If a participant dies after the required beginning date (RBD) and the designated beneficiary is not an eligible designated beneficiary, the beneficiary must continue to take annual RMDs, with the entire benefit distributed by the end of the tenth year after the year of the participant's death.
If an eligible designated beneficiary was taking lifetime or life expectancy distributions before their death, the beneficiary of the eligible designated beneficiary must continue taking annual RMDs, with the entire benefit distributed no later than the tenth year after the year of the eligible designated beneficiary's death.
The proposed regulations would apply for distributions on or after January 1, 2022. In Notice 2022-53, the IRS announced that it intends to issue final regulations related to RMDs but that the regulations will not apply until the 2023 distribution calendar year, at the earliest.
In response to the proposed regulations, commenters indicated they had expected the ten-year rule to apply differently than what was set out in the proposed regulations (that is, no distributions would be required until the end of the ten-year period). Instead, the proposed regulations would require annual distributions, with the entire benefit needing to be distributed by the end of the ten-year period. As a result, some commenters who were beneficiaries of participants who died in 2020 did not take distributions in 2021 and were not sure if they needed to take distributions in 2022.
Guidance on 2021 and 2022 RMDs
Notice 2022-53 states that final regulations regarding RMDs will not apply before the 2023 distribution calendar year.
Additionally, regarding RMDs for 2021 and 2022, the guidance provides that:
A defined contribution plan that fails to make a specified RMD will not be treated as having failed to satisfy the RMD requirements.
The guidance defines a specified RMD as a distribution that, under the proposed regulations, would be required to be made under a defined contribution plan or IRA that is subject to new Code Section 401(a)(9)(H), in 2021 or 2022 to a:
Designated beneficiary of an employee or IRA owner if:
the employee or IRA owner died in 2020 or 2021 and on or after the employee's RBD; and
the designated beneficiary is not taking lifetime or life expectancy distributions.
Beneficiary of an eligible designated beneficiary if:
the eligible designated beneficiary died in 2020 or 2021; and
the eligible designated beneficiary was taking lifetime or life expectancy distributions.