal of enrollment of enrolled agents

should be funded by enrollment and renewal fees – not the EA SEE user fee – and

recommended increasing the enrollment

and renewal fees instead of increasing the

EA SEE user fee. The second commenter

expressed agreement with this comment.

Under Office of Management and Budget (OMB) Circular A-25, 58 FR 38142

823

(July 15, 1993) (OMB Circular A-25),

Federal agencies that provide services that

confer benefits on identifiable recipients

are to establish user fees that recover for

the government the full cost of providing

the service. An agency that seeks to impose a user fee for government-provided

services must calculate the full cost of

providing those services. Under OMB

Circular A-25, a user fee should be set

at an amount that recovers the full cost

of providing a service, unless the OMB

grants an exception. The full cost of providing a service includes both the direct

and indirect costs of providing the service.

As required by OMB Circular A-25,

the IRS conducted a biennial review of

the EA SEE user fee, during which it calculated the full cost of overseeing the EA

SEE, taking into account all direct and indirect costs. In calculating the full cost of

overseeing the EA SEE, the IRS followed

generally accepted accounting principles

established by the Federal Accounting

Standards Advisory Board. The proposed

EA SEE user fee only recovers the IRS’s

cost of overseeing the EA SEE. It does

not recover costs associated with other

programs. The preamble to the proposed

regulations describes in detail the costs associated with overseeing the EA SEE and

the IRS’s calculation of the proposed EA

SEE user fee.

The IRS charges a separate user fee

to recover the costs it incurs related to

enrollment and renewal of enrollment of

enrolled agents and renewal of enrollment

of enrolled retirement plan agents. That

fee is currently set at $67 per initial application and renewal. Like the EA SEE

user fee, the user fees for enrollment and

renewal of enrollment of enrolled agents

and renewal of enrollment of enrolled

retirement plan agents are also subject

to biennial review under OMB Circular

A-25. See REG-114209-21 in the Proposed Rules section of this edition of the

Federal Register, separately proposing to

increase the renewal user fee for enrolled

retirement plan agents from $67 to $140

and both the enrollment and renewal user

fee for enrolled agents from $67 to $140.

Accordingly, after consideration of the

comments, the proposed regulations are

adopted without change.

March 14, 2022

Special Analyses

These regulations are not significant

and are not subject to review under section

6(b) of Executive Order 12866 pursuant to

the Memorandum of Agreement (April 11,

2018) between the Treasury Department

and the Office of Management and Budget regarding review of tax regulations.

Pursuant to the Regulatory Flexibility Act

(5 U.S.C. chapter 6), it is hereby certified

that these final regulations will not have a

significant economic impact on a substantial number of small entities. The final regulations remove the ERPA SEE user fee as

the IRS no longer offers the examination or

new enrollment as an enrolled retirement

plan agent. The EA SEE user fee primarily

affects individuals who take the EA SEE.

Only individuals, not businesses, can be

enrolled agents. Accordingly, the economic impact of these regulations on any small

entity would be a result of an individual

enrolled agent owning a small entity or a

small entity employing an enrolled agent

and reimbursing the individual for the fee.

The Treasury Department and the IRS estimate that an average of 22,381 EA SEE

examination parts will be taken by individuals annually. Consequently, a substantial number of small entities is not likely

to be affected. Further, the economic impact on any small entities affected would

be limited to paying the $18 difference

in cost between the $99 user fee and the

previous $81 user fee per part (for each

enrolled agent that a small entity employs

and pays for), which is unlikely to present

a significant economic impact. The total

economic impact of these regulations is

approximately $402,858 annually, which

is the product of the approximately 22,381

examination parts and the $18 increase in

the fee per part. The rule is, therefore, not

expected to have a significant economic

March 14, 2022

impact on a substantial number of small

entities, and a regulatory flexibility analysis is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking was submitted to the

Chief Counsel of the Office of Advocacy

of the Small Business Administration for

comment on its impact on small business. No comments on the notice were

received from the Chief Counsel for the

Office of Advocacy of the Small Business

Administration.

Drafting Information

The principal author of these regulations is Karen Wozniak, Office of the

Associate Chief Counsel (Procedure and

Administration). Other personnel from

the Treasury Department and the IRS

participated in the development of the

regulations.

List of Subjects in 26 CFR Part 300

Reporting and recordkeeping requirements, User fees.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 300 is

amended as follows:

PART 300 – USER FEES

Paragraph 1. The authority citation for

part 300 continues to read as follows:

Authority: 31 U.S.C. 9701.

§300.0 [Amended]

Par. 2. Section 300.0 is amended by

removing paragraph (b)(9) and redesignating paragraphs (b)(10) through (13) as

paragraphs (b)(9) through (12).

824

Par. 3. Section 300.4 is amended by

revising paragraphs (b) and (d) to read as

follows:

§300.4 Enrolled agent special enrollment

examination fee.

*****

(b) Fee. The fee for taking the enrolled

agent special enrollment examination is

$99 per part, which is the cost to the government for overseeing the development

and administration of the examination

and is in addition to the fees charged by

the administrator of the examination.

*****

(d) Applicability date. This section applies to registrations for the enrolled agent

special enrollment examination that occur

on or after March 31, 2022.

§300.9 [Removed]

Par. 4. Section 300.9 is removed.

§§300.10 through 300.13 [Redesignated

as §§300.09 through 300.12]

Par. 5. Redesignate §§300.10 through

300.13 as §§300.09 through 300.12.

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Approved: February 24, 2022.

Thomas C. West, Jr.,

Deputy Assistant Secretary of the

Treasury (Tax Policy).

(Filed by the Office of the Federal Register on February 25, 2021, 11:15 a.m., and published in the issue

of the Federal Register for March 1, 2022, 87 F.R.

11295)

Bulletin No. 2022–11

Part IV

Announcement of

Disciplinary Sanctions

From the Office of

Professional Responsibility

Announcement 2022-5

The Office of Professional Responsibility (OPR) announces recent disciplinary sanctions involving attorneys, certified public accountants, enrolled agents,

enrolled actuaries, enrolled retirement

plan agents, appraisers, and unenrolled/

unlicensed return preparers (individuals

who are not enrolled to practice and are

not licensed as attorneys or certified public accountants). Licensed or enrolled

practitioners are subject to the regulations

governing practice before the Internal

Revenue Service (IRS), which are set out

in Title 31, Code of Federal Regulations,

Subtitle A, Part 10, and which are released

as Treasury Department Circular No.

230. The regulations prescribe the duties

and restrictions relating to such practice

and prescribe the disciplinary sanctions

for violating the regulations. Unenrolled/

unlicensed return preparers are subject to

Revenue Procedure 81-38 and superseding guidance in Revenue Procedure 201442, which govern a preparer’s eligibility

to represent taxpayers before the IRS in

examinations of tax returns the preparer

both prepared for the taxpayer and signed

as the preparer. Additionally, unenrolled/

unlicensed return preparers who voluntarily participate in the Annual Filing Season Program under Revenue Procedure

2014-42 agree to be subject to the duties

and restrictions in Circular 230, including

the restrictions on incompetent or disreputable conduct.

The disciplinary sanctions to be imposed for violation of the applicable standards are:

Disbarred from practice before the

IRS—An individual who is disbarred

is not eligible to practice before the IRS

as defined at 31 C.F.R. § 10.2(a)(4) for a

minimum period of five (5) years.

Suspended from practice before the

IRS—An individual who is suspended is

Bulletin No. 2022–11

not eligible to practice before the IRS as

defined at 31 C.F.R. § 10.2(a)(4) during

the term of the suspension.

Censured in practice before the

IRS—Censure is a public reprimand. Unlike disbarment or suspension, censure

does not affect an individual’s eligibility

to practice before the IRS, but OPR may

subject the individual’s future practice

rights to conditions designed to promote

high standards of conduct.

Monetary penalty—A monetary penalty may be imposed on an individual who

engages in conduct subject to sanction,

or on an employer, firm, or entity if the

individual was acting on its behalf and it

knew, or reasonably should have known,

of the individual’s conduct.

Disqualification of appraiser—An

appraiser who is disqualified is barred

from presenting evidence or testimony in

any administrative proceeding before the

Department of the Treasury or the IRS.

Ineligible for limited practice—An

unenrolled/unlicensed return preparer

who fails to comply with the requirements

in Revenue Procedure 81-38 or to comply

with Circular 230 as required by Revenue

Procedure 2014-42 may be determined ineligible to engage in limited practice as a

representative of any taxpayer.

Under the regulations, individuals

subject to Circular 230 may not assist,

or accept assistance from, individuals

who are suspended or disbarred with

respect to matters constituting practice

(i.e., representation) before the IRS, and

they may not aid or abet suspended or

disbarred individuals to practice before

the IRS.

Disciplinary sanctions are described in

these terms:

Disbarred by decision, Suspended by decision, Censured by decision,

Monetary penalty imposed by decision,

and Disqualified after hearing—An

administrative law judge (ALJ) issued

a decision imposing one of these sanctions after the ALJ either (1) granted the

government’s summary judgment motion

or (2) conducted an evidentiary hearing

upon OPR’s complaint alleging violation

of the regulations. After 30 days from the

issuance of the decision, in the absence

825

of an appeal, the ALJ’s decision becomes

the final agency decision.

Disbarred by default decision, Suspended by default decision, Censured

by default decision, Monetary penalty

imposed by default decision, and Disqualified by default decision—An ALJ,

after finding that no answer to OPR’s

complaint was filed, granted OPR’s motion for a default judgment and issued a

decision imposing one of these sanctions.

Disbarment by decision on appeal,

Suspended by decision on appeal, Censured by decision on appeal, Monetary

penalty imposed by decision on appeal,

and Disqualified by decision on appeal—The decision of the ALJ was appealed to the agency appeal authority, acting as the delegate of the Secretary of the

Treasury, and the appeal authority issued a

decision imposing one of these sanctions.

Disbarred by consent, Suspended by

consent, Censured by consent, Monetary penalty imposed by consent, and

Disqualified by consent—In lieu of a

disciplinary proceeding being instituted or

continued, an individual offered a consent

to one of these sanctions and OPR accepted the offer. Typically, an offer of consent

will provide for: suspension for an indefinite term; conditions that the individual

must observe during the suspension; and

the individual’s opportunity, after a stated number of months, to file with OPR a

petition for reinstatement affirming compliance with the terms of the consent and

affirming current fitness and eligibility

to practice (i.e., an active professional license or active enrollment status, with no

intervening violations of the regulations).

Suspended indefinitely by decision in

expedited proceeding, Suspended indefinitely by default decision in expedited

proceeding, Suspended by consent in

expedited proceeding—OPR instituted

an expedited proceeding for suspension

(based on certain limited grounds, including loss of a professional license for

cause, and criminal convictions).

Determined ineligible for limited

practice—There has been a final determination that an unenrolled/unlicensed

return preparer is not eligible for limited

representation of any taxpayer because the

March 14, 2022

preparer violated standards of conduct or

failed to comply with any of the requirements to act as a representative.

A practitioner who has been disbarred

or suspended under 31 C.F.R. § 10.60, or

suspended under § 10.82, or a disqualified

appraiser may petition for reinstatement

before the IRS after the expiration of 5

years following such disbarment, suspension, or disqualification (or immediately

following the expiration of the suspension

or disqualification period if shorter than 5

years). Reinstatement will not be granted

unless the IRS is satisfied that the petitioner is not likely to engage thereafter in

conduct contrary to Circular 230, and that

granting such reinstatement would not be

contrary to the public interest.

