In this vlog, LKA Attorney Justin M. Kennedy discusses the impact of the final regulations issued on July 19, 2024, by the Department of the Treasury updating the required minimum distribution rules in response to the SECURE and SECURE 2.0 Acts.
Transcript:
Hello, I’m attorney Justin M. Kennedy with Litherland, Kennedy and Associates, a California estate planning and elder care law firm.
On July 19, 2024, the Department of the Treasury and the IRS issued final regulations updating the required minimum distribution rules in response to the SECURE and SECURE 2.0 Acts. These final regulations confirm that most inherited IRA beneficiaries must take distributions each year over the 10-year period following the death of the IRA owner.
Originally, it was assumed that as long as the inherited retirement account was completely depleted by the end of the tenth year, that you would be in compliance. Now, however, it is clear that you cannot wait until the tenth year to start to take distributions from the inherited retirement account.
To make sure that you stay in compliance with the law, it is advisable to take distributions from an inherited retirement account as follows: calculate the amount to be distributed by dividing the account balance by the number of years remaining in the 10-year period.
Here is an example, in year 1, the annual payment would be calculated by dividing the account balance by 10. In year 2, payment would be calculated by dividing the account balance by 9; and so on until year 10 when the entire remaining balance is distributed.
There is another wrinkle to this discussion, if the deceased IRA owner had already started receiving required minimum distributions, then the calculation for distributions by an inheriting beneficiary should continue the required minimum distribution pattern that the decedent had started, so long as the final payment occurs within the 10-year period. This has the unpleasant result, that the inherited retirement account may need to be distributed in less than 10 years depending upon the age of the decedent when they passed.
As has previously been established under the SECURE Act, preferential distribution rules may apply to eligible designated beneficiaries. Eligible designated beneficiaries include: (1) the surviving spouse, (2) a minor child, (3) a disabled or chronically ill individual, or (4) an individual within 10-years of age of the decedent.
If you are the owner of the retirement account, then it is important to list death beneficiaries on the account. There are always exceptions, but as a general rule, our office recommends that if you are married the primary beneficiary should be your spouse, with the contingent beneficiary listed as your living trust. If you are unmarried, then we recommend that you list your living trust as your primary beneficiary.
Upon a death, we recommend that you contact an estate planning attorney to help you to determine your next steps. There may be important tax and/or legal actions that need to be timely made after someone passes away.
Thank you.
- Caring for Two Generations: The Estate Planning Challenges of the Sandwich Generation - August 27, 2026
- Turning Fear into Peace of Mind: Meet Associate Attorney Andrew Morris - August 19, 2026
- Should You Put Your Home in a Trust? - August 5, 2026
