2024 IRA Quick Reference Guides A compilation of IRA Guides with features, benefits, rules, and tips.
  • 2024 IRA Quick Reference Guides A compilation of IRA Guides with features, benefits, rules, and tips. (Publication)

    What’s New For 2024

    ● Quick Reference: Substantially Equally Periodic Payments/SEPP/72(t):

    Quick Reference Guide

     The IRS issued Notice 2022-6, in which they provide guidance on distributions made under a substantially equal periodic payment (SEPP)/72(t) program.

    Distributions taken under a SEPP/72(t) program are exempt from the 10% early distribution penalty that applies to early distributions from IRAs and employer-sponsored retirement plans.

    Notice 2022-6 applies to SEPP/72(t) payments that commence on or after January 1, 2023, and may also be applied to those that commence in 2022.

    Notice 2022-6 restates some of the previously existing SEPP/72(t) rules and explains what has changed.

     SECURE Act 2.0: Transfers and rollovers will not cause a SEPP/72(t) to be “modified”:

    One of the exceptions to the 10% early distribution penalty applies to distributions taken under a substantially equal periodic payment, or SEPP, program—also known as 72(t) payment programs. These payments are subject to strict rules; breaking them would result in retroactive disqualification from receiving the waiver. For example, one of the rules prohibits transfer and rollover to or from an account running a 72(t) program unless the entire balance is rolled over or transferred to a new account. Secure 2.0 repeals that limitation effective for rollovers and transfers made after 2023—including allowing partial transfers and rollovers—providing the total payments for each year of the program equals the amount initially established under the program. (Effective for transfers and rollovers occurring after Dec. 31, 2023.)

      IRA Beneficiary Options: Eligible Designated Beneficiary & Designated

    Beneficiary under the SECURE Act, as explained by the proposed RMD regulations that were published on February 24, 2022. On February 24, 2022, the IRS issued proposed amendments to the income tax regulations (proposed regulations) that govern required minimum distributions (RMDs) for IRAs and accounts/benefits under employer plans. These regulations propose to update RMD regulations to reflect the amendments made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted on December 20, 2019. While it was expected that the regulations would include clarifications, it has a few surprises that make it necessary for advisors to revise related advice to their clients.

    Interpretations by the Proposed RMD Regulations

    The proposed RMD regulations include a few surprises such as requiring designated beneficiaries to take annual RMDs when the account owner dies on or after the RBD. Confirmation that certain provisions of the existing regulations still apply was also provided. Changes that affect the guides in this publication are reflected accordingly.

     IRS Notice 2023‐53 and Notice 2023‐54: IRS Waives Excise Tax for 2021, 2022, and 2023 RMDs for beneficiaries subject to the 10‐year rule and the life expectancy rule at the same time.

    The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) introduced a new 10-year rule for certain beneficiaries who inherit IRAs after 2019. Language from the SECURE Act suggested that distributions during the first nine years after the account owner’s death were optional, though the entire balance must be distributed by the end of the 10th year. However, the proposed RMD regulations, published in February of 2022, explain that some beneficiaries must also take annual life expectancy RMDs under this new 10-year rule. In response to complaints from beneficiaries subject to the 10-year rule plus the annual life expectancy RMD requirement but did not take RMDs for 2021 and 2022, the IRS published Notice 2022-53, under which they waived the 50% excise tax that would otherwise apply. This provision was extended to 2023 (IRS Notice 2023-54)

    You benefit from this waiver only if you are one of the following two types of beneficiaries:

    a. You are a designated beneficiary who inherited an IRA from the owner in 2020, 2021, or 2022 and the IRA owner died on or after their required beginning date (RBD). The RBD is April 1 of the year that follows the year the IRA owner reached age 72 (70 ½ if they reached age 70 ½ by December 31, 2019).

    Generally, a designated beneficiary is a beneficiary who is a person or a qualified see-through trust.

    b. You are a successor beneficiary of an IRA for which the original beneficiary is an eligible designated beneficiary taking annual life expectancy distributions, and you inherited that beneficiary IRA in 2020, 2021, or 2022.

     SECURE Act 2.0 Made Changes to RMD Age and Other IRA and employer plan rules. SECURE Act 2.0 was signed into law on December 29, 2022, as part of the Consolidated Appropriations Act, 2023 Pub. L. 117-164, and made over 90 changes to the rules that govern IRAs and employer plans. For a complete list, see the section-by-section summary prepared by Ways and Means (last visited January 15, 2023. The quick reference guides included in this booklet are updated to reflect SECURE Act 2.0 changes. These include the following:

    • A schedule of new starting ages for when required minimum distributions are required to begin.
    • New exceptions to the 10% early distribution penalty, and Changes to IRA and plan contributions

    ....and much more! Download today for full details!...