Reinstatement decisions are published

at the individual’s request, and described

in these terms:

Reinstated to practice before the

IRS—The individual’s petition for reinstatement has been granted. The

agent, and eligible to practice before the

IRS, or in the case of an appraiser, the individual is no longer disqualified.

Reinstated to engage in limited

practice before the IRS—The individual’s petition for reinstatement has been

granted. The individual is an unenrolled/

unlicensed return preparer and eligible to

engage in limited practice before the IRS,

subject to requirements the IRS has prescribed for limited practice by tax return

preparers.

OPR has authority to disclose the

grounds for disciplinary sanctions in these

situations: (1) an ALJ or the Secretary’s

delegate on appeal has issued a final decision; (2) the individual has settled a disciplinary case by signing OPR’s “consent

to sanction” agreement admitting to one

or more violations of the regulations and

consenting to the disclosure of the admitted violations (for example, failure to file

Federal income tax returns, lack of due

diligence, conflict of interest, etc.); (3)

OPR has issued a decision in an expedited

proceeding for indefinite suspension; or

(4) OPR has made a final determination

(including any decision on appeal) that an

unenrolled/unlicensed return preparer is

ineligible to represent any taxpayer before

the IRS.

Announcements

of

disciplinary

sanctions appear in the Internal Revenue Bulletin at the earliest practicable

date. The sanctions announced below

are alphabetized first by state and second by the last names of the sanctioned

individuals.

City & State

Name

Professional

Designation

Disciplinary Sanction

Effective Date(s)

Alabama

Mobile

Frederickson, Chris C.

CPA

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Arizona

Scottsdale

Schiffman, Jack B.

Attorney

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

California

Pedersen, Carol A., see Texas

Colorado

Aurora

Langlois, Patricia A.

CPA

Suspended by consent for

violations of §§ 10.51(a) and

10.51(a)(10)

Indefinite from

November 18, 2021

Illinois

Chicago

Jefferson, Juannell

CPA

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Maryland

Rockville

Ayala, Felix N.

Enrolled Agent

La Plata

Murphy, Timothy J.

Attorney

Suspended by consent for

violation of §10.51(a)(2)

Suspended by decision in

expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Indefinite from

December 2, 2021

March 14, 2022

826

Bulletin No. 2022–11

City & State

Name

Professional

Designation

Disciplinary Sanction

Effective Date(s)

North Carolina

Efland

Price, Martin L.

CPA

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

November 24, 2021

Ohio

Northfield

Nartker, Brian M.

CPA

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Oregon

Ashland

Rangel, Sonia E.

CPA

Suspended by default decision in

expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

November 18, 2021

Pennsylvania

Pittsburgh

Young, Robert G.

Attorney

Suspended by decision in

expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Texas

Georgetown

Dean, John

CPA

Indefinite from

December 2, 2021

Bryan

Pedersen, Carol A.

CPA

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Suspended by default decision

in expedited proceeding under

31 C.F.R. § 10.82(b)

Missouri

Schiffman, Jack B.,

see Arizona

Indefinite from

December 2, 2021

Frederickson, Chris C.

see Alabama

Virginia

Norfolk

La Mondue, Carl C.

Attorney

Suspended by default decision in

expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

December 2, 2021

Wyoming

Rock Springs

Edman, Paul R.

CPA

Suspended by default decision in

expedited proceeding under

31 C.F.R. § 10.82(b)

Indefinite from

November 18, 2021

Bulletin No. 2022–11

827

March 14, 2022

Notice of Proposed

Rulemaking

Required Minimum

Distributions

REG-105954-20

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains

proposed 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 eligible deferred compensation plans under section 457. These

regulations will 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: Written or electronic comments

must be received by May 25, 2022. Outlines of topics to be discussed at the public hearing scheduled for June 15, 2022, at

10:00 a.m. must be received by May 25,

2022.

As of February 24, 2022, § 1.408-8 of

the notice of proposed rulemaking that

was published in the Federal Register on

July 14, 1981 (46 FR 36198) is withdrawn.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG-105954-20) by following the online

instructions for submitting comments.

Once submitted to the Federal eRulemaking Portal, comments cannot be edited

or withdrawn. The IRS expects to have

limited personnel available to process

public comments that are submitted on

March 14, 2022

paper through mail. Until further notice,

any comments submitted on paper will be

considered to the extent practicable. The

Department of the Treasury (Treasury

Department) and the IRS will publish for

public availability any comment submitted electronically, and to the extent practicable on paper, to its public docket. Send

paper submissions to: CC:PA:LPD:PR

(REG-105954-20), room 5203, Internal Revenue Service, PO Box 7604, Ben

Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, Brandon M. Ford or Laura B.

Warshawsky, (202) 317-6700; concerning

submissions of comments and outlines

of topics for the public hearing, Regina

Johnson, (202) 317-5177 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax Regulations (26 CFR part 1) under section 401(a)

(9) of the Internal Revenue Code of 1986

(Code). These proposed regulations address the required minimum distribution

requirements for plans qualified under

section 401(a) and are being proposed

to 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 of 2019, Public Law 116-94, 133 Stat.

2534 (2019).

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 408A(c)

(5) for Roth 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) 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

828

of eligible rollover distribution in section

402(c). Accordingly, this document also

contains proposed 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 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.

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 (in accordance with

regulations) over the life or life expectancy of the designated beneficiary with

the distributions generally beginning no

later than 1 year after the date of the employee’s death; or (2) distributed within

5 years after the death of the employee.

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

a surviving spouse may wait until the

date the employee would have attained

age 72 to begin taking required minimum

distributions.

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

by section 114 of the SECURE Act) defines the required beginning date for an

Bulletin No. 2022–11

employee (other than a 5-percent owner

or IRA owner) as April 1 of the calendar

year following the later of the calendar

year in which the employee attains age

72 or the calendar year in which the employee retires. 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 age 72, 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.

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 that is used to determine

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 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 be paid 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 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 the

employee’s interest is entirely distributed,

then section 401(a)(9)(H)(ii) does not apply to the beneficiary of the eligible designated beneficiary, and the remainder of

the employee’s interest 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-beneficiary 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) also provides

that in the case of an applicable multi-beneficiary trust, if, under the terms of the

trust, no individual (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) defines the

term applicable multi-beneficiary trust as

a trust: (1) which 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)(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) or a qualified trust that is a

part of a defined benefit plan) is treated as

a defined contribution plan.1

Prior to amendment by section 114 of

the SECURE 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 70½. Section 114(d) of the SECURE Act provides

that the amendments made by section 114

of the SECURE Act apply to distributions

required to be made after December 31,

2019, with respect to individuals who attain age 70½ after that date.

Section 401(b)(1) of the SECURE Act

provides that, generally, the amendments

made 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 that were ratified before December 20,

2019, the amendments to sections 401(a)

The eligible retirement plans described in section 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.

1

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829

March 14, 2022

(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) the date on which the last of the collective bargaining agreements terminated

(without regard to any extension of the

agreement to which the parties agree on or

after December 20, 2019), or (2) December 31, 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 sections 401(a)

(9)(E) and (H) will 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 sections 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 December 20, 2019, and at all times

thereafter.2

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 sections 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).

Section 402(c) — Rollovers

Section 402(c) 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, Public Law 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, Public Law 107147, 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 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, Public Law

115-97, 131 Stat. 2054 (2017) (TCJA)

to provide an extended rollover deadline

for qualified plan loan offset (QPLO)

amounts.3 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 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)

to expand the list of retirement plans eligible to receive rollovers to include an annuity contract described in section 403(b)

of the Code, and an eligible deferred compensation plan described in section 457(b)

which 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

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.

3

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.

2



March 14, 2022

830

Bulletin No. 2022–11

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.

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) of the Code was

added by section 829 of the Pension Protection Act of 2006, Public Law 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 individual retirement plan 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 individual retirement plan.

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

4

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)

(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) 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 50 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.

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).

Existing Regulations

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 18988).4 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

68077). 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 qualified 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

72477) 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

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 C.B. 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

Final regulations under section 4974 (relating to excise taxes for excess accumulations in qualified plans) were published at the same time but have not been amended.

Bulletin No. 2022–11

831

March 14, 2022

Federal Register on January 6, 2021 (86

FR 464). See §1.402(c)-3.

Explanation of Provisions

These proposed regulations would 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. These proposed

regulations also clarify certain issues

that have been raised in public comments

and private letter ruling requests. These

proposed 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 existing regulations

that are retained in these proposed regulations are generally not discussed in this

Explanation of Provisions.

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.

Proposed §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 new section 401(a)(9)(H),

which was added by section 401 of the

SECURE Act to limit life expectancy distributions for beneficiaries. 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 beneficiary, 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

March 14, 2022

10-year payout required by section 401(a)

(9)(H)(iii). Accordingly, the death of the

designated beneficiary triggers a requirement to complete payment within 10 years

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.

These proposed regulations provide

that if an employee in a plan who dies before the section 401(a)(9)(H) effective date

for that plan has 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.

For purposes of applying the statutory

effective date, these proposed regulations

provide that if, pursuant to section 401(a)

(9)(B)(iv), a surviving spouse is waiting

to begin distributions until the year for

which the employee would have been first

required to take distributions, then the

spouse is treated as the employee. Thus, in

that case, if the spouse died before January

1, 2020, but the spouse’s designated beneficiary dies after the section 401(a)(9)(H)

effective date for the plan, section 401(a)

(9)(H) applies to any beneficiary of the

spouse’s designated beneficiary upon the

death of that designated beneficiary.

These proposed regulations reflect the

statutory delay of the effective date for

governmental plans and collectively bargained plans. For this purpose, the determination of whether a plan is a collectively

bargained plan is made in accordance with

§1.436-1(a)(5)(ii)(B) (relating to plans

under which some participants are not

832

members of collective bargaining units).

The proposed regulations also reflect the

exception for existing annuity contracts

for which an irrevocable election as to

the method and the amount of the annuity

payments was made before December 20,

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

the SECURE Act.

2. Participants in Multiple Plans

These proposed regulations provide

that if an employee is a participant in

more than one plan, the plans in which

the employee participates are not permitted to be aggregated for purposes of testing whether the distribution requirements

of section 401(a)(9) are met. This rule is

currently in §1.401(a)(9)-8, Q&A-1, but

is moved to §1.401(a)(9)-1(a)(2) in these

proposed regulations.

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

commencing during an employee’s

lifetime

Proposed §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 existing 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.

In accordance with section 114(a) of

the SECURE Act, these proposed 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 attains age

72, and (2) the calendar year in which the

employee retires from employment with

the employer maintaining the plan. These

proposed regulations also provide that for

an employee who was born before July 1,

1949, the required beginning date remains

April 1 of the calendar year following the

later of (1) the calendar year in which the

employee attains age 70½, and (2) the

calendar year in which the employee retires from employment with the employer maintaining the plan. However, if an

employee is a 5-percent owner, then the

required beginning date is April 1 of the

calendar year following the calendar year

Bulletin No. 2022–11

in which the employee attains age 70½ or

72 (whichever required beginning date

applies to the employee as determined using the employee’s date of birth), and that

required beginning date applies regardless

of whether the employee has retired from

employment with the employer maintaining the plan.

Section 114(d) of the SECURE Act provides that the amended definition of the required beginning date applies with respect

to employees who attain age 70½ on or

after January 1, 2020. This effective date

provision could be interpreted to require

the employee to survive until age 70½ in

order to have the amended definition apply (that is, if the employee died before

attaining age 70½, then the amended definition would not apply with respect to distributions to that employee’s beneficiary,

even if the employee would have attained

age 70½ on or after January 1, 2020, had

the employee survived). Instead, for ease

of administration, these proposed regulations interpret the effective date language

to apply the amendments made by section

114 of the SECURE Act to an employee

who died before attaining age 70½ if the

employee would have attained age 70½ on

or after January 1, 2020 (that is, the employee’s date of birth is on or after July 1,

1949). This interpretation also extends to

a surviving spouse who is waiting to begin

distributions pursuant to section 401(a)(9)

(B)(iv). Thus, for example, if an employee who was born on June 1, 1952, died in

2018, and the employee’s sole beneficiary

is the employee’s surviving spouse, then

the surviving spouse may wait until 2024

(the calendar year in which the employee

would have attained age 72) to begin receiving distributions.

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

required beginning date

Proposed §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 existing regulations but are updated

to reflect new section 401(a)(9)(H). Because section 401(a)(9)(H) applies only

to defined contribution plans, the rules for

distributions from defined benefit plans

and defined contribution plans have been

separated, with the rules for distributions

Bulletin No. 2022–11

from defined benefit plans set forth in

proposed §1.401(a)(9)-3(b) and the rules

for distributions from defined contribution plans set forth in proposed §1.401(a)

(9)-3(c).

Section 401(a)(9)(H)(i) provides for a

new 10-year distribution period in certain

cases (10-year rule). Specifically, in the

case of a defined contribution plan, if an

employee who has a designated beneficiary dies before the employee’s required beginning date, then section 401(a)(9)(B)(ii)

is satisfied if the employee’s entire interest

is distributed by the end of the calendar

year that includes the tenth anniversary of

the employee’s death. This 10-year rule is

similar to the 5-year rule in the existing

regulations (under which distributions

may be delayed until the end of the fifth

calendar year following the calendar year

of the employee’s death if the employee

dies before the required beginning date)

and permits distributions to be delayed

until the end of the tenth calendar year following the calendar year of the employee’s death if the employee dies before the

required beginning date.

The 5-year rule is retained in these proposed regulations and continues to apply

to a defined benefit plan. It also applies

to a defined contribution plan if section

401(a)(9)(H) does not apply to the employee (which could occur if the employee does not have a designated beneficiary

or if the employee died before the effective date of section 401(a)(9)(H) and the

employee’s designated beneficiary elected

the 5-year rule).

These proposed regulations retain the

rule that permits an employee’s interest

to be distributed over the designated beneficiary’s life or life expectancy in accordance with section 401(a)(9)(B)(iii) (life

expectancy payments rule). However,

pursuant to section 401(a)(9)(H)(ii), in

the case of a defined contribution plan,

that rule is available only if the designated beneficiary is an eligible designated

beneficiary as defined in section 401(a)

(9)(E)(ii). Thus, in the case of a defined

contribution plan, if the employee dies before the required beginning date and the

employee’s designated beneficiary is not

an eligible designated beneficiary, the 10year rule applies.

These proposed regulations also

provide that in the case of a defined

833

contribution plan, if the employee has a

designated beneficiary who is an eligible

designated beneficiary, the plan may provide either that the 10-year rule applies or

that the life expectancy payments rule applies. Alternatively, the plan may provide

the employee or the eligible designated

beneficiary an election between the 10year rule or the life expectancy payments

rule. However, if a defined contribution

plan does not include either of those optional provisions and the employee has an

eligible designated beneficiary, the plan

must provide for the life expectancy payments rule.

D. Section 1.401(a)(9)-4 —

Determination of the designated

beneficiary

Proposed §1.401(a)(9)-4 provides rules

addressing the determination of the employee’s beneficiary for purposes of section 401(a)(9) and these proposed regulations are substantially similar to the rules

in the existing regulations. In addition to

providing rules addressing the new definition of eligible designated beneficiary,

these proposed regulations include rules

that clarify and simplify the determination of a beneficiary for purposes of section 401(a)(9) in certain situations involving the use of a trust.

A designated beneficiary within the

meaning of section 401(a)(9)(E)(i) generally is an individual designated under the

plan as a beneficiary who is entitled to a

portion of an employee’s benefit, contingent on the employee’s death or another

specified event. If a beneficiary designated

under the plan is a person other than an

individual, then the employee is treated as

not having a designated beneficiary (even

if there is an individual who is designated

as a beneficiary under the plan). However, if a beneficiary designated under the

plan is a see-through trust as described in

Section I.D.2 of this Explanation of Provisions, then certain beneficiaries of that

trust are treated as the employee’s beneficiaries under the plan rather than the trust.

In addition, designating a person that is

not an individual as a beneficiary under

the plan does not cause the employee to be

treated as not having a designated beneficiary to the extent separate account treatment applies with respect to that person as

March 14, 2022

described in Section I.H of this Explanation of Provisions.

1. Eligible Designated Beneficiaries

These proposed regulations incorporate

the new definition of eligible designated

beneficiary in section 401(a)(9)(E)(ii).

Specifically, 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 age of majority

Section 401(a)(9)(E)(ii)(II) provides

that if the employee’s designated beneficiary, as of the date of the employee’s

death, is a child of the employee who has

not yet reached the age of majority (as

defined in section 401(a)(9)(F)), then that

child is an eligible designated beneficiary.

Section 1.401(a)(9)-6, A-15, of the existing regulations provides guidance regarding the application of section 401(a)(9)(F).

That regulatory provision does not specify

a particular age as a generally applicable

age of majority, but provides that a child

may be treated as having not reached the

age of majority if the child has not completed a specified course of education and

is under the age of 26.

The Treasury Department and the IRS

have determined that it is necessary to revise the definition of age of majority from

the definition used under the existing regulations (the pre-SECURE Act application of which is limited to defined benefit

plans and rarely applied). As more plans

are expected to apply an age of majority

definition, plans may find it difficult to implement the existing standard under which

the plan administrator obtains information

about the education of an employee’s child

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

(H). Furthermore, because the definition

of age of majority is intended to apply to

all of an individual’s accounts in defined

contribution plans, which may be in multiple qualified plans and IRAs, the Treasury

Department and the IRS have concluded

that the definition, which will determine

whether a designated beneficiary is an

March 14, 2022

eligible designated beneficiary across

plans and accounts, should not be a plan

design choice. The potential for different

plans to have different definitions would

lead to confusion and complexity for individuals in planning and for their beneficiaries, as well as plan administrators

and custodians, in determining payment

streams. Accordingly, for purposes of

section 401(a)(9)(E)(ii)(II) and (F), these

proposed regulations provide that a child

of the employee reaches the age of majority on that child’s 21st birthday (which accommodates the age of majority definition

in all of the States). However, as described

in Section I.F of this Explanation of Provisions, the proposed regulations permit defined benefit plans that have used the prior

definition of age of majority to retain that

plan provision.

b. Definition of disability

These proposed 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,

for individuals under age 18, that standard

may be difficult to apply. Accordingly, if,

as of the date of the employee’s death, a

beneficiary is younger than age 18, the

proposed 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 proposed regulations also provide a safe harbor for the determination of

whether 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).

Pursuant to section 401(a)(9)(E)(ii),

the determination of whether a beneficiary is disabled is made as of the date of

834

the employee’s death. For example, if, as

of the employee’s death, the employee’s

designated beneficiary is the employee’s

10-year-old child who is not disabled but

who becomes disabled 5 years after the

employee’s death, then pursuant to section

401(a)(9)(E)(iii) and these proposed regulations, that child’s later disability will not

be taken into account, and that child will

cease to be an eligible designated beneficiary on the child’s 21st birthday.

c. Documentation requirements for

disabled or chronically ill status

These proposed 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

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 for an indefinite period 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

these proposed 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

Bulletin No. 2022–11

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.

d. Other rules related to eligible

designated beneficiaries

These proposed regulations provide

that, if an employee has more than one

designated beneficiary and one of them

is not an eligible designated beneficiary,

then for purposes of section 401(a)(9), the

employee generally is treated as not having an eligible designated beneficiary. In

addition, these proposed regulations provide that if the surviving spouse is waiting to begin distributions until the year in

which the employee would have attained

age 72 and the surviving spouse dies before the beginning of that year, then the

determination of whether the surviving

spouse’s designated beneficiary is an eligible designated beneficiary is made by

substituting the surviving spouse for the

employee (including for purposes of establishing the date as of which that determination is made). For example, a child of

the surviving spouse is an eligible designated beneficiary if the child has not yet

reached the age of majority as of the date

of the surviving spouse’s death.

2. Trust as Beneficiary

These proposed regulations retain the

see-through trust concept in the existing

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

of the employee if the trust meets the requirements to be a see-through trust. Specifically, to be a see-through 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.

In response to issues raised in private

letter ruling requests and comments submitted to the Treasury Department and the

IRS, these proposed regulations provide

additional guidance in determining which

beneficiaries of the see-through trust are

treated as beneficiaries of the employee.5

These proposed rules are consistent with

the examples that are in §1.401(a)(9)-5,

Q&A-7(c), of the existing regulations,

but address many more fact patterns. The

Treasury Department and the IRS intend

for these more detailed rules to address

many of the issues raised in comment

letters and private letter ruling requests

and expect that this more comprehensive

and definitive guidance will minimize the

need for taxpayers to request private letter

rulings.

a. Determining which see-through trust

beneficiaries are treated as beneficiaries

of the employee

1. See-through trust beneficiaries taken

into account

Generally, the proposed 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 is not treated as

having predeceased)6 the employee.

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 accumulation trust. A conduit trust is defined in

the proposed 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, specified beneficiaries. A seethrough trust will not fail to be a conduit

trust merely because the trust terms do not

require an immediate distribution after the

death of all of the specified beneficiaries

described in the preceding sentence.

For example, if an employee names

a conduit trust as the beneficiary of the

employee’s interest in a plan and the

trust terms require all distributions from

the plan to the trust during the surviving

spouse’s life to be distributed immediately

to that surviving spouse, then the surviving spouse is treated as a beneficiary of the

employee because the surviving spouse

could receive amounts in the trust that are

neither contingent upon nor delayed until

the death of another trust beneficiary. In

this case, if distributions have begun from

the plan and the surviving spouse dies

before the employee’s entire interest is

distributed, any beneficiary who could receive distributions from the conduit trust

at the time of the surviving spouse’s death

is not treated as a beneficiary of the employee because that beneficiary’s ability

to receive amounts from the trust is contingent upon the death of the surviving

spouse.

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 has a residual interest in the

portion of the trust representing the employee’s interest in the plan (that is, the

beneficiary could receive amounts in the

trust, representing the employee’s interest

in the plan, that were not distributed to individuals described in the first paragraph

of this Section I.D.2.a.1). For example,

assume an employee names a see-through

trust as the sole beneficiary of the employee’s interest in the plan. The terms of

the see-through trust require the trustee

to pay specified amounts from the trust

to the employee’s surviving spouse, and

those specified amounts do not include

the immediate payment of plan distributions made to the trust. Upon the spouse’s

These proposed regulations provide for the determination of the trust beneficiaries that are treated as beneficiaries of the employee in §1.401(a)(9)-4(f). In the existing regulations, these

provisions were in §1.401(a)(9)-5.

6

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

or a qualified disclaimer.

5

Bulletin No. 2022–11

835

March 14, 2022

death, the see-through trust is to terminate

and the amounts remaining in the trust are

to 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 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 immediately distributed to 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 has a residual

interest in the see-through trust (that is, he

could receive amounts in the trust representing the employee’s interest in the plan

that were not distributed to the surviving

spouse).

2. Disregarded beneficiaries of seethrough trusts

These proposed regulations also provide for certain beneficiaries of a seethrough trust to be disregarded as beneficiaries of the employee for purposes

of section 401(a)(9), because they have

only minimal or remote interests. Specifically, a see-through trust beneficiary

is not treated as a beneficiary of the employee if that beneficiary could receive

payments from the trust that represent

the employee’s interest in the plan only

after the death of another trust beneficiary whose sole interest is a residual

interest in the trust (as described in the

preceding paragraph) and who did not

predecease (and is not treated as having

predeceased) the employee. Thus, using

the example in the preceding paragraph,

assume the see-through trust terms provide that if the employee’s brother survives the employee but predeceases the

surviving spouse, then the amounts remaining in the trust after the death of

the surviving spouse are to be paid to a

charity. In that case, the charity is disregarded as a beneficiary of the employee

because the charity could receive only

amounts in the trust that are contingent

upon the death of the employee’s brother, whose only interest was a residual interest (that is, an interest in the amounts

remaining in the trust after the death of

the surviving spouse). In contrast, the

March 14, 2022

charity would be treated as a beneficiary of the employee if the brother could

receive amounts in the trust not subject

to any contingencies or contingent upon

an event other than the death of the surviving spouse (such as the surviving

spouse’s remarriage).

These proposed regulations provide

another exception under which a seethrough trust beneficiary with a residual

interest is disregarded as a beneficiary

of the employee because the beneficiary would have only a minimal or remote

interest in the trust. These proposed 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

individual described in the first paragraph

of Section I.D.2.a.1 of this Explanation

of Provisions by the later of: (1) the calendar year following the calendar year

of the employee’s death; and (2) the end

of the tenth calendar year following the

calendar year in which that specified individual attains the age of majority, then

any other beneficiary whose sole entitlement to distributions is conditioned on

the unlikely event that specified individual dies before the full distribution is required is disregarded as a beneficiary of

the employee.

To illustrate this exception, assume

an employee names a see-through trust

as the sole beneficiary, the trust permits

specified amounts to be paid to the employee’s niece until the niece reaches

age 31 (age of majority plus 10 years),

and those specified amounts are not required to include the immediate payment

of plan distributions made to the trust.

The trust is scheduled to terminate with

a full distribution of all trust assets to the

niece when the niece reaches age 31, but

if the niece dies before this scheduled termination, then the amounts remaining in

the trust will be paid to the employee’s

sibling. In that case, the only beneficiary

designated under the plan for purposes

of section 401(a)(9) and these regulations is the employee’s niece because the

employee’s sibling is disregarded under

the exception described in the preceding

paragraph. However, if the see-through

trust terms do not require a full distribution of amounts in the trust representing

the employee’s interest in the plan until

836

the niece reaches age 35, then this exception does not apply, and both the employee’s niece and sibling are treated as beneficiaries designated under the plan for

purposes of section 401(a)(9) and these

regulations.

b. Identifiability of trust beneficiaries

These proposed regulations retain the

requirement from the existing regulations that the employee’s beneficiaries

(including beneficiaries of a see-through

trust) be identifiable, but modify the

definition of identifiability in light of the

enactment of section 401(a)(9)(H). Generally, trust beneficiaries are identifiable

if it is possible to identify each person

designated by the employee as eligible

to receive a portion of the employee’s interest in the plan through the trust. Under

the proposed regulations, if an employee

names a class of individuals as the beneficiary (such as the employee’s grandchildren), the addition of another member of that class (for example, the birth

of another grandchild) will not cause the

trust to fail to meet the identifiability

requirements.

These proposed regulations provide

another exception to the general identifiability rule under which a trust will not

fail to satisfy the identifiability requirements merely because an individual has

a power of appointment with respect to a

portion of the employee’s interest in the

plan. Specifically, these proposed regulations provide that if, by September 30 of

the calendar year following the calendar

year of the employee’s death, the power is

exercised in favor of one or more beneficiaries that are identifiable or is restricted

so that any appointment made at a later

time may only be made in favor of one or

more identifiable beneficiaries, then all of

those identifiable beneficiaries are taken

into account as beneficiaries of the employee. If the power is not exercised by

that September 30 in favor of one or more

beneficiaries that are identifiable (and is

not so restricted) then each taker in default (that is, each person who would be

entitled to the portion subject to the power

if that power is not exercised) is treated as

a beneficiary of the employee.

These proposed regulations include

a rule that applies when a beneficiary is

Bulletin No. 2022–11

added who was not initially taken into account in determining the employee’s beneficiaries. Under this rule, if a beneficiary

is added after September 30 of the calendar year following the calendar year of the

employee’s death (for example, if an individual exercises a power of appointment

after that September 30), then the determination of whether there is no designated

beneficiary because one of the employee’s

beneficiaries is not an individual, and the

rules relating to multiple designated beneficiaries described in Sections I.D.1.d

and I.E.3.d of this Explanation of Provisions must be applied taking into account

the new beneficiary along with all of the

beneficiaries that were taken into account

before the addition of the new beneficiary.

However, if the addition of the beneficiary

would cause a full distribution of the employee’s interest in the plan to be required

pursuant to section 401(a)(9)(H) during

the calendar year in which the beneficiary

is added or in an earlier calendar year (and

a full distribution would not have been required in the absence of the new beneficiary), then the proposed regulations provide

that the full distribution is not required until the end of the calendar year following

the calendar year in which the beneficiary

was added.

To illustrate this rule, assume an employee named a see-through trust as the

beneficiary of the employee’s interest in

the plan, the terms of the trust require the

trustee to pay specified amounts from the

trust to the employee’s surviving spouse,

and those specified amounts do not require the immediate payment of plan distributions made to the trust. In this case,

the trust is an accumulation trust. The

trust terms also provide the spouse with

a testamentary power of appointment to

name the beneficiary of any portion of

the employee’s interest in the plan that

has not been distributed before the surviving spouse dies, but in the absence of an

appointment, the employee’s only child

is entitled to that residual interest in the

trust. If the power of appointment is not

exercised by September 30 of the calendar

year following the calendar year of the employee’s death, then the trust does not fail

to satisfy the identifiability requirements,

and both the employee’s surviving spouse

and child are treated as beneficiaries of the

employee. If, after that September 30, the

Bulletin No. 2022–11

surviving spouse exercises the power by

naming the spouse’s sibling as the beneficiary of the residual interest in the trust,

then the employee’s surviving spouse, the

employee’s child, and the spouse’s sibling

are all taken into account when applying

the rules for multiple designated beneficiaries for each calendar year after the

year during which the sibling is added as

a beneficiary.

These proposed regulations also provide that a see-through trust will not fail

to satisfy the identifiability requirements

merely because the trust is subject to

state law that permits the trust terms to be

modified after the death of the employee

(such as by a court reformation, through

a decanting, or otherwise), thus permitting a change in the beneficiaries of the

trust. If a beneficiary of a see-through

trust is removed through a modification

of the trust terms by September 30 of the

calendar year following the calendar year

of the employee’s death, the proposed

regulations provide that the beneficiary

that was removed is disregarded as a beneficiary of the employee for purposes of

section 401(a)(9) and these regulations.

Similarly, if a beneficiary is added pursuant to such a modification, that beneficiary is taken into account as a beneficiary of the employee for purposes of

section 401(a)(9) and these regulations.

However, if a beneficiary is added pursuant to such a modification after that

September 30, then the rules that apply to

a beneficiary that is added pursuant to a

power of appointment will apply also to

a beneficiary that is added pursuant to the

modification.

c. Applicable multi-beneficiary trusts

These proposed regulations also provide guidance on a particular type of seethrough trust defined in section 401(a)(9)

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

trust. Specifically, these proposed regulations define two types of applicable

multi-beneficiary trusts. A type I applicable multi-beneficiary trust is an applicable

multi-beneficiary trust, the terms of which

provide 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

837

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)).

When dividing a type I applicable

multi-beneficiary trust, one of the separate trusts could be a type II applicable

multi-beneficiary trust. Thus, if a type I

applicable multi-beneficiary trust is divided into separate trusts and one of the

separate trusts satisfies the requirements

to be a type II applicable multi-beneficiary trust, then the beneficiaries of that

separate trust who are not disabled or

chronically ill are disregarded as beneficiaries of the employee for purposes of

section 401(a)(9) and these regulations.

However, for any separate trust that does

not satisfy the requirements to be a type

II applicable multi-beneficiary trust, the

beneficiaries of that separate trust are

treated as beneficiaries of the employee

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

these regulations.

The Treasury Department and the IRS

are aware of concerns related to the application of the amendments made by section

401 of the SECURE Act to section 401(a)

(9) of the Code in the case of a trust with

terms intended to ensure that a disabled

individual who is a beneficiary of the

trust remains eligible for means-tested

government benefits. The Treasury Department and the IRS request comments

on whether under applicable law a trust

for a disabled individual (for example, a

supplemental needs trust) could include

terms providing that the disabled individual would lose the individual’s interest in

the trust in the event the interest would

disqualify the individual for means-tested government benefits and still satisfy

the requirements under the Code to be a

type II applicable multi-beneficiary trust.

Specifically, comments are requested on

whether this type of provision may be

included in a trust (thereby allowing a

disabled individual to continue to qualify

for means-tested government benefits),

while not providing for trust payments to

any other beneficiary until the death of

the disabled individual.

March 14, 2022

3. Other Rules Related to Designated

Beneficiaries.

a. Special rules for multiple designated

beneficiaries

As described in the first paragraph of

Section I.D.1.d of this Explanation of

Provisions, these proposed regulations

provide a general rule under which, if an

employee has more than one designated

beneficiary, and at least one of them is not

an eligible designated beneficiary, then

for purposes of section 401(a)(9), the employee is treated as not having an eligible

designated beneficiary. As a result, the

employee’s interest must be distributed

no later than the end of the tenth calendar year following the calendar year of the

employee’s death.

These proposed regulations include

two exceptions to this general rule that allow an eligible designated beneficiary to

use the life expectancy rule even if there

is another designated beneficiary who is

not an eligible designated beneficiary. The

first exception is that if any of the employee’s designated beneficiaries is a child of

the employee who, as of the date of the

employee’s death, has not yet reached

the age of majority, then the employee is

still treated as having an eligible designated beneficiary (which allows payments

to continue until 10 years after the child

reaches the age of majority even if there

are other designated beneficiaries who

are not eligible designated beneficiaries).

The second exception is if the see-through

trust is a type II applicable multi-beneficiary trust, then the beneficiaries who

either are disabled or chronically ill are

treated as eligible designated beneficiaries

without regard to whether any of the other

trust beneficiaries are not eligible designated beneficiaries.

To illustrate these rules, if an employee

who is a participant in a defined contribution plan names a see-through trust as the

sole beneficiary of the employee’s interest

in the plan, and the trust beneficiaries are

the employee’s surviving spouse and the

employee’s adult child who is not disabled

or chronically ill, then the employee is

treated as not having an eligible designated beneficiary. As a result, the employee’s

entire interest must be distributed no later

than 10 years after the employee’s death.

March 14, 2022

However, if there is another designated

beneficiary who is the employee’s child

and who, as of the date of the employee’s

death, has not yet reached the age of majority, then, under the exception described

in the preceding paragraph, the employee

is treated as having an eligible designated beneficiary. In that second situation, if

the trust is receiving annual distributions

using the life expectancy rule, then a full

distribution from the plan would not be required until ten years after the minor child

reaches the age of majority.

b. Determining the beneficiary for

purposes of calculating the required

minimum distribution

These proposed regulations largely retain the rules of the existing regulations

related to determining who is a beneficiary

for purposes of section 401(a)(9), so that a

person is a beneficiary if that person is a

beneficiary designated under the plan as

of the date of the employee’s death and remains a beneficiary as of September 30 of

the calendar year following the calendar

year in which the employee died. For this

purpose, a beneficiary need not be specified by name in order to be designated

under the plan, provided the beneficiary

is identifiable pursuant to the designation.

The existing regulations provide that

a beneficiary is disregarded if certain

events occur before September 30 of the

calendar year following the calendar year

in which the employee dies. In response

to issues raised in private letter ruling

requests and comments submitted to the

Treasury Department and the IRS, these

proposed regulations provide an exclusive

list of events that permit a beneficiary to

be disregarded. Specifically, the proposed

regulations provide that if any of the following events occurs by September 30 of

the calendar year following the calendar

year in which the employee dies with respect to a person who was a beneficiary as

of the employee’s date of death, then that

person will be disregarded in identifying

the beneficiaries of the employee for purposes of section 401(a)(9): (1) the individual predeceases the employee; (2) the individual is treated as having predeceased

the employee pursuant to a simultaneous

death provision or pursuant to a qualified

disclaimer that satisfies section 2518 and

838

applies to the entire interest to which the

beneficiary is entitled; or (3) the person

receives the entire benefit to which the

person is entitled.

To illustrate the rule in the preceding

paragraph, if an individual makes a disclaimer satisfying section 2518 that applies to the individual’s entire interest

(including the requirement that the disclaimer be made within 9 months of the

employee’s death), that individual is not

treated as a beneficiary for purposes of

section 401(a)(9). However, if the disclaimer is executed more than 9 months

after the employee’s death, then that individual will not be disregarded for purposes of identifying the beneficiaries. As

another example, assume a see-through

trust is designated as a beneficiary of the

employee’s interest in the plan and that

trust could be liable for expenses of administering and distributing the deceased

employee’s estate at death. In this case,

the decedent’s estate is treated as a beneficiary of the employee designated under

the plan because some portion of the employee’s interest in the plan may be used

for the payment of those administration

expenses, thus satisfying an obligation of

the estate. However, if all of those expenses that could be paid from the employee’s

interest in the plan are paid by September

30 of the calendar year following the calendar year in which the employee died (so

that by that date, the deceased employee’s

estate received the entire interest to which

it was entitled), then the deceased employee’s estate is disregarded, and the other

beneficiaries of the see-through trust are

considered beneficiaries of the employee.

E. Section 1.401(a)(9)-5 — Required

minimum distributions from defined

contribution plans

1. In General

Proposed §1.401(a)(9)-5 retains the

general method in the existing 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 life expectancy

payments after an employee dies before

the required beginning date. Specifically,

Bulletin No. 2022–11

the required minimum distribution for a

calendar year is determined by dividing

the employee’s account balance as of the

end of the prior year by an applicable divisor. The existing regulations refer to the

divisor as the applicable distribution period. However, in light of the amendments

made by section 401 of the SECURE Act

that may result in different distribution

periods, these proposed regulations refer

to the divisor as the applicable denominator. In addition to the requirement to take

annual required minimum distributions,

the proposed regulations implement those

amendments by requiring that a full distribution of the remaining interest be taken

in certain circumstances.

These proposed regulations also update 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 is implemented by a cross-reference to a list of

amounts in §1.402(c)-2(c)(3) (relating to

amounts that are not treated as eligible

rollover distributions). The effect of the

new cross-reference is to add the following items to the list of amounts that are

disregarded for purposes of determining

the required minimum distribution 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, deemed distributions

with respect to a collectible pursuant to

section 408(m), and distributions that are

permissible withdrawals from an eligible

automatic contribution arrangement within the meaning of section 414(w).

2. Distributions While the Employee is

Alive

These proposed regulations provide

that, in determining the required minimum distribution for a distribution calendar year beginning while the employee is

alive, the employee divides the account

balance as of December 31 of the preceding calendar year by the employee’s applicable denominator. Generally, the applicable denominator is determined using

the Uniform Lifetime Table in §1.401(a)

(9)-9(c). However, if the employee’s sole

Bulletin No. 2022–11

beneficiary is the employee’s spouse who

is more than 10 years younger than the

employee, then the applicable denominator is determined using the Joint and Last

Survivor Table in §1.401(a)(9)-9(d) (providing for a longer payout period).

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) (expanded to a 10-year rule in certain cases

by section 401(a)(9)(H)(i)(I)) generally

applies if an employee dies before the

employee’s required beginning date, section 401(a)(9)(H)(i)(II) provides that section 401(a)(9)(B)(ii) applies whether or

not distributions have commenced. 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, these proposed regulations provide

for the same calculation of the annual required minimum distribution that was adopted in the existing 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 Explanation of

Provisions).

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 proposed regulations), then for calendar years after the

calendar year in which the employee died,

the applicable denominator generally is

839

the remaining life expectancy of the designated beneficiary. 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 a recalculation in accordance with section 401(a)(9)(D)). 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 in the calendar year in which

the spouse died, reduced by one for each

subsequent calendar year.

If the employee has no designated beneficiary, then the applicable denominator

is the employee’s life expectancy calculated in the calendar year in which the

employee died, reduced by one for each

subsequent calendar year. This applicable

denominator is also used in the case of an

employee who died after the required beginning date and who was younger than the

designated beneficiary.

c. Full distribution required in certain

circumstances

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)(H), and (E)(iii)), these proposed

regulations provide that, if an employee’s

interest is in a defined contribution plan to

which section 401(a)(9)(H) applies, 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;

March 14, 2022

(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 has not yet

reached the age of majority as of the date

of the employee’s death; and

(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.

For example, if an employee died after

the required beginning date with a designated beneficiary who is not an eligible

designated beneficiary, then the designated beneficiary would continue to have

required minimum distributions calculated using the beneficiary’s life expectancy

as under the existing regulations for up to

nine calendar years after the employee’s

death. In the tenth year following the calendar year of the employee’s death, a full

distribution of the employee’s remaining

interest would be required.

Similarly, if an employee died after the

required beginning date with an eligible

designated beneficiary, then the eligible

designated beneficiary would continue to

have required minimum distributions calculated during the beneficiary’s lifetime

using the rules under the existing regulations. However, if the eligible designated

beneficiary dies before the entire interest

of the employee is distributed, then the

beneficiary of that eligible designated

beneficiary would continue taking annual distributions using the rules under the

existing regulations for up to nine years

after the death of the eligible designated

beneficiary. In the tenth year following the

calendar year of the eligible designated

beneficiary’s death, a full distribution of

the employee’s remaining interest would

be required.

If the employee’s designated beneficiary is a child of the employee who, as of

the employee’s death, has not yet reached

the age of majority, then the child would

have annual required minimum distributions calculated during the child’s lifetime

using the rules of the existing regulations.

However, those distributions would be

March 14, 2022

permitted to be paid for up to only nine

years after the child reaches the age of

majority with a full distribution of the

employee’s remaining interest required

in the tenth year following the calendar

year in which the child reaches the age of

majority.

As another example, if an employee

died at age 75 after the required beginning date and the employee’s non-spouse

eligible designated beneficiary was age

80 at the time of the employee’s death,

the applicable denominator would be determined using the employee’s remaining

life expectancy. However, these proposed

regulations require a full distribution of

the employee’s remaining interest in the

plan in 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 (even though the applicable denominator for determining the

required minimum distribution is based

on the remaining life expectancy of the

employee). In this case, based on the

beneficiary’s life expectancy of 11.2 in

the year of the employee’s death, a full

distribution would be required in the year

the beneficiary reaches age 91 (because

in the 11th calendar year after the employee’s death the beneficiary’s life expectancy would be less than or equal to

one).

d. Multiple designated beneficiaries

These proposed regulations include a

modified version of the general rule adopted in the existing regulations that applies

if an employee has more than one designated beneficiary. Specifically, instead of

determining the applicable denominator

using the beneficiary with the shortest life

expectancy, these proposed regulations

provide that the applicable denominator

is determined using the life expectancy of

the oldest designated beneficiary. The proposed regulations provide that whether a

full distribution is required also generally

is determined using the oldest of the designated beneficiaries. For example, if an

employee has multiple eligible designated beneficiaries who are born in the same

calendar year, then full distribution of the

employee’s remaining interest generally is required by the tenth calendar year

840

following the death of the oldest designated beneficiary.

These general rules for multiple designated beneficiaries are subject to certain

exceptions. Under one exception, if the

employee’s beneficiary is a type II 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.

Thus, the ages of the other beneficiaries

are disregarded in determining the applicable denominator, and the death of the

last of the disabled or chronically ill trust

beneficiaries triggers the 10-year payout

requirement under section 401(a)(9)(H)

(iii).

Under a second exception to the general rule, if any of the employee’s designated beneficiaries is a child of the employee

who has 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 at

the employee’s date of death are taken into

account. Thus, in a situation involving one

or more designated beneficiary children

under the age of majority and one or more

older designated beneficiaries, the death

of an older designated beneficiary will

not result in a requirement to pay a full

distribution before the oldest child attains

the age of majority plus ten years. In this

case, a full distribution of the employee’s

remaining interest is not required until the

tenth calendar year following the calendar year in which the oldest child of the

employee who is a designated beneficiary

and who had not attained the age of majority as of the employee’s death reaches

the age of majority (or, if earlier, the tenth

calendar year following the calendar year

of that child’s death).

To illustrate these rules, assume an employee died at the age of 75 after the employee’s required beginning date, and the

employee named a see-through trust that

is an accumulation trust as the employee’s

beneficiary under the plan. The terms of the

trust require specified amounts to be paid to

the employee’s surviving spouse (who was

age 74 at the time of the employee’s death).

Upon the spouse’s death, the trust will

Bulletin No. 2022–11

terminate and the amounts remaining in the

trust that have not been paid to the spouse

will be paid to the employee’s sibling (who

was age 67 at the time of the employee’s

death). If the employee’s sibling predeceases the surviving spouse, the amounts

remaining in the trust that have not been

paid to the surviving spouse will be paid

to a charity. In this case, the charity is disregarded as a beneficiary of the employee

(as described in Section I.D.2.a.2 of this

Explanation of Provisions), and all of the

other trust beneficiaries are eligible designated beneficiaries (a surviving spouse and

a beneficiary who is not more than 10 years

younger than the employee). Under these

proposed regulations, required minimum

distributions are made to the trust beginning in the calendar year after the calendar

year of the employee’s death using the surviving spouse’s remaining life expectancy,

because the surviving spouse is the oldest

beneficiary of the employee. Upon the surviving spouse’s death, annual distributions

must continue to the trust using the surviving spouse’s remaining life expectancy in

the calendar year of the spouse’s death, reduced by one in each subsequent calendar

year. In addition, the entire interest of the

employee must be distributed no later than

the tenth calendar year following the calendar year of the spouse’s death.

F. Section 1.401(a)(9)-6 — Required

minimum distributions from defined

benefit plans

Proposed §1.401(a)(9)-6 provides rules

for required minimum distributions from

defined benefit plans and from annuity

contracts that are annuitized to pay benefits

under defined contribution plans. These

rules are based on the existing regulations

and are updated to reflect the amendments

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

section 114 of the SECURE Act regarding

the required beginning date and actuarial

increases.

1. Rules Applicable to Defined Benefit

Plans

a. Actuarial increase for employees

retiring after age 70½

These proposed regulations address the

actuarial increase required under section

Bulletin No. 2022–11

401(a)(9)(C)(iii). Section 401(a)(9)(C)(iii)

provides that, if section 401(a)(9)(C)(i)(II)

applies to an employee and the employee

retires in a calendar year after the calendar year in which the employee attains age

70½, then the employee’s accrued benefit

must be actuarially increased to take into

account the period after age 70½ during

which the employee was not receiving any

benefits under the plan. Section 401(a)(9)

(C)(ii)(I) provides that section 401(a)(9)

(C)(i)(II) (providing a required beginning

date based on the calendar year in which

the employee retires) does not apply to an

employee who is a 5-percent owner (as

defined in section 416) for the plan year

ending in the calendar year in which the

employee attains age 72.

The proposed regulations reflect that

the required actuarial increase under section 401(a)(9)(C)(iii) does not apply to a

5-percent owner. This is because the actuarial increase is limited to employees to

whom section 401(a)(9)(C)(i)(II) applies

(and section 401(a)(9)(C)(ii)(I) provides

that section 401(a)(9)(C)(i)(II) generally

does not apply in the case of an employee who is a 5-percent owner). Thus, the

required actuarial increase applies to an

employee other than a 5-percent owner

who retires in a calendar year after the calendar year in which the employee attains

age 70½.

These proposed regulations, like the

existing regulations, reflect the exception from the requirements of section

401(a)(9)(C)(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 section

401(a)(9), a church plan is a plan maintained by a church for church employees,

and a church is any church within the

meaning of section 3121(w)(3)(A) or any

qualified church-controlled organization

within the meaning of section 3121(w)

(3)(B). These proposed regulations clarify that the determination of whether an

employee is a church employee is made

without regard to whether the employee

would be considered an employee of a

church under section 414(e)(3)(B). Therefore, a plan for the employees of a tax-exempt organization that is not a church or

a qualified church-controlled organization

must provide an actuarial increase for an

employee who retires in a calendar year

841

after the calendar year in which the employee reaches age 70½.

b. Interaction of benefit restrictions under

section 436(d) and minimum distribution

requirements under section 401(a)(9)

Under section 436(d), a plan is required

to provide certain limitations on accelerated benefit distributions. Under section

436(d)(1), if the plan’s annual funding target attainment percentage (AFTAP) for a

plan year is less than 60 percent, the plan

must not make any prohibited payment

(that is, a payment in excess of the monthly amount paid under a single life annuity

or a payment for the purchase of an irrevocable commitment from an insurer to

pay benefits) after the valuation date for

the plan year. Under section 436(d)(2), if

the plan sponsor is in bankruptcy proceedings, the plan may not pay any prohibited

payment unless the plan’s enrolled actuary

certifies that the AFTAP of the plan is at

least 100 percent. Under section 436(d)

(3), if the plan’s AFTAP for a plan year

is at least 60 percent but is less than 80

percent, the plan must not pay any prohibited payment to the extent the payment

exceeds the lesser of (1) 50 percent of the

amount otherwise payable under the plan,

and (2) the present value of the maximum

Pension Benefit Guaranty Corporation

guarantee with respect to a participant.

If an employee dies before the required

beginning date and distributions are being

made in accordance with section 401(a)

(9)(B)(ii), then the entire interest of the

employee generally must be distributed

within 5 years of the employee’s death

(the 5-year rule). Because compliance

with this requirement under section 401(a)

(9)(B)(ii) may conflict with the requirements of section 436(d), these proposed

regulations provide an exception to the

5-year rule so that a plan will not fail to

comply with those requirements merely

because payments by the plan are restricted by section 436(d). Under this provision, benefits that are required to be paid

under the 5-year rule may extend past the

section 401(a)(9)(B)(ii) deadline for full

payment provided that the payments (1)

start by the fifth year after the employee’s

death, and (2) are paid in a form that is

as accelerated as permitted under section

436(d).

March 14, 2022

2. Rules Applicable to Annuity Contracts

a. Annuity providers must be licensed

Like the existing regulations, these

proposed regulations provide that, for

either a defined benefit plan or a defined

contribution plan, the required minimum

distribution rules may be satisfied through

the purchase, with the employee’s entire

interest in the plan, of an annuity contract

that provides periodic annuity payments

for the employee’s life (or the joint lives

of the employee and beneficiary) or over

a period certain. These proposed regulations add a rule that, for this purpose, the

annuity contract must be issued by an insurance company licensed in the jurisdiction where the annuity is sold. However,

pursuant to §1.403(b)-6(e)(5), this rule

does not apply to an annuity paid under

a retirement income account that is described in section 403(b)(9).

b. Qualified Longevity Annuity Contracts

In 2014, the Treasury Department and

the IRS amended the regulations under

section 401(a)(9) in order to facilitate the

purchase, under a defined contribution

plan, of a deferred annuity that commences annuity payments at an advanced age.

See 79 FR 37633. Those modifications

apply to an annuity contract that satisfies

certain requirements, including a requirement that distributions commence not later than age 85. Prior to annuitization, the

value of this type of contract, referred to

as a Qualified Longevity Annuity Contract

(QLAC), is excluded from the account

balance used to determine required minimum distributions.

Section 1.401(a)(9)-6, A-17(a)(4), of

the existing regulations provides that a

QLAC may not make available any commutation benefit, cash surrender value, or

other similar feature. These proposed regulations would change this rule so that this

prohibition applies only after the required

beginning date. This change is 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

I.R.B. 820 applies,7 those target date funds

would be permitted to include QLACs

among their assets.

3. Other Rules

a. Increasing payments

Like the existing regulations, these proposed regulations generally provide that

all payments under a defined benefit plan

or annuity contract must be nonincreasing, subject to a number of exceptions.

These proposed regulations retain the exceptions in the existing final regulations

and add to the list of circumstances under

which annuity payments under a defined

benefit plan may increase. Under the proposed regulations, annuity payments may

increase as a result of the resumption of

benefits that were suspended pursuant to

section 411(a)(3)(B) (for a retiree whose

benefits were suspended on account of

employment after commencement of benefits and then resume after the suspension

of benefits ends). In addition, annuity payments may increase as a result of the resumption of benefits that were suspended

pursuant to section 418E (for an insolvent

plan) or section 432(e)(9) (for a participant or beneficiary of a plan in critical and

declining status whose benefits have been

suspended under section 432(e)(9), if the

suspension of benefits consists of a temporary reduction of benefits or if suspended benefits resume because of a failure to

meet the conditions of section 432(e)(9)

(C)).

The existing regulations provide a

number of exceptions under which payments from annuity contracts purchased

from insurance companies may increase,

and certain of these exceptions apply only

if the total future expected payments under

the contract exceed the total value being

annuitized. These proposed regulations

make a minor modification to the rules to

clarify the calculation of the total future

expected payments and the total value

being annuitized. Specifically, these proposed regulations modify the determination of the total value being annuitized by

providing that the total value is calculated

as of the date on which the contract is annuitized. This modification (under which

this determination is made as of the date

on which the contract is annuitized, rather

than the date on which payments on the

annuitized contract begin as specified in

§1.401(a)(9)-6, A-14(e)(1)(i) of the existing regulations), will have an effect only

in situations in which the contract is annuitized on a date earlier than the date on

which payments begin. In addition, these

proposed regulations update the examples

illustrating these rules to reflect the mortality rates in §1.401(a)(9)-9.

These proposed regulations also provide three additional exceptions to the

nonincreasing payments requirement for

annuities issued by insurance companies

that apply without regard to a comparison

of the total future expected payments and

the total value being annuitized. Two of

these exceptions have been added because

commentors have identified that certain

policy features are popular with policyholders and these features do not have a

material impact on the amount of expected payments. First, these proposed regulations allow an annuity contract to provide a final payment upon the death of the

employee that does not exceed the excess

of total value being annuitized over the

total of payments before the death of the

employee. Second, these proposed regulations allow an annuity contract to offer a

short-term acceleration of payments, under which up to one year of annuity payments are paid in advance of when those

payments were scheduled to be made. In

addition, to facilitate compliance, these

proposed regulations provide a third exception that allows an annuity contract to

provide an acceleration of payments that

is required to comply with section 401(a)

(9)(H).

b. Payments to children

These proposed regulations amend the

existing rules governing when, pursuant

to section 401(a)(9)(F), payment of an

employee’s accrued benefit to a child may

be treated as if the payments were made

to a surviving spouse. These rules are the

Notice 2014-66 provides relief under section 401(a)(4) 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.

7

March 14, 2022

842

Bulletin No. 2022–11

same as under the existing regulations except, as discussed in Section I.D.1.a of this

Explanation of Provisions, these proposed

regulations specify that an individual

reaches the age of majority for purposes

of sections 401(a)(9)(E)(ii)(II) and (F) on

that individual’s 21st birthday.

Under these proposed regulations, a

plan’s terms that define the age of majority that were adopted on or before February 24, 2022 and met the requirements of

§1.401(a)(9)-6, A-15 of the existing regulations are not required to be amended to

reflect this change, and the plan may continue to use that plan definition of the age

of majority for purposes of section 401(a)

(9)(F). Moreover, because a governmental

plan is subject only to a reasonable, good

faith standard in complying with the rules

of section 401(a)(9), the plan terms of a

governmental plan may use a definition of

the age of majority for purposes of section

401(a)(9)(F) that meets the requirements

of §1.401(a)(9)-6, A-15 of the existing

regulations, even if the plan terms that define age of majority are adopted after that

date.

G. Section 1.401(a)(9)-7 — Rollovers

and transfers

Proposed §1.401(a)(9)-7 retains the

rollover and transfer rules that are in the

existing regulations.

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

Proposed §1.401(a)(9)-8 provides

special rules applicable to satisfying the

minimum distribution requirement. These

include separate account treatment for

beneficiaries, the definition of spouse

(updated to include the post-Obergefell

regulations under §301.7701-18), application of the qualified domestic relations

order (QDRO) rules, and the applicability

of elections under section 242(b)(2) of the

Tax Equity and Fiscal Responsibility Act

of 1982, Public Law 97-248, 96 Stat. 324

(1982) (TEFRA).

The proposed regulation generally

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

the employee that were adopted in the

existing regulations, including the rule

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

Bulletin No. 2022–11

trust. However, in light of the new applicable multi-beneficiary trust rules provided in section 401(a)(9)(H)(iv), these proposed regulations provide an exception to

that prohibition that would permit separate application of section 401(a)(9) to the

separate subtrusts of a type I applicable

multi-beneficiary trust.

These proposed regulations also clarify

the rules under which section 401(a)(9) is

applied separately with respect to the separate interests of each of the employee’s

beneficiaries under a plan, provided that

the separate accounting requirements are

satisfied. Those separate accounting requirements include:

(1) Any post-death distribution with

respect to a beneficiary’s interest must be

allocated to the separate account of that

beneficiary;

(2) All post-death investment gains and

losses, contributions, and forfeitures, for

the period prior to the establishment of the

separate accounts must be allocated on a

pro rata basis in a reasonable and consistent manner among the separate accounts;

and

(3) The investment return with respect

to the investments held in the separate accounts that were established for the separate interests of the beneficiaries must be

allocated to those separate accounts.

However, if the separate accounting

requirements are not satisfied until after

the end of the calendar year following the

calendar year of the employee’s death,

then, for calendar years after the separate

accounting requirements are satisfied:

(1) the required minimum distribution is

determined without regard to the separate

accounts; (2) the aggregate distribution is

allocated among the beneficiaries based

on each beneficiary’s share of the total

remaining balance of the employee’s interest; and (3) the allocated share for each

beneficiary must be distributed to each respective beneficiary.

I. Section 1.401(a)(9)-9 — Life

expectancy and distribution period

tables

These proposed regulations include

minor changes to existing provisions of

§1.401(a)(9)-9 to conform the terminology in that section to the new terminology used in proposed §1.401(a)(9)-5. For

843

example, references to the “applicable

distribution period” have been changed to

refer to the “applicable denominator.”

II. Section 402(c) Regulations

These proposed regulations provide

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

that reflect 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. Exclusion from income of amount

rolled over

These proposed regulations provide

that, if an employee receives an eligible

rollover distribution and rolls it over to

any eligible retirement plan within 60 days

of the distribution (including any amount

withheld under section 3405(c)), then the

distribution generally is not includible in

gross income. However, if any portion of

the eligible rollover distribution is rolled

over to a Roth IRA and the distribution

is not from a designated Roth account,

that portion is includible in the taxpayer’s

gross income but generally is not subject

to the 10-percent additional tax under section 72(t).

B. Definition of eligible rollover

distribution and eligible retirement plan

These proposed regulations update the

definition of eligible rollover distribution

to include the portion of the distribution

that constitutes the employee’s investment

in the contract and provide that, pursuant

to section 402(c)(4)(C), an eligible rollover distribution does not include any

distribution made on account of hardship.

These proposed regulations also provide

that a rollover distribution may be a 60day rollover, a direct rollover described

in section 401(a)(31), or the repayment of

a distribution that is treated as a rollover

pursuant to another statutory provision

(such as the repayment of a qualified birth

or adoption distribution that is treated as

a rollover pursuant to section 72(t)(2)(H)

(v)(III)).

These proposed regulations also update

the list of amounts of distributions and

March 14, 2022

deemed distributions that are not eligible

rollover distributions. Specifically, the

proposed regulation adds that a deemed

distribution with respect to a collectible

pursuant to section 408(m) is not treated

as an eligible rollover distribution.

These proposed regulations provide

that, pursuant to section 402(c)(8)(B),

an eligible retirement plan is: (1) an

IRA; (2) a qualified plan (including an

employee’s trust described in section

401(a) that is exempt from taxation under section 501(a), an annuity plan under section 403(a) or an annuity contract

under 403(b)); or (3) an eligible deferred

compensation plan under section 457(b)

maintained by an employer described in

section 457(e)(1)(A) (such as a State or

local government). Pursuant to section

402(c)(10), an eligible deferred compensation plan under section 457(b) is an eligible retirement plan only if it separately

accounts for amounts rolled into the plan.

Furthermore, an eligible rollover distribution from a designated Roth account

under section 402A may be rolled over

only to another designated Roth account

or to a Roth IRA.

C. Special rules related to eligible

rollover distributions

1. Distributions that Include Basis

In accordance with section 402(c)(2),

these proposed regulations provide that if

an eligible rollover distribution includes

an amount that is allocable to the employee’s basis (that is, the employee’s investment in the contract), then additional rules

will apply if it is not rolled over to an IRA.

Specifically, if the rollover is to a qualified plan or annuity contract described in

section 403(b), then the rollover must be

made through a direct trustee-to-trustee

transfer. In addition, the portion of a distribution that is allocable to an employee’s

basis may not be rolled over to an eligible

deferred compensation plan described in

section 457(b).

These proposed regulations also provide that if an eligible rollover distribution includes an amount that is allocable

to an employee’s basis, and only a portion

of that distribution is rolled over, then

the portion that is rolled over is treated

as first consisting of the portion of the

March 14, 2022

distribution that is not allocable to the employee’s basis.

2. Distributions that Include Property

These proposed regulations reflect the

rules in section 402(c)(1)(C) and provide

that, generally, if an eligible rollover distribution is made in the form of property,

then that property may be rolled over. In

accordance with section 402(c)(6)(A), if

that property is sold after being distributed, then the proceeds of the sale may be

rolled over (up to the fair market value of

the property at the time of the sale), but

only if the distribution otherwise satisfies

the requirements to be an eligible rollover

distribution. The Treasury Department

and the IRS request comments on whether

there are additional issues under section

402(c)(6) concerning the treatment of

the proceeds of the sale of the property

(including in situations in which the proceeds of the sale exceed the fair market

value of the property at the time of the

distribution) that should be addressed in

future guidance.

3. Extensions of and Exceptions to the

60-day Rollover Deadline

These proposed regulations provide for

certain extensions of and exceptions to

the 60-day deadline by which an eligible

rollover distribution must be rolled over

to an eligible retirement plan. Specifically,

the regulations adopt the requirements of

section 402(c)(3)(B), which provides that

the Commissioner may waive the 60-day

deadline if the failure to waive that requirement would be against equity or good

conscience, including casualty, disaster, or

other events beyond the reasonable control of the individual with respect to that

requirement. In addition, the proposed

regulations provide that the 60-day period

does not include any period during which

the amount transferred to the employee is a

frozen deposit described in section 402(c)

(7)(B), and does not end earlier than 10

days after that amount ceases to be a frozen deposit. The proposed regulations also

clarify that in the case of a repayment of a

distribution treated as a rollover (such as a

qualified disaster distribution), the repayment timing requirements in the statutory

provision giving rise to that treatment take

844

precedence over the otherwise applicable

60-day period. Finally, these proposed

regulations also move the rules for the section 402(c)(3)(C) exception to the 60-day

deadline for a rollover of a QPLO amount

from §1.402(c)-3 to §1.402(c)-2(g).

D. Distributions to beneficiaries

1. General Rules

These proposed regulations provide

that, generally, a distributee other than

the employee or the employee’s surviving

spouse is not permitted to roll over a distribution from a qualified plan. Pursuant to

section 402(c)(9), these proposed regulations provide that a surviving spouse may

roll over an employee’s interest in the plan

to an IRA or a qualified plan. In the case

of a spousal rollover to a qualified plan,

the amount rolled over is treated as the

spouse’s own interest in the receiving plan

and not as the decedent’s interest in the

distributing plan. Accordingly, with respect to the amount rolled over to a qualified plan, section 401(a)(9) is satisfied

under the rules of section 401(a)(9)(A)

(applicable to distributions to employees)

and not section 401(a)(9)(B) (applicable

to distributions to beneficiaries following

the employee’s death).

These proposed 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-to-trustee 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)).

In determining whether a distribution

to a beneficiary is an eligible rollover distribution, the portion of the distribution

that constitutes a required minimum distribution under section 401(a)(9) must be

determined. The proposed regulations set

forth rules for making this determination

Bulletin No. 2022–11

that are similar to the rules adopted in Notice 2007-7, Q&A-17 and Q&A-19, but

are expanded to apply to both spouse and

non-spouse beneficiaries.

These proposed regulations provide

that, generally, if an employee dies before the required beginning date, then the

amount of a distribution to a beneficiary

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

is not an eligible rollover distribution) is

determined based on whether the 5-year

rule, 10-year rule, or life expectancy rule

(or, in the case of a defined benefit plan,

the annuity payment rule) applies. Regardless of which rule applies, no portion of a distribution made in the year of

the employee’s death is treated as a required minimum distribution under section 401(a)(9).

If the 5-year rule applies, then no

amount distributed before the fifth calendar year after the calendar year of the

employee’s death is treated as a required

minimum distribution. In the fifth calendar year after the calendar year of the

employee’s death, the entire amount distributed in that year is treated as a required

minimum distribution (and thus is not an

eligible rollover distribution). Similarly,

if the 10-year rule applies, then, generally, no amount distributed before the tenth

calendar year after the calendar year of the

employee’s death is treated as a required

minimum distribution. In the tenth calendar year after the calendar year of the

employee’s death, the entire amount distributed in that year is treated as a required

minimum distribution (and thus is not an

eligible rollover distribution).

If the employee dies on or after the

required beginning date or if the life expectancy rule applies (or, in the case of a

defined benefit plan, the annuity payment

rule applies), then, in the first distribution

calendar year for the beneficiary and for

each subsequent year, the amount treated

as a required minimum distribution (and

thus is not an eligible rollover distribution) is determined in accordance with the

rules described in Sections I.F and I.G of

this Explanation of Provisions. In this situation, if the employee dies before receiving the distribution, the amount that would

have otherwise been a required minimum

distribution for the employee in the calendar year of the employee’s death is treated

Bulletin No. 2022–11

as a required minimum distribution with

respect to any distribution to a beneficiary of the employee. A similar rule applies

if the employee’s beneficiary dies before

receiving the distribution for the calendar

year of the beneficiary’s death, so that the

amount that would have otherwise been

a required minimum distribution for the

employee’s beneficiary in the calendar

year of that beneficiary’s death is treated

as a required minimum distribution with

respect to any distribution to a beneficiary

of the employee’s beneficiary.

These proposed regulations provide an

exception for a beneficiary to whom the

5-year rule or 10-year rule applies if that

beneficiary makes the election described

in Section IV of this Explanation of Provisions to have the life expectancy rule (or

annuity payment rule) apply to amounts

in the IRA that receives the distribution

(rather than the 5-year rule or 10-year

rule that applied under the distributing

plan). This exception ensures that if a beneficiary makes that election, then the portion of a distribution from the plan that is

a required minimum distribution is determined in a consistent manner with respect

to all amounts to which the life expectancy rule or annuity payment rule apply.

2. Special Rule for Certain Distributions

to Surviving Spouses

These proposed regulations also provide

for a special rule that limits the ability of a

surviving spouse to use the 5-year rule or

the 10-year rule to defer distributions beyond the otherwise required beginning date

and then, after that date, commence annual distributions. This rule, which applies in

limited circumstances, is 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 treats 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, applies if: (1) the

distribution is made in or after the calendar year the surviving spouse attains age

72; and (2) the surviving spouse rolls over

some or all of the distribution to an eligible

845

retirement plan under which the surviving

spouse is not treated as the beneficiary of

the employee. For example, this special rule

applies when an employee dies at age 67,

the spouse (who is age 68) elects the 10year rule, the spouse takes a distribution in

the 6th calendar year following the employee’s death (the calendar year in which the

spouse is age 74 and the employee would

have been age 73), and the surviving spouse

is rolling over a part of that distribution to

the spouse’s own IRA (but the rule would

not apply if the distribution occurred in the

calendar year that the surviving spouse attained age 71 or an earlier year).

Under this special rule, the portion of

the distribution that is treated as a required

minimum distribution is 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 begins 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 ends 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 proposed regulations

provide that an adjusted account balance

is used. The adjusted account balance for

a calendar year is determined by reducing

the account balance that normally would be

used to determine the required minimum

distribution for that 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.

III. Section 403(b) Regulations

A. Section 1.403(b)-6(e) — Minimum

required distributions for eligible plans

These proposed regulations amend

§1.403(b)-6(e) to conform that paragraph

March 14, 2022

(which sets forth the required minimum

distribution rules for a section 403(b)

contract) to the changes made to section

401(a)(9) under the SECURE Act. For

example, pursuant to the change in the

required beginning date under section

114 of the SECURE Act, these proposed

regulations change the reference to age

70½ in the current regulations to the required beginning date as determined under §1.401(a)(9)-2(b).

These proposed regulations also

amend §1.403(b)-6(e) to provide that the

exception from the applicability of section 401(a)(9)(H) for qualified annuities

provided in section 401(b)(4) of the SECURE Act applies in the case of a section

403(b)(9) retirement income account even

if a commercial annuity (as defined in section 3405(e)(6) of the Code) is not used,

provided that all of the other requirements

for the qualified annuity exception are

satisfied.

B. Request for comments regarding

required minimum distributions from

section 403(b) plans

Under §1.403(b)-6(e), the required

minimum distribution rules applicable to

IRAs apply to section 403(b) contracts,

and, in general, the required minimum

distribution rules for section 403(b) plans

are applied in accordance with §1.408-8.

Thus, for example, under §1.403(b)-6(e)

(7), a required minimum distribution

owed with respect to one section 403(b)

contract of an individual is permitted to

be distributed from another section 403(b)

contract of the same individual. Although

IRA trustees are required, on Form 5498,

IRA Contribution Information, to report to

the IRS and provide to IRA owners certain information regarding required minimum distributions (such as whether a

required minimum distribution is due for

a year and the account balance on which

the required minimum distribution will be

based), Notice 2002-27, 2002-18 I.R.B.

814, provides that no reporting is required

with respect to required minimum distributions from section 403(b) contracts. Accordingly, a section 403(b) plan is neither

required to automatically make a required

minimum distribution for a participant nor

required to inform the IRS or the participant that a required minimum distribution

March 14, 2022

is due or the account balance on which the

distribution is based.

The required minimum distribution

rules applicable to section 403(b) contracts were developed before 2007 when

the section 403(b) regulations were issued

and made section 403(b) plans more like

employer-sponsored qualified plans rather

than IRAs, including requiring employers to adopt a written plan document that

describes employer responsibilities under

the plan. The existing regulations also provide that section 403(b) plans determine

the required beginning date in accordance

with the rules applicable to qualified plans

rather than the rules applicable to IRAs,

and that the qualified plan rules related to

the purchase of a QLAC apply to section

403(b) plans rather than the corresponding IRA rules. These proposed regulations

further treat a section 403(b) plan like a

qualified plan in that the distributions or

deemed distributions not taken into account in determining the required minimum distribution for a calendar year are

the distributions or deemed distributions

described in the qualified plan rules rather

than the IRA rules.

The Treasury Department and the IRS

are considering additional changes to the

required minimum distribution rules for

section 403(b) plans so that they more

closely follow the required minimum

distribution rules for qualified plans. For

example, under this approach, each section 403(b) plan (like each qualified plan)

would be required to make required minimum distributions calculated with respect to that plan (rather than rely on the

employee to request distributions from

another plan in an amount that satisfies

the requirement). These changes would

treat similar employer-sponsored plans

consistently and may facilitate compliance with the required minimum distribution rules.

The Treasury Department and the

IRS request comments on these possible

changes to the required minimum distribution rules for section 403(b) plans, including: (1) any administrative concerns;

(2) any differences between the structure

or administration of section 403(b) plans

and of qualified plans that should be taken into account in applying the required

minimum distribution rules for qualified

plans to section 403(b) plans; and (3) any

846

transition rules that would ease the implementation of these possible changes.

IV. Section 1.408-8 — Distribution

Requirements for IRAs

These proposed 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. For

example, pursuant to the change in the

required beginning date under section 114

of the SECURE Act, these proposed regulations change the references to age 70½

in the current regulations to the required

beginning date as determined under

§1.401(a)(9)-2(b)(3). This change reflects

that the IRA owner’s required beginning

date is April 1 of the calendar year after

the calendar year in which the individual attains age 72 (or 70½ in the case of

an IRA owner born before July 1, 1949).

These proposed regulations also provide

that the owner of a Roth IRA is not required to begin distributions during the

owner’s lifetime (consistent with existing

§1.408A‑6, Q&A-14 and 15).

These proposed regulations incorporate the rules in Notice 2007-7, Q&A-17

and 19 (relating to the carryover of the

method of determining required minimum distributions from a distributing

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

section 402(c)(11)). In addition, these

proposed regulations extend those rules

to provide comparable treatment to a

surviving spouse in light of the extension of the 5-year period to a 10-year

period pursuant to section 401(a)(9)(H).

Specifically, these proposed regulations

provide that, if an employee dies before

the employee’s required beginning date

after designating the employee’s spouse

as a beneficiary, and the surviving spouse

rolls over a distribution from the qualified plan to an IRA in the name of the

decedent, then any distribution method

that was elected under the qualified plan

also will apply to the IRA that receives

the rollover. The same rule applies in the

case of an IRA owner who dies before the

required beginning date (so that, if the

surviving spouse rolls over a distribution

to an IRA in the name of the decedent,

then the distribution method that was

Bulletin No. 2022–11

elected under the distributing IRA will

also apply to the IRA that receives the

rollover).

These proposed regulations also provide an exception to the rules in the preceding paragraph providing for comparable treatment between surviving spouse

beneficiaries and other designated beneficiaries. Under this exception, a surviving

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

rule applies and who rolls over a distribution from a plan (or an IRA) to an IRA

in the decedent’s name, may elect to have

distributions from the IRA that receives

the rollover be subject to the life expectancy rule (rather than the 5-year rule or

10-year rule). The deadline for making

this election is the deadline that would

have applied for an election between the

5-year rule (or 10-year rule) and the life

expectancy rule (or annuity payment rule)

had the distributing plan provided for an

election between those rules by the beneficiary. As described in Section II.D. of this

Explanation of Provisions, if this election

is made, then the portion of a distribution

that is treated as the required minimum

distribution also will be calculated using

the life expectancy rule (or annuity payment rule).

The proposed rules described in the

preceding two paragraphs also are proposed to apply to a non-spouse beneficiary who is making a transfer described

in section 402(c)(11) (incorporating the

rules of Notice 2007-7, Q&A-17 and 19).

Thus, for example, if an eligible designated beneficiary elects the 10-year rule and,

in the seventh calendar year after the calendar year of the employee’s death, that

beneficiary elects for a distribution to be

made in the form of a direct transfer of the

employee’s interest under the plan to an

IRA in the name of the decedent, then the

amount transferred nevertheless must be

distributed by the end of the tenth calendar year following the calendar year of the

employee’s death. However, if the distribution is made by the end of the calendar

year following the year the employee dies,

then the beneficiary would be permitted to

make an election to have the life expectancy rule apply under the IRA.

These new rules relating to the distribution method of the receiving IRA do

not apply to a surviving spouse when that

spouse is rolling over a distribution to the

Bulletin No. 2022–11

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, these

proposed regulations provide 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 new rule under which in certain circumstances a spouse who elects the 10year rule is required to treat a portion of

any distribution as a required minimum

distribution under the life expectancy

rule).

To coordinate with these rules, the

proposed regulations provide 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. This new deadline should

not disrupt the normal application of the

election, because the primary purpose for

not making an immediate election is for a

surviving spouse who has not yet reached

age 59½ to take advantage of the section

72(t)(2)(A)(ii) exception to the 10% additional income tax on early withdrawals

made by a beneficiary. If the surviving

spouse were to miss the deadline provided for in these proposed regulations, that

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.D of this Explanation of

Provisions.

These proposed regulations also provide that any beneficiary (including a

non-individual beneficiary) may aggregate IRAs that are inherited from the same

decedent when determining the amount

that is a required minimum distribution.

Thus, for example, if a trust is the beneficiary of two IRAs that are inherited from

the same decedent, the trustee may aggregate those IRAs when determining the

amount that is a required minimum distribution and take that aggregate amount

from either one of the IRAs.

847

V. Section 1.457-6(d) — Minimum

Required Distributions for Eligible

Plans

These proposed regulations delete a

sentence in §1.457-6(d) that describes section 401(a)(9), because the sentence refers

to age 70 ½, and is no longer accurate following the amendment to the definition of

required beginning date under section 114

of the SECURE Act.

VI. Section 54.4974-1 — Excise Tax on

Accumulations in Qualified Retirement

Plans

These proposed regulations provide

amendments to §54.4974-2 (which is

renumbered as §54.4974-1) to conform

the rules to the changes made to section

401(a)(9) under the SECURE Act. For

example, the rules for determining the

required minimum distribution when the

5-year rule applies are expanded to include rules for determining the required

minimum distribution when the 10-year

rule applies.

These proposed regulations also provide two situations in which an automatic

waiver of the excise tax applies, one of

which is based on the automatic waiver in

the existing regulation. The first situation

in which the automatic waiver applies is

when: (1) the employee (or in the case of

an IRA, the IRA owner) died before the

required beginning date; (2) the payee is

an eligible designated beneficiary who did

not make an affirmative election to use the

life expectancy rule but otherwise is subject to the life expectancy rule pursuant to

a plan provision or the regulatory default

provision that applies in the absence of a

plan provision; (3) the payee did not satisfy the required minimum distribution

requirements; and (4) the payee elects for

the employee’s or IRA owner’s entire interest to be distributed under the 10-year

rule. In that case, once the payee elects the

10-year rule, the payee’s required minimum distribution in the tenth calendar

year following the calendar year of the

employee’s or IRA owner’s death is the

entire account balance.

The second situation in which an automatic waiver applies is in the case of an

individual who had a minimum distribution requirement in a calendar year and

March 14, 2022

died in that calendar year before satisfying that minimum distribution requirement. In this situation, the individual’s

beneficiary 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 excise tax for the failure to take

the distribution is automatically waived

provided that the beneficiary satisfies that

requirement no later than that beneficiary’s tax filing deadline (including extensions thereof).

Applicability Dates

Amended §§1.401(a)(9)-1 through

1.401(a)(9)-9, 1.403(b)-6(e), and 1.408-8

are proposed to apply for purposes of determining required minimum distributions

for calendar years beginning on or after

January 1, 2022. Amended §1.402(c)2 is proposed to apply for distributions

on or after January 1, 2022. Amended §54.4974-1 is proposed to apply for

taxable years beginning on or after January 1, 2022. For the 2021 distribution calendar year, taxpayers must apply the existing regulations, but taking into account

a reasonable, good faith interpretation of

the amendments made by sections 114

and 40

